By David Shepardson
WASHINGTON (Reuters) -Delta Air Lines and Aeromexico on Friday asked a U.S. appeals court to stay a Trump administration order forcing it to unwind a joint venture that allows the airlines to coordinate the scheduling, pricing and capacity of flights between the United States and Mexico.
Aeromexico told the 11th Circuit Court of Appeals that it would face substantial costs that it could not recover even if a court later confirmed the deal.
In September, the U.S. Department of Transportation ordered the nearly nine-year joint venture to end by Jan. 1, as part of several actions targeting Mexican aviation, citing competition concerns.
Delta said it would also face losses without a court order delaying the requirement pending a ruling.
The airline said its flight operations “will face severe disruptions” and called USDOT’s action “arbitrary, capricious and unrealistic,” based on “baseless, irrelevant and speculative reasoning.”
As a result, the Atlanta-based airline has already canceled two U.S. flights to Mexico and “may need to cancel additional cross-border flights for next summer.”
Delta also argued that USDOT held its joint venture to a stricter standard than other joint ventures, including United Airlines and ANA.
USDOT, which on Friday denied the airlines’ request to delay the order, had no comment.
Aeroméxico said the order requires it to “divert
and hire new staff, establish a new brand presence in the US, separate its information technology platforms for US pricing and sales from those of Delta.
In August, USDOT said the joint venture should end due to “current anti-competitive effects in the markets between the United States and Mexico City that provide an unfair advantage to Delta and Aeromexico.”
Airlines account for about 60% of passenger flights from Mexico City Airport to the US. The airport is the fourth largest international gateway to and from the United States.
Aeromexico and Delta said they have a 20% seat share in the Mexico-U.S. market, compared to American Airlines’ 21%, arguing that shows there is a very competitive market.
The USDOT, which is not requiring Delta to sell its 20% ownership stake in Aeromexico, has said potential problems stemming from the company include higher fares in some markets, reduced capacity and challenges for U.S. airlines due to government intervention.
Delta maintains that up to $800 million in annual consumer benefits could evaporate, two dozen routes could be canceled and smaller planes could replace existing planes if the joint venture disappears.
(Reporting by David Shepardson; Editing by Richard Chang and Sam Holmes)