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Trump Administration orders Delta and Aeromexico joint venture to terminate by January 1, 2019.

The Trump administration announced late Monday that it had ordered Delta Air Lines to dissolve a joint venture with Aeromexico by January 1, which allowed the carriers to coordinate flight scheduling, pricing, and capacity decisions between U.S. and Mexico.

In July, the U.S. Transportation Department proposed to end the joint venture that had been in place for nearly nine years as part of several actions targeted at Mexican aviation. The department under Joe Biden announced in January 2024 that it was looking into ending it.

Washington also warned that it may take action against European nations over restrictions at airports.

The Department said Monday that the joint venture was ending because it "is necessary due to ongoing anti-competitive effects on U.S. Mexico City markets which provide an unfair benefit to Delta and Aeromexico."

About 60% of passengers flying from Mexico City Airport into the U.S. are carried by these carriers. The airport is the 4th largest international gateway into and out of the United States.

The U.S. Government said that it did not require Delta to sell its 20 percent equity stake in Aeromexico. The U.S. government said that it did not require Delta to sell its 20% equity stake in Aeromexico.

Delta expressed disappointment that the Transportation Department had withdrawn approval of the venture. It said the move "would cause significant harm" to U.S. consumers, jobs and communities traveling between the U.S.A. and Mexico. We are reviewing Department's orders and determining next steps."

Aeromexico and the Mexican government did not respond immediately to comments.

Delta stated that the joint venture creates more than 310 million dollars of gross domestic product in the United States and nearly 4,000 jobs. It warned that up to $800,000,000 in consumer benefits per year could disappear, and that two dozen routes may be cancelled or smaller aircraft replaced.

The Transportation Department announced in July that it would take action against the Mexican government for forcing cargo carriers to relocate their operations from Mexico City and for cutting flight slots. This had a negative impact on U.S. Airlines.

Transportation Secretary Sean Duffy has ordered Mexican carriers file flight schedules. He also warned that his department may disapprove Mexican flight requests if they fail to address U.S. concerns about decisions made by Mexico in 2022 or 2023.

The Transportation Department stated on Monday that Mexico continues to "continue along a pathway of market interference and distortion which adversely impacts competition in the U.S. - Mexico air services market." It also said that it "perpetuated an allocation system for slots that does not comply with international standards and benefits Aeromexico."

The Department of Transportation warned that the venture would likely result in higher fares on some markets, reduced capacities and difficulties for U.S. carriers because of government intervention. (Reporting and editing by Tom Hogue, Jamie Freed, and Kylie Madry; Additional reporting in Mexico City by David Shepardson)

(source: Reuters)