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LAXintl
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DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 2:34 pm

.
The U.S. DOT has issued a tentative ruling on the proposed AeroMexico - Delta ATI JV.

While the DOT has concluded the alliance will not substantially reduce or eliminate competition between the US and Mexico, the joint carrier would exert too much market power at limited entry airports of MEX and JFK.
As result the DOT would require the applicant to divest 24 slot pairs at MEX and 6 slot pairs at JFK to other Mexican or US low-cost/low fare carriers for transborder services.

In addition the ATI JV grant would only be for a 5-year period and carriers would be required to enter submit traffic data and annual alliance reports to the DOT as the department monitors competitive effects. In addition carriers would be required to remove some "certain anticompetitive provisions from the alliance agreements."

Order 2016-11-2

=

Lets see what AM/DL say about these remedies...
From the desert to the sea, to all of Southern California
 
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redzeppelin
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 2:37 pm

Can the U.S. DOT really enforce slot divestitures at a Mexican airport?
 
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Polot
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 2:39 pm

redzeppelin wrote:
Can the U.S. DOT really enforce slot divestitures at a Mexican airport?

Sure the DOT can. They technically can't force the carriers to do so...but there is no law that says the DOT must approve DL/AM's JV ;)

If AM/DL refuse to divest the MEX slots the DOT will refuse to say yes to the JV. If AM/DL try to be sneaky about it and circumvent the divestiture somehow then the DOT can just cancel the JV.
Last edited by Polot on Fri Nov 04, 2016 2:45 pm, edited 1 time in total.
 
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mercure1
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 2:44 pm

Sounds like excellent news for JetBlue and Southwest which have complained about inability to secure appropriate slots at MEX.
In addition Volaris/Interjet will be able to further grow their U.S. flights with the slots.
mercure f-wtcc
 
commavia
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 2:49 pm

No big shocks, but definitely a few interesting elements of the DOT's proposed ruling.

It's not at all surprising that the MEX divestitures exclude AA and United - entirely predictable given recent DOT actions. Once again - per usual - seems like a remedy crafted and tailor-made with Southwest as the big winner (at least from the U.S. side). I was interested to see that JetBlue is excluded from any JFK divestitures. That does beg the question of which airlines might actually take the JFK slot divestitures if they are (a) limited to Mexico and (b) if AA and JetBlue are both excluded. I'm not sure that any other U.S. airlines would have any interest - and that basically to me says that the DOT essentially intends for these slots to really go to Interjet, Volaris and VivaAerobus. Additionally, the discussion and language on the exclusivity clauses in the alliance agreement are interesting. I'm also quite happy to see that the DOT rejected Southwest's ridiculous whining about Delta's busy Saturday schedule in CUN - it's hardly appropriate for regulators to essentially mandate that Delta reorient its flying to less favorable and attractive schedules at an unrestricted airport solely to help a competitor.

I suspect Delta and Aeromexico will complain but ultimately accept all of these conditions - the financial incentive is to great, and I think Delta badly wants to gain effective control over Aeromexico like it has done with Virgin Atlantic so that it can start harvesting the value of the relationship.

Finally, it will be interesting to see what impact - if any - this has on the recent reports of Interjet shopping around a stake to either AA or United. I will be interested to see if one or both of them wait to see how this regulatory approval for Delta/Aeromexico proceeds, given that if Interjet ultimately does sel a stake to either of those airlines, then presumably the two carriers would immediately file for a similar ATI/JV.
Last edited by commavia on Fri Nov 04, 2016 2:57 pm, edited 4 times in total.
 
AABB777
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 2:53 pm

 
ahj2000
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Fri Nov 04, 2016 3:16 pm

Sounds like 40, B6, and possibly WN or AS is about to get some slots....
40 could make their JFK flight 2x off thi§
-Andrés Juánez
 
hiflyeras
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 3:25 pm

Would love to see AS/VX return to MEX as a result of this...was really sad when they pulled out. Flights to MEX out of SFO, LAX and SAN would be great.
 
