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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Tue Nov 15, 2016 9:48 pm

Aeromexico and Delta say they will fight the proposed slot divestitures.

https://www.flightglobal.com/news/artic ... ur-431466/

Meanwhile Volaris CEO says government did not go far enough to help break up AM MEX slot holdings.
From the desert to the sea, to all of Southern California
 
commavia
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Tue Nov 15, 2016 9:55 pm

LAXintl wrote:
Aeromexico and Delta say they will fight the proposed slot divestitures.


I'm honestly surprised. I think their resistance will ultimately be futile - they may succeed in knocking a few incremental slot pairs off at JFK and/or MEX, but I doubt they'll get the DOT to substantially back off on the divestiture "ask." Plus, while releasing all these prime slots at MEX would obviously clear the way for meaningful new competition, it seems like Aeromexico and Delta would be willing to accept that given all of the apparently-unused slots they currently have.
 
Kilopond
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Tue Nov 15, 2016 10:19 pm

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


No, of course it can not randomly order anyone to give up slots in a foreign country. But it still can define the conditions under which a DL/AM JV could be regarded as a legal project and not as a rule-breaking anti-competitive one.
 
Atlwarrior
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Tue Nov 15, 2016 10:37 pm

I would wait until the new administration takes over.
 
ScottB
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 12:28 am

commavia wrote:
LAXintl wrote:
Aeromexico and Delta say they will fight the proposed slot divestitures.


I'm honestly surprised. I think their resistance will ultimately be futile


I don't really get the choice to fight the divestitures, either, given that there's really no way for DL/AM to take DOT to court with a winnable case. They can't really argue that DOT is being arbitrary or capricious because in the end they don't have an inherent right to form a joint venture with a competitor. And if we assume that the new MEX will open in six to seven years (I agree that the planned opening date seems unrealistic) the slot divestitures just aren't a long-term factor.

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.


They still tend to bring lower average fares to markets where they are present when compared to markets where only the legacy carriers are present. Take, for example, the average fare for BOS-CMH of $180 and compare that to the average BOS-CVG fare of $357. DL has a virtual monopoly between ATL & MEM with an average fare of $311. WN has a near-monopoly between LAS & RNO (G4 also flies it but less-than-daily) and their average fare is $170. IAH/HOU-MSY has an average fare of $175. IAH/HOU-BTR has an average fare of $341.

WN is not one of the ULCCs -- but then again, their pricing also doesn't come with all the gimmicks and gotchas of NK/F9/G4. Nor does the proposed remedy of slot divestitures seem to unfairly discriminate against any other U.S. LCC or ULCC. Only one Mexican LCC is excluded from the MEX slots, and that's because that carrier is already the second-largest slot-holder at MEX.

commavia wrote:
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.


Except that the decision isn't necessarily a shoo-in for WN, as evidenced by the proceedings for the Cuba route authorities. I'd be shocked if the eligible Mexican LCCs don't apply for divested slots, and I also expect that B6, F9, AS, and NK at a minimum would apply, too. The Mexican LCCs might even have a bit of an edge if they're willing to extend service to cities which currently lack non-stop service to MEX; i.e. Y4 applying for a slot for FAT-MEX or AUS-MEX would probably beat out another carrier applying for LAX-MEX and they have a hub at MEX to help fill the flight with connections.
 
FlyPNS1
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 12:58 am

commavia wrote:

I'm honestly surprised. I think their resistance will ultimately be futile - they may succeed in knocking a few incremental slot pairs off at JFK and/or MEX, but I doubt they'll get the DOT to substantially back off on the divestiture "ask."


Depends on how aggressive the new DOT is come January. DL and AM can certainly wait a few months to test the water with a new DOT Secretary who might be more "business friendly."
 
AADFWFlyer
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 2:51 am

DDR wrote:
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.


Yea, I agree as well - perceived favorable treatment in many areas, as they are not a low fare carrier anymore, and have not been for a bit. Will be interesting to see how the new Administration in DC handles these type of things when it comes to DOT, airlines and such - interesting times indeed.
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 4:31 am

A couple articles in Spanish quote the Aeromexico CEO's response: http://a21.com.mx/normatividad/2016/11/ ... obre-slots and http://expansion.mx/empresas/2016/11/15 ... dounidense .