AADFWFlyer
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 3:51 pm

To Post #5 - agree, typical WN whining about things that they have no business whining about - Delta's schedule at CUN, really? And seems as if the DOT does play favorites with WN, giving their recent rulings and slot allocations. AA and JetBlue should be able to bid on any JFK divestures, just like anyone else - and submit their proposal and not be excluded. And I believe that AA does have an 'agreement' with InterJet, for flights between US and Mexico. Living in the DFW area, hear way too much of the WN whining about anything that they think is newsworthy - and as I have said before on these posts - everyone has their airline of choice, and can play favorites for whatever reason they choose - but any airline should not be excluded from fair balance and competition, and the DOT does not need to 'shape' the playing field. At least for my airline of choice, now have a management team that is aggressive and building on market share and presence and knows how to 'run' an airline - unlike the team prior to and in BK. Nice refreshing change, that is reaping its rewards and benefits. If AA wants more slots at JFK, they should be able to bid on them, as well as gain presence in Mexico as well.
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 7:05 pm

So, in addition to the slot pair divestiture mandated by the DOT, we have to consider the remedies (conditions) imposed by Mexico's competition watchdog. I believe the Mexican authorities may have also asked for the divestiture of certain slot pairs at MEX (but please correct me if I am wrong) and also determined that redundancies by the two carriers in routes where so far they compete have to be eliminated. The way I understand this particular remedy is that, for example, in JFK-MEX that is nowadays flown by DL (1x or 2x daily) and AM (4?x daily), one of the two carriers has to stop flying.

Is this right?
Upcoming flights:
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August: KL MEX-AMS 74M (J), KQ AMS-NBO 788 (J).
 
HeeseokKoo
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 7:36 pm

While 6 JFK slots could be manageable, 24 MEX slots might be too burden for them. That's nearly 10% of AM's total number of flights out of MEX, and AM+DL offers roughly 40 flights a day out of MEX to the US. I'm not sure if AM is that desperate to divest nearly 10% of slots.
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 7:53 pm

Mexico competition commission CoFeCE approved the deal back in May, but required that 8 slot pairs be given up in MEX, and required that any city pairs served by both airlines (such as MEX-JFK, LAX-GDL, etc), one of the two airlines would be required to drop service and that frequencies and capacity offered by the other airline could not be increased for 3-year period in order to encourage new entrants and competition.
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Sightseer
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 7:58 pm

It'll be interesting to see if AM/DL are willing to part with 24 slot pairs at MEX. That's substantially larger than any other JV divestiture that I can recall. I also wonder if the new MEX will do anything to allay anti-competitive concerns.
 
ScottB
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:01 pm

commavia wrote:
It's not at all surprising that the MEX divestitures exclude AA and United - entirely predictable given recent DOT actions. Once again - per usual - seems like a remedy crafted and tailor-made with Southwest as the big winner (at least from the U.S. side). I was interested to see that JetBlue is excluded from any JFK divestitures. That does beg the question of which airlines might actually take the JFK slot divestitures if they are (a) limited to Mexico and (b) if AA and JetBlue are both excluded. I'm not sure that any other U.S. airlines would have any interest - and that basically to me says that the DOT essentially intends for these slots to really go to Interjet, Volaris and VivaAerobus. Additionally, the discussion and language on the exclusivity clauses in the alliance agreement are interesting. I'm also quite happy to see that the DOT rejected Southwest's ridiculous whining about Delta's busy Saturday schedule in CUN - it's hardly appropriate for regulators to essentially mandate that Delta reorient its flying to less favorable and attractive schedules at an unrestricted airport solely to help a competitor.


I'm not surprised at all to see AA and UA excluded from the MEX slot divestitures. They're currently the #1 and #2 carriers in the transborder market, and allowing them to acquire divested slots at MEX would not act as a remedy to the increased consolidation in the U.S.-Mexico market which will result from the DL-AM ATI grant. I don't even see WN as the big winner here because the Mexican LCCs (apart from 4O which already has a large slot portfolio at MEX) and all the other U.S. LCCs including B6, VX, AS, SY, F9, NK, G4, etc. would also be eligible for slots. It's not as if WN's three slot pairs at MEX currently make them a big player in the market. JFK divestitures don't help WN at all given that they're unlikely to open JFK just to serve JFK-MEX. So how exactly is WN the "big winner?"