He makes it clear they will go through with the JV no matter what, but that they will ask for clarification on how the DOT arrived at the quantity of MEX slots needed to be divested (they believe the DOT wrongly based a lot of their decision on preliminary research/opinion by the Cofece Mexican authorities of the slot regime at MEX, which they plan to address), and they will also point out that for JFK slot divestitures Newark was not included in the analysis and should have been as one of the NYC market airports.
 
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enilria
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 2:26 pm

Atlwarrior wrote:
I would wait until the new administration takes over.

FlyPNS1 wrote:
Depends on how aggressive the new DOT is come January.

AADFWFlyer wrote:
Will be interesting to see how the new Administration in DC handles these type of things when it comes to DOT, airlines and such - interesting times indeed.

Talk about rolling the dice. Who knows what January brings to something like this. Trump is also pro-consumer.
dmorbust wrote:
He makes it clear they will go through with the JV no matter what

Talk about a weak negotiating position. If that's your starting point you already lost.
commavia wrote:
I'm honestly surprised. I think their resistance will ultimately be futile - they may succeed in knocking a few incremental slot pairs off at JFK and/or MEX, but I doubt they'll get the DOT to substantially back off on the divestiture "ask." Plus, while releasing all these prime slots at MEX would obviously clear the way for meaningful new competition, it seems like Aeromexico and Delta would be willing to accept that given all of the apparently-unused slots they currently have.

You are looking at it as if it is no skin off their nose to give away unused slots. In fact, it is doubly bad. They aren't using the slots in order to artificially constrain capacity and drive up fares. They could have operated them with their own aircraft and chose not to, knowing it would reduce profits. Now, not only are they going to be operated, but they are going to be operated by LCCs which not only adds capacity, it adds a lot more capacity, and now fares go down both from capacity dilution and from an LCC fare structure.. So, yes, it is a big deal to them to protect their anti-competitive plan.
ScottB wrote:
I don't really get the choice to fight the divestitures, either, given that there's really no way for DL/AM to take DOT to court with a winnable case. They can't really argue that DOT is being arbitrary or capricious because in the end they don't have an inherent right to form a joint venture with a competitor. And if we assume that the new MEX will open in six to seven years (I agree that the planned opening date seems unrealistic) the slot divestitures just aren't a long-term factor.

If this were just a JV DL wouldn't care as the impact of this is really all on AM, and little on DL depending upon who gets the slots, BUT with DL taking a 49% stake they care a lot as this reduces the value of their investment significantly as control of MEX is AM's largest asset by far.
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 3:43 pm

ScottB wrote:
I don't really get the choice to fight the divestitures, either, given that there's really no way for DL/AM to take DOT to court with a winnable case.


Delta isn't taking DOT to court; DL is challenging the DOT to take Delta/AM to court to block the JV. Maybe it's a bluff, and later DL/AM will agree to the demanded concessions via a consent order. Maybe they think the DOT won't prevail in court. The burden isn't on Delta to prove the deal is pro-consumer - the burden is on DOT to prove it is anti-consumer.
 
commavia
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 4:13 pm

enilria wrote:
You are looking at it as if it is no skin off their nose to give away unused slots. In fact, it is doubly bad. They aren't using the slots in order to artificially constrain capacity and drive up fares. They could have operated them with their own aircraft and chose not to, knowing it would reduce profits. Now, not only are they going to be operated, but they are going to be operated by LCCs which not only adds capacity, it adds a lot more capacity, and now fares go down both from capacity dilution and from an LCC fare structure.. So, yes, it is a big deal to them to protect their anti-competitive plan.


Oh I get that completely. I get that it is, indeed, a double-hit because not only will extra, ostensibly margin-dilutive capacity come into the MEX market, but it will be flown by lower-cost competitors instead of Delta/Aeromexico themselves. That said, though, I still find it surprising that they would truly push it that hard - as I have to think they pretty much knew this was going to be the likely outcome, and were factoring that into the business case for the JV.

MIflyer12 wrote:
Delta isn't taking DOT to court; DL is challenging the DOT to take Delta/AM to court to block the JV. Maybe it's a bluff, and later DL/AM will agree to the demanded concessions via a consent order. Maybe they think the DOT won't prevail in court. The burden isn't on Delta to prove the deal is pro-consumer - the burden is on DOT to prove it is anti-consumer.


Do we know that? Have we actually seen any public statements or press reports indicating that Delta is actually going to push regulators to bring legal action?
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 4:24 pm

MIflyer12 wrote:
ScottB wrote:
I don't really get the choice to fight the divestitures, either, given that there's really no way for DL/AM to take DOT to court with a winnable case.


Delta isn't taking DOT to court; DL is challenging the DOT to take Delta/AM to court to block the JV. Maybe it's a bluff, and later DL/AM will agree to the demanded concessions via a consent order. Maybe they think the DOT won't prevail in court. The burden isn't on Delta to prove the deal is pro-consumer - the burden is on DOT to prove it is anti-consumer.

Does the DOT actually have to take DL/AM to court to block the JV? DL/AM have no automatic right to a JV. Unless you are suggesting that DL/AM will just ignore the authorities and share information/work together without permission (of course at that point the DOT would no longer be suing on the grounds of blocking the JV...).
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 4:42 pm

MIflyer12 wrote:
Delta isn't taking DOT to court; DL is challenging the DOT to take Delta/AM to court to block the JV. Maybe it's a bluff, and later DL/AM will agree to the demanded concessions via a consent order. Maybe they think the DOT won't prevail in court. The burden isn't on Delta to prove the deal is pro-consumer - the burden is on DOT to prove it is anti-consumer.


That's not how it works with antitrust immunity. It is unlawful for DL and AM to cooperate on commercial decisions like pricing, routes, or capacity, full stop. They are not merging, nor are they combining their operations apart from planning what amounts to a virtual joint venture. They must receive a grant of antitrust immunity in order to create their JV; this isn't like a merger/acquisition where no action on the part of the government is tacit approval. You can also see this in the fact that the government is able to impose a limited term (in this case five years) under which DL & AM are permitted to operate the JV; at the end of that term, the government may choose to extend or revoke the grant of ATI.

enilria wrote:
If this were just a JV DL wouldn't care as the impact of this is really all on AM, and little on DL depending upon who gets the slots, BUT with DL taking a 49% stake they care a lot as this reduces the value of their investment significantly as control of MEX is AM's largest asset by far.


If they're valuing their investment in AM based on control of slots of MEX, then the folks in ATL are a lot more foolish than I'm inclined to believe. Maybe they think that the new MEX won't provide a meaningful increase in airfield capacity for a decade or two?
 
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enilria
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 5:23 pm

commavia wrote:
Oh I get that completely. I get that it is, indeed, a double-hit because not only will extra, ostensibly margin-dilutive capacity come into the MEX market, but it will be flown by lower-cost competitors instead of Delta/Aeromexico themselves. That said, though, I still find it surprising that they would truly push it that hard - as I have to think they pretty much knew this was going to be the likely outcome, and were factoring that into the business case for the JV.

I disagree they knew this at the onset. It is pretty rare to require divestiture of foreign assets. I can only think of LHR as being a place where this may have happened before. I don't think they expected it.
ScottB wrote:
If they're valuing their investment in AM based on control of slots of MEX, then the folks in ATL are a lot more foolish than I'm inclined to believe. Maybe they think that the new MEX won't provide a meaningful increase in airfield capacity for a decade or two?

Nail hits head. I think DL entered into the deal with AM fairly sure that AM would continue to control MEX. I don't know how or why they think that, but I give DL a lot of respect for savvy transactions and they wouldn't invest this much without feeling confident about that. Outside control of MEX slots, what else creates any unique value for AM? LCCs would probably wipe them out if not for the slots. It's surprising the Mexican LCCs have not pulled a WestJet and started Europe and other long haul. That's the other unique thing AM has.
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 5:33 pm

enilria wrote:
I disagree they knew this at the onset. It is pretty rare to require divestiture of foreign assets. I can only think of LHR as being a place where this may have happened before. I don't think they expected it.