I think it's logical to exclude B6 from the JFK divestitures for the same reason that 4O was excluded at MEX: B6 is the second-largest slot-holder at JFK and it wouldn't be burdensome for them to fund JFK slots for MEX service from their own extensive portfolio. Plus it's likely that we'd end up with even more competition given that B6 probably will enter the market and so would more Mexican LCCs. I agree that by default the Mexican LCCs are the most likely suspects -- but then DOT's job here is to minimize negative competitive impact to consumers in the U.S.-Mexico market, not favor U.S. carriers.

I agree that it's a bit of a stretch to try to force DL to shuffle its schedule at CUN on Saturdays, but to some degree I see the point: while CUN isn't slot-limited like MEX is, there is a limit to the facilities at commercially desirable times. And the MEX slot divestitures come with the condition that the new entrants be able to request commercially viable times for their slots. I don't think it was unreasonable at all for WN to request that DL/AM guarantee the availability of two gates at LAX T2 given the impact of the JV on competition at LAX and the fact that connections between TBIT and T1 would be unappealing to many customers.

AADFWFlyer wrote:
everyone has their airline of choice, and can play favorites for whatever reason they choose - but any airline should not be excluded from fair balance and competition, and the DOT does not need to 'shape' the playing field.


Actually, by law, DOT is charged to "'shape' the playing field" in order to protect the interests of the traveling public -- and they typically cite their own studies and academic research into how the anti-competitive impact of consolidation can be mitigated.
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:08 pm

HeeseokKoo wrote:
While 6 JFK slots could be manageable, 24 MEX slots might be too burden for them. That's nearly 10% of AM's total number of flights out of MEX, and AM+DL offers roughly 40 flights a day out of MEX to the US. I'm not sure if AM is that desperate to divest nearly 10% of slots.


From reading DOT's Show Cause order, AM fails to use 39% of its take-off and landing slots at MEX thanks to lax utilization rules at MEX. My guess is they should be able to find some slots in there...
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:10 pm

HeeseokKoo wrote:
While 6 JFK slots could be manageable, 24 MEX slots might be too burden for them. That's nearly 10% of AM's total number of flights out of MEX, and AM+DL offers roughly 40 flights a day out of MEX to the US. I'm not sure if AM is that desperate to divest nearly 10% of slots.

I have to agree. I think the MEX slots are a bitter pill to swallow. As of now DL ownly owns 5% of AM as I understand it. The other 44% waits on the JV. So, I guess does AM want to use this opportunity to kill the deal? I suspect not, but it also lowers the value of the company to DL who is going to have 49%.
 
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enilria
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:11 pm

ScottB wrote:
HeeseokKoo wrote:
While 6 JFK slots could be manageable, 24 MEX slots might be too burden for them. That's nearly 10% of AM's total number of flights out of MEX, and AM+DL offers roughly 40 flights a day out of MEX to the US. I'm not sure if AM is that desperate to divest nearly 10% of slots.


From reading DOT's Show Cause order, AM fails to use 39% of its take-off and landing slots at MEX thanks to lax utilization rules at MEX. My guess is they should be able to find some slots in there...

As we know, the greatest value in slots is not in using them, it's preventing disruptive airlines from using them. Not using slots AND denying them to LCCs is anticompetitive nirvana.
 
santi319
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:34 pm

enilria wrote:
As we know, the greatest value in slots is not in using them, it's preventing disruptive airlines from using them. Not using slots AND denying them to LCCs is anticompetitive nirvana.


Welcome to Mexico, less than 20 years ago both main airlines where owned by the same company. This needs to change to bring Mexico a la par with the rest of the world. Everybody knows AM has a mini slot monopoly and it is completely unnacceptable that this happens in 2016.
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:35 pm

enilria wrote:
HeeseokKoo wrote:
While 6 JFK slots could be manageable, 24 MEX slots might be too burden for them. That's nearly 10% of AM's total number of flights out of MEX, and AM+DL offers roughly 40 flights a day out of MEX to the US. I'm not sure if AM is that desperate to divest nearly 10% of slots.

I have to agree. I think the MEX slots are a bitter pill to swallow. As of now DL ownly owns 5% of AM as I understand it. The other 44% waits on the JV. So, I guess does AM want to use this opportunity to kill the deal? I suspect not, but it also lowers the value of the company to DL who is going to have 49%.