Given the recent sentiment of competitors and course of regulatory decisions (or in-decisions, as it were) on other ATI/JVs, I don't think this was surprising. Indeed, many of us could have seen MEX slot divestitures coming as a highly plausible, if not probable, outcome - particularly given how notoriously constrained the airport is and, especially, the given the revelation that MEX was hoarding and not using slots. To be quite honest, if Aeromexico is truly hoarding and not using the MEX slots that the DOT says they are, then I can't see how they and Delta possible thought they wouldn't have to divest some MEX slots.

enilria wrote:
Outside control of MEX slots, what else creates any unique value for AM? LCCs would probably wipe them out if not for the slots.


I think that's a gross oversimplification. Aeromexico is the largest network airline in one of the world's largest economies, which happens to have a massive trading relationship with the U.S. Aeromexico has a lot more value beyond just slots at MEX.
 
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LAX772LR
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Nov 16, 2016 5:33 pm

MIflyer12 wrote:
Delta isn't taking DOT to court; DL is challenging the DOT to take Delta/AM to court to block the JV. Maybe it's a bluff, and later DL/AM will agree to the demanded concessions via a consent order. Maybe they think the DOT won't prevail in court. The burden isn't on Delta to prove the deal is pro-consumer - the burden is on DOT to prove it is anti-consumer.

You're confusing the DOT with the DOJ.

The DOT has no legal burden whatsoever to prove anything, in court or otherwise; the decision rests solely within their authority.


Polot wrote:
Does the DOT actually have to take DL/AM to court to block the JV?

Nope, they do not.
I myself, suspect a more prosaic motive... ~Thranduil
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 19, 2016 3:52 pm

 
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enilria
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 19, 2016 4:26 pm

dmorbust wrote:

Despite their protests, it seems unlikely they would walk away. I think a concern is probably that DOT could ask for more slots in 5 years, but I think that's fair if DL/AM have taken control of the market in that timeframe.
 
msycajun
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 19, 2016 4:30 pm

Looks like Delta brings up several reasonable points, especially regarding EWR not being considered as part of the NYC market in the DOT's analysis. I was surprised initially to see how many slots the DOT was asking DL/AM to divest. I think they could reduce the number by half and still provide a reasonable level of competition.

I think a big question is how MEX slots will be handled. While other carriers complain the slot process has not been exactly fair or transparent, the DOT needs to make sure that enough well times slots are made available to new or smaller entrants. Probably another part of it is the DOT wanting to make sure that US LCC's are able to get decent slots in addition to their Mexican counterparts.
 
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Mon Nov 21, 2016 7:08 pm

ScottB wrote:
Except that the decision isn't necessarily a shoo-in for WN, as evidenced by the proceedings for the Cuba route authorities. I'd be shocked if the eligible Mexican LCCs don't apply for divested slots, and I also expect that B6, F9, AS, and NK at a minimum would apply, too. The Mexican LCCs might even have a bit of an edge if they're willing to extend service to cities which currently lack non-stop service to MEX; i.e. Y4 applying for a slot for FAT-MEX or AUS-MEX would probably beat out another carrier applying for LAX-MEX and they have a hub at MEX to help fill the flight with connections.


I'm not sure Y4 would extend MEX service to borderline markets like FAT and AUS as the traffic would have to mostly be O&D to make it work. Y4 has a much larger hub in GDL than MEX, and while there are a few connecting markets out of MEX that don't exist out of GDL, I don't know if those cities would add very many passengers. AM has a substantially larger hub in D.F., and quite a few more connections into Central and South America (both on their own metal and SkyTeam partners). Ironically, Y4's two Central American destinations, GUA and SJO, are both served out of GDL, not MEX. If Y4 were to build up MEX and add service to more destinations, especially large immigrant cities like MLM and BJX, and large population centers like GUA, SJO, SAL, and PTY (and perhaps vacation destinations like BZE, LIR, and CZM), quite a few more US cities would make sense. But for now, outside of holiday periods, it might not make sense for them to do that unless they already have plans to grow MEX and want to secure the slots early.
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 26, 2016 12:30 pm

Somehow I get the feeling airlines are losing sight of fact that ATI JV are not a given commercial right, but something that must be earned and often in return for concessions.