I agree, but isn't this a bitter pill to swallow just for the short term. When the new MEX opens in 2020 will controlled slots go away?
 
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11725Flyer
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:49 pm

Here are a few links:

http://finance.yahoo.com/news/u-tentati ... 27268.html
http://www.usatoday.com/story/travel/fl ... /93291564/

I'm amazed the U.S. DOT can mandate slot divestitures at a foreign airport. Has that ever happened when any other JV was approved?
 
commavia
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 8:57 pm

ScottB wrote:
I'm not surprised at all to see AA and UA excluded from the MEX slot divestitures. They're currently the #1 and #2 carriers in the transborder market, and allowing them to acquire divested slots at MEX would not act as a remedy to the increased consolidation in the U.S.-Mexico market which will result from the DL-AM ATI grant. I don't even see WN as the big winner here because the Mexican LCCs (apart from 4O which already has a large slot portfolio at MEX) and all the other U.S. LCCs including B6, VX, AS, SY, F9, NK, G4, etc. would also be eligible for slots. It's not as if WN's three slot pairs at MEX currently make them a big player in the market. JFK divestitures don't help WN at all given that they're unlikely to open JFK just to serve JFK-MEX. So how exactly is WN the "big winner?"


My presumption - and admittedly that's all it is - is that a regulatory decision designed explicitly to benefit "low fare carriers" at the expense of network carriers would naturally tend to benefit the nation's largest "low fare carrier," as defined by the same regulators. In this case, my personal expectation - again, could be wrong - is that Southwest will be both the most aggressive and successful applicant for the expanded access to MEX.

ScottB wrote:
I agree that it's a bit of a stretch to try to force DL to shuffle its schedule at CUN on Saturdays, but to some degree I see the point: while CUN isn't slot-limited like MEX is, there is a limit to the facilities at commercially desirable times. And the MEX slot divestitures come with the condition that the new entrants be able to request commercially viable times for their slots. I don't think it was unreasonable at all for WN to request that DL/AM guarantee the availability of two gates at LAX T2 given the impact of the JV on competition at LAX and the fact that connections between TBIT and T1 would be unappealing to many customers.


I don't see Southwest's point at all. If Southwest doesn't like all of Delta's flights to CUN on Saturday afternoons - as Southwest itself admits, the prime schedule pattern for CUN leisure customers - then Southwest can add just as many flights to CUN on Saturday afternoons. And if Southwest can't add as many flights to CUN on Saturday afternoons because of facility constraints, they should take it up with the airport authorities in Mexico. And if that's unsuccessful, then frankly, that's the way the cookie crumbles - yet another missed opportunity arising from Southwest's stunningly slow move into international markets.

enilria wrote:
As we know, the greatest value in slots is not in using them, it's preventing disruptive airlines from using them. Not using slots AND denying them to LCCs is anticompetitive nirvana.

santi319 wrote:
Everybody knows AM has a mini slot monopoly and it is completely unnacceptable that this happens in 2016.


Ridiculous indeed - I agree that if Aeromexico is sitting on (and blocking alternative use of) almost 2/5 of its slots, that's blatantly anti-competitive, and it's highly unfortunate that Mexican regulators allow that to persist.
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 9:06 pm

11725Flyer wrote:
I'm amazed the U.S. DOT can mandate slot divestitures at a foreign airport. Has that ever happened when any other JV was approved?


A foreign authority could do the same regarding activity at a U.S. airport.

Remember its the airlines here asking for something. In return the competition authority like with any other industry may place restrictions and remedies on the applicants in order for the applicants to gain approval.

It happens in every sector. Airlines are not unique.
From the desert to the sea, to all of Southern California
 
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11725Flyer
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 9:13 pm

LAXintl wrote:
11725Flyer wrote:

It happens in every sector. Airlines are not unique.


Thanks for the explanation. I appreciate it.
 
MIflyer12
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 9:48 pm

LAXintl wrote:


It happens in every sector. Airlines are not unique.


Bilateral treaties, slot restrictions, and carrier preferences make international air rights quite odd in contrast to trade in goods an other services under WTO. Apple didn't have to cut sales of iPhone 5s in China in order to get permission to sell iPhone 6s.
 
HeeseokKoo
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 10:09 pm

ScottB wrote:
HeeseokKoo wrote:
While 6 JFK slots could be manageable, 24 MEX slots might be too burden for them. That's nearly 10% of AM's total number of flights out of MEX, and AM+DL offers roughly 40 flights a day out of MEX to the US. I'm not sure if AM is that desperate to divest nearly 10% of slots.


From reading DOT's Show Cause order, AM fails to use 39% of its take-off and landing slots at MEX thanks to lax utilization rules at MEX. My guess is they should be able to find some slots in there...

That I was completely missing. Thanks for letting me know.
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 10:42 pm

MIflyer12 wrote:
Bilateral treaties, slot restrictions, and carrier preferences make international air rights quite odd in contrast to trade in goods an other services under WTO. Apple didn't have to cut sales of iPhone 5s in China in order to get permission to sell iPhone 6s.


If Apple wanted to buy or create a venture with a large Chinese company they very well could face regulatory remedies to ensure ongoing competition.

Concerns and desire to maximize competition and market access is one of the most common litmus test any deal in any sector must satisfy.
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LAX772LR
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 11:08 pm

11725Flyer wrote:
I'm amazed the U.S. DOT can mandate slot divestitures at a foreign airport. Has that ever happened when any other JV was approved?

Yes and no.

In both 1998 and 2002, the DOT requested massive slot divestitures at LHR in exchange for approving AA/BA... but both times, basically got told to go F itself.
I myself, suspect a more prosaic motive... ~Thranduil
 
EddieDude
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 11:12 pm

commavia wrote:
if Aeromexico is sitting on (and blocking alternative use of) almost 2/5 of its slots, that's blatantly anti-competitive, and it's highly unfortunate that Mexican regulators allow that to persist.

I wonder whether all this will create an incentive for AM to get some 739MAX aircraft instead of 738MAX and accelerate the replacement of ERJ-145s with E-170s and E-175s.
Upcoming flights:
May: AM MEX-CUN 73H (Y), AM CUN-MEX 73W (Y).
August: KL MEX-AMS 74M (J), KQ AMS-NBO 788 (J).
 
klm617
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Fri Nov 04, 2016 11:57 pm

What I don't understand is why they are so concerned about the large market the airports that suffer the most are the second tier airport with little or no service and prices remain high and very likely they will get even higher the big city markets always get more than enough competition to keep prices at a decent level while secondary markets pay higher fares to make up for the loss in major cities where fares already are low because of competition.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
commavia
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 12:07 am

klm617 wrote:
What I don't understand is why they are so concerned about the large market the airports that suffer the most are the second tier airport with little or no service and prices remain high and very likely they will get even higher the big city markets always get more than enough competition to keep prices at a decent level while secondary markets pay higher fares to make up for the loss in major cities where fares already are low because of competition.


Because the busy airports in big cities are the ones where capacity is constrained and oversubscribed. With very few exceptions, small and mid-size airports and free and open - in the U.S. and Mexico - and airlines can easily add capacity there whenever they want. They just choose not to because the economics are often quite challenging. Big cities get lots of capacity for a reason - because that's where the people are, and thus that's where the money is.
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 12:24 am

Does anyone know what will happen when the new MEX airport opens, supposedly in 2020, will it be slot constrained at opening? For the 12-month period ending May 31, 2016 the current MEX airport handled 39,563,710 passengers. When the new MEX airport opens it will have a capacity of 68,000,000 during the initial phase with possibility of growing to 120,000,000 in later phases.
 
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KrustyTheKlown
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 5:44 am

dmorbust wrote:
Does anyone know what will happen when the new MEX airport opens, supposedly in 2020, will it be slot constrained at opening? For the 12-month period ending May 31, 2016 the current MEX airport handled 39,563,710 passengers. When the new MEX airport opens it will have a capacity of 68,000,000 during the initial phase with possibility of growing to 120,000,000 in later phases.


The new MEX is not going to be slot constrained for a few decades.

The current MEX offers up to 58 slots/hour while the new MEX initially is going allow up to 110 slots/hour (220 slots/hour when all 6 runways are built).
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 2:33 pm

KrustyTheKlown wrote:
dmorbust wrote:
Does anyone know what will happen when the new MEX airport opens, supposedly in 2020, will it be slot constrained at opening? For the 12-month period ending May 31, 2016 the current MEX airport handled 39,563,710 passengers. When the new MEX airport opens it will have a capacity of 68,000,000 during the initial phase with possibility of growing to 120,000,000 in later phases.