As DOT just reminded AA/QF, there always is the inherent possibility of denial of an application, and the decision in any proceeding very well might go against commercial interest of applicants.

So at the end of the day, AM/DL are free to pull their application if they feel the concessions are too high. No one is forcing either party to proceed.
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 26, 2016 1:54 pm

LAXintl wrote:
Somehow I get the feeling airlines are losing sight of fact that ATI JV are not a given commercial right, but something that must be earned and often in return for concessions.

As DOT just reminded AA/QF, there always is the inherent possibility of denial of an application, and the decision in any proceeding very well might go against commercial interest of applicants.

So at the end of the day, AM/DL are free to pull their application if they feel the concessions are too high. No one is forcing either party to proceed.

More importantly, the JV must prove benefit to the flying public, not their own bottom line.
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sat Nov 26, 2016 3:38 pm

LAXintl wrote:
Somehow I get the feeling airlines are losing sight of fact that ATI JV are not a given commercial right, but something that must be earned and often in return for concessions.

As DOT just reminded AA/QF, there always is the inherent possibility of denial of an application, and the decision in any proceeding very well might go against commercial interest of applicants.

So at the end of the day, AM/DL are free to pull their application if they feel the concessions are too high. No one is forcing either party to proceed.


I understand what you are saying. But consider the fact that the DOT acknowledges that there would be public benefit, that there is enough competition in the US-Mexico market (Aeromexico and Delta are currently #3 and #4 in the market and if combined would only be a little larger than American or United, with plenty of other competitors), and that only the JFK-MEX route is of concern as well as slot procedures at MEX airport. Given that AM+DL have already agreed to give up 8 daily MEX slot pairs (representing the entirety of DL's slot holdings at MEX), MEX airport authority has agreed to institute IATA slot allocation procedures by mid-2017, and that this is the first time the DOT ever considers the JFK market as distinct from Newark in the NYC market, I would say that approving this deal is in the best interest of competition because we would at the very least immediately get 8 new competitive routes. Killing this deal means no new competitive routes. I bet if DL and AM walk away from this deal then all the other low cost carriers clamoring for these slots (e.g. Southwest, Jetblue, Volaris) would come back and say they actually support the deal as originally approved by the COFECE. I am very interested to see how the DOT ultimately rules because I believe DL/AM made some very compelling points.
 
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mercure1
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sun Nov 27, 2016 1:16 am

Delta arguments defy logic when one remembers Aeromexico today does not fully utilize its slot holdings at MEX.

As came out during the process AM is sitting on huge slot holdings and utilizes under 80 percent of them due to day of week and seasonal scheduling practices.

AM could lose every slot the DOT is proposing and still operate its full schedule by merely actually utilizing the slots in its portfolio.
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dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sun Nov 27, 2016 8:30 am

mercure1 wrote:
Delta arguments defy logic when one remembers Aeromexico today does not fully utilize its slot holdings at MEX.

As came out during the process AM is sitting on huge slot holdings and utilizes under 80 percent of them due to day of week and seasonal scheduling practices.

AM could lose every slot the DOT is proposing and still operate its full schedule by merely actually utilizing the slots in its portfolio.


Have you read DL's response, especially pages 12 through 16: http://news.delta.com/sites/default/fil ... 0Order.pdf ?
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sun Nov 27, 2016 9:22 am

dmorbust wrote:
Have you read DL's response, especially pages 12 through 16: http://news.delta.com/sites/default/fil ... 0Order.pdf ?


Don't fall for Delta's law firms very carefully crafted wording.

There is no doubt AM sits on MEX slots the same manner UA sat in EWR slots which the DOT decided to blow a hole in.