The new MEX is not going to be slot constrained for a few decades.

The current MEX offers up to 58 slots/hour while the new MEX initially is going allow up to 110 slots/hour (220 slots/hour when all 6 runways are built).


So in reality these concessions AM/DL must swallow are only for three years.
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 3:38 pm

dmorbust wrote:
So in reality these concessions AM/DL must swallow are only for three years.


If you really believe the new airport will open in 2020.

They have yet to award the construction tender. Bids are due November 21st.

Besides the slot concessions, dont also forget the requirements by Mexican side that AM/DL drop service on several overlapping routes also.
From the desert to the sea, to all of Southern California
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 4:05 pm

JetBlue issued a statement:

"JetBlue commends the DOT for noting that in the increasingly consolidated airline industry where fewer and larger players dominate the landscape, only important protections such as ensuring airport access and term limits on immunity from antitrust laws will allow small but vital competitors like JetBlue to continue offering low fares and protecting the interests of consumers,” said James Hnat, Executive Vice President and General Counsel."

http://www.businesswire.com/news/home/2 ... 006089/en/

=
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DDR
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 4:33 pm

I am just amazed that WN is still regarded as a low fare carrier and is still receiving the benefits that comes with the misconception.
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 5:18 pm

LAXintl wrote:
dmorbust wrote:
So in reality these concessions AM/DL must swallow are only for three years.


If you really believe the new airport will open in 2020.

They have yet to award the construction tender. Bids are due November 21st.

Besides the slot concessions, dont also forget the requirements by Mexican side that AM/DL drop service on several overlapping routes also.


Check out the construction updates video on the new MEX website - I know it is very much early days but things seem to be progressing on schedule so far: http://www.aeropuerto.gob.mx/index.php (or straight to youtube video here: https://www.youtube.com/watch?v=oM8WtsXccyQ).

Also, construction tenders have gone out according to plan as you can see on the previous official website, as well as this summary here: http://centreforaviation.com/profiles/n ... al-airport

Lastly, I remember the Mexican COFECE requirement that they drop overlapping routes, but I could not find it mentioned at all in the US DOT show cause order: https://www.regulations.gov/document?D= ... -0070-0074. It wouldn't surprise me if COFECE ends up dropping that requirement.
 
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KrustyTheKlown
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 6:36 pm

dmorbust wrote:
So in reality these concessions AM/DL must swallow are only for three years.


The new MEX is planned to open on October 2020, so the concessions will endure for at least 4 years.

Also, there's no telling if the US or MX governments would allow DL-AM to freely bid for the new slots, specially given that the US approval is only for 5 years.
 
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LAXintl
Topic Author
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 6:55 pm

dmorbust wrote:
[


Thank you but I already know much about the airport project. I just returned two weeks ago from MEX and have been involved with parties participating in the terminal tender whose bids are due on Nov 21st.

The general feeling is that the airport will not open as intended 2020, or atleast not with all the facilities as desired. Its unlikely winning party (assuming Mexican government does indeed decide on the tenders rapidly) will break ground till second half or late 2017.
In addition there is much enabling work required for the new airport, plus work on support infrastructure (think roads, sewers, utility plant, etc) that has not even been put out to bid, or yet even designed by authorities.
Also only a single runway tender has been approved, with no bids issued for the 2nd and 3rd runway which are all part of phase 1 development of the airport.

Lastly the DOT places is own remedies on the application. Its not the DOTs place to simply repeat what COFECE found in its ruling back in May. At the end both governments must be satisfied with what AM/DL comply with otherwise they cannot implement their JV ATI.
From the desert to the sea, to all of Southern California
 
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enilria
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 7:34 pm

DDR wrote:
I am just amazed that WN is still regarded as a low fare carrier and is still receiving the benefits that comes with the misconception.

Completely agree. I fear WN will be allowed to buy B6 when it seems clear from WN-FL that WN is actually more likely to decimate the other carrier's network than the Big 3 are.
11725Flyer wrote:
Here are a few links:

http://finance.yahoo.com/news/u-tentati ... 27268.html
http://www.usatoday.com/story/travel/fl ... /93291564/

I'm amazed the U.S. DOT can mandate slot divestitures at a foreign airport. Has that ever happened when any other JV was approved?

Seems like it happened at LHR in the past with BA and a partner (they've had UA/AA/US at times)?
 
AADFWFlyer
Posts: 121
Joined: Mon Dec 23, 2013 8:52 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 8:45 pm

AADFWFlyer wrote:
everyone has their airline of choice, and can play favorites for whatever reason they choose - but any airline should not be excluded from fair balance and competition, and the DOT does not need to 'shape' the playing field.


Actually, by law, DOT is charged to "'shape' the playing field" in order to protect the interests of the traveling public -- and they typically cite their own studies and academic research into how the anti-competitive impact of consolidation can be mitigated.[/quote]

Yea, you are right and I know that 'by law' to shape the field - IMO should have more than their own studies and academic inputs to their shaping - as they have much room for improvement in a few areas.
 
dmorbust
Posts: 116
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 9:35 pm

LAXintl wrote:
dmorbust wrote:
[


Thank you but I already know much about the airport project. I just returned two weeks ago from MEX and have been involved with parties participating in the terminal tender whose bids are due on Nov 21st.

The general feeling is that the airport will not open as intended 2020, or atleast not with all the facilities as desired. Its unlikely winning party (assuming Mexican government does indeed decide on the tenders rapidly) will break ground till second half or late 2017.
In addition there is much enabling work required for the new airport, plus work on support infrastructure (think roads, sewers, utility plant, etc) that has not even been put out to bid, or yet even designed by authorities.
Also only a single runway tender has been approved, with no bids issued for the 2nd and 3rd runway which are all part of phase 1 development of the airport.

Lastly the DOT places is own remedies on the application. Its not the DOTs place to simply repeat what COFECE found in its ruling back in May. At the end both governments must be satisfied with what AM/DL comply with otherwise they cannot implement their JV ATI.


Thanks for the insider info!
 
tjh8402
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 10:20 pm

EddieDude wrote:
commavia wrote:
if Aeromexico is sitting on (and blocking alternative use of) almost 2/5 of its slots, that's blatantly anti-competitive, and it's highly unfortunate that Mexican regulators allow that to persist.

I wonder whether all this will create an incentive for AM to get some 739MAX aircraft instead of 738MAX and accelerate the replacement of ERJ-145s with E-170s and E-175s.


Does MEX's altitude present operational challenges for the -9? I know UA uses them extensively out of DEN but MEX is another 2000 ft +. They don't operate -900s either. How far could a -900/-9 go out of MEX with a full passenger load? I'm guessing not JFK. I assume they would need to try to reach some other DL hubs. Could it make SEA? MSP or DTW? ATL?
 
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KrustyTheKlown
Posts: 347
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 10:55 pm

LAXintl wrote:
dmorbust wrote:
[


Thank you but I already know much about the airport project. I just returned two weeks ago from MEX and have been involved with parties participating in the terminal tender whose bids are due on Nov 21st.

The general feeling is that the airport will not open as intended 2020, or atleast not with all the facilities as desired. Its unlikely winning party (assuming Mexican government does indeed decide on the tenders rapidly) will break ground till second half or late 2017.
In addition there is much enabling work required for the new airport, plus work on support infrastructure (think roads, sewers, utility plant, etc) that has not even been put out to bid, or yet even designed by authorities.
Also only a single runway tender has been approved, with no bids issued for the 2nd and 3rd runway which are all part of phase 1 development of the airport.

Lastly the DOT places is own remedies on the application. Its not the DOTs place to simply repeat what COFECE found in its ruling back in May. At the end both governments must be satisfied with what AM/DL comply with otherwise they cannot implement their JV ATI.


It seems your information is a little off:

- the bids for the 1st and 2nd runways were approved on early September.
- most bids for sewers and utilities have already been approved and some are already under construction.
- work on the foundation for the terminal building is scheduled to start in the coming weeks.

- Access roads, 3rd runway and rail link are late.

I admit that it is somewhat unlikely that the airport will be completed as scheduled, but the situation is not as dire as you imply.
 
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LAXintl
Topic Author
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 05, 2016 11:39 pm

KrustyTheKlown wrote:
- the bids for the 1st and 2nd runways were approved on early September.
- most bids for sewers and utilities have already been approved and some are already under construction.
- work on the foundation for the terminal building is scheduled to start in the coming weeks.

- Access roads, 3rd runway and rail link are late.

I admit that it is somewhat unlikely that the airport will be completed as scheduled, but the situation is not as dire as you imply.


Only contract for the first runway has been executed. Everyone is actually scratching their heads at the manner the authorities have broken out the project bids. It most unusual to potentially have 3 different companies build 3 different runways, let alone all the parking ramps and taxiways. Its actually almost a recipe for disaster. Reminds me of Bangkok Suvarnabhumi where the work was similarly spread out among many companies and we've seen how ramps and taxiways are sinking as each was built differently than the other.

Yes amazingly the foundation work for terminal was also broken up and was one of the initial dozen or so tender packets. Its going to be very interesting as both of the two main finalist consortiums for terminal actually have quite different proposed construction plans and have questioned wisdom of prebuilding a foundation which might or might not be feasible to accompany the manner future terminal would be structured.

For utilities and infrastructure there are many projects around Lake Texcoco zone that have yet to have tenders issued on as they have yet to be finalized in concept and design. Without some of these enabling and support projects being completed such as major power station, canalization, sewer, fuel distribution lines from off the airport, let alone all the public roadways the airport wont be very functional.

While the airport is magnificent in concept, there are thousands of little details and potential problems which could easily throw the very ambitious schedule out the window.
From the desert to the sea, to all of Southern California
 
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LAX772LR
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sun Nov 06, 2016 1:23 am

DDR wrote:
I am just amazed that WN is still regarded as a low fare carrier and is still receiving the benefits that comes with the misconception.

Agree 10,000%

It's like they can do no wrong in the eyes of the government.
I myself, suspect a more prosaic motive... ~Thranduil
 
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enilria
Posts: 9482
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sun Nov 06, 2016 2:12 am

LAX772LR wrote:
DDR wrote:
I am just amazed that WN is still regarded as a low fare carrier and is still receiving the benefits that comes with the misconception.

Agree 10,000%

It's like they can do no wrong in the eyes of the government.

I think it is just that the DOT doesn't really recognize change well.

If anything typifies the coming of age of WN from feisty pro-competition "LCC" to Big 4 carrier, it is the Dallas Love Field monopolization which is right out of the Northwest/US Airways playbook, except NW/US never succeeded in achieving that sort of monopolization.
 
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flymco753
Posts: 3250
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Mon Nov 07, 2016 1:39 am

tjh8402 wrote:
EddieDude wrote:
commavia wrote:
DTW?
Of course this doesn't really help since it's only a rumor, but ever since AM announced resumption to MTY, there's has been speculation about MEX receiving the same treatment with an AM 737. GDL in my mind is possible too. DL flies a 757 during peak seasons and it looks like it'll be here earlier next year as opposed to the last 2. The only Mexico route that can be added and make sense is GDL for both the auto industry and local traffic, SW Detroit has a lot of people from the GDL area.
...the carriage of liquids, gels, and aerosols are prohibited through the screening checkpoint except for travel size toiletries of 3 ounces or less...
 
DDR
Posts: 1591
Joined: Sat Sep 28, 2013 11:09 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Tue Nov 08, 2016 2:03 am

LAX772LR wrote:
DDR wrote:
I am just amazed that WN is still regarded as a low fare carrier and is still receiving the benefits that comes with the misconception.

Agree 10,000%

It's like they can do no wrong in the eyes of the government.


Yep. I just don't get it. I really don't.
 
EddieDude
Posts: 6969
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Tue Nov 08, 2016 6:15 am

dmorbust wrote:
Lastly, I remember the Mexican COFECE requirement that they drop overlapping routes, but I could not find it mentioned at all in the US DOT show cause order: https://www.regulations.gov/document?D= ... -0070-0074. It wouldn't surprise me if COFECE ends up dropping that requirement.

Why should the two regulators' resolutions be verbatim and impose the exact same conditions? The fact that the DOT did not ask for the dropping of overlapping routes does not mean that COFECE shouldn't uphold that requirement of theirs.
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