AM very well might be fully compliant by the rules by operating slots at 85% rate, the same manner UA was compliant in EWR. But this is hardly the spirit 80/20 or 85/15 usage rules where meant when established..

What it all means at the end is that out of 100 slots, 15 can go unused in a given day which denies access to competitors which might be trying to operate at non middle of the night timings .
From the desert to the sea, to all of Southern California
 
jbs2886
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Sun Nov 27, 2016 9:32 pm

LAXintl wrote:
dmorbust wrote:
Have you read DL's response, especially pages 12 through 16: http://news.delta.com/sites/default/fil ... 0Order.pdf ?


Don't fall for Delta's law firms very carefully crafted wording.

There is no doubt AM sits on MEX slots the same manner UA sat in EWR slots which the DOT decided to blow a hole in.

AM very well might be fully compliant by the rules by operating slots at 85% rate, the same manner UA was compliant in EWR. But this is hardly the spirit 80/20 or 85/15 usage rules where meant when established..

What it all means at the end is that out of 100 slots, 15 can go unused in a given day which denies access to competitors which might be trying to operate at non middle of the night timings .


Delta does not have a law firm engaged based on the first page. AM has Hogan, but not Delta.
 
dmorbust
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu Dec 15, 2016 12:06 am

DOT has made their final decision, upholding their intitial approval with a few key tweaks:

"We note the position of AICM and the DGAC, but the Department must make a decision in this
case now, using the evidence at hand. Based on that evidence, we are here finalizing our
determination in the Show Cause Order that a grant of ATI cannot be justified without stringent
conditions to ensure that public benefits are realized. We will, however, modify our tentative
decision in that we will require ten MEX slot-pairs and two JFK slot-pairs to be subject to
exhaustion of efforts by the receiving carriers. We will also reduce the number of required
divestitures at JFK from six to four. We are finalizing all other conditions and remedies
proposed in the Show Cause Order."

https://www.regulations.gov/document?D= ... -0070-0096
 
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LAXintl
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Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu Dec 15, 2016 2:10 am

dmorbust wrote:
DOT has made their final decision, upholding their intitial approval with a few key tweaks:


I am not sure where you got that quote, but DOT is sticking with its 24 MEX slots and 4 up to 4 JFK pairs.

We determine that the Joint Applicants shall divest up to 24 slot-pairs at Mexico City’s Benito Juarez International Airport (MEX) and up to four (4) slot-pairs at New York’s John F. Kennedy International Airport (JFK), subject to the processes, terms, and conditions set forth in Appendix A to this Final Order;

The remedy slot divestiture is built in 2 phases
Phase 1- 14 MEX and 2 JFK
Phase 2- 10 MEX and 2 JFK
Phase 1 goes into immediate effect, and Phase-2 goes into effect by IATA Summer 2018 season (late March 2018), should desirous airlines not be able to obtain their own commercially viable slots at MEX. Basically DOT is creating clever mechanism whereby airlines would apply themselves for new slots at MEX since both AM/DL and Mexican slot administrators state slots are available at MEX, and based on the outcome of such request the DOT would activate Phase 2 of remedy slot divestitures.

DOT also stuck to only granting the JV for 5-year period.

The approval and grant of antitrust immunity shall expire five (5) years from the date upon which the Joint Applicants submit the notice described in Ordering Paragraph 2;

Airlines have 7-days to accept DOT terms including all remedies and conditions.

DOT has set 6 step timeline:

1. Joint Applicants indicate their acceptance or rejection of the terms and conditions – within 7 business days of the issuance of this Final Order
2. DOT issues an instituting notice requesting proposals for remedy slots.
3. DOT selects eligible carriers to receive remedy slots in show-cause and final orders.
4. The Joint Applicants and carriers receiving Phase 1 slots negotiate slot transfer agreements and the Joint Applicants seek prior approval of the agreements prior to execution.
5. The Joint Applicants submit a notice on the record indicating the date the execution of the Phase 1 slot transfer agreements are complete and approved by the slot coordinators, and the date that the Joint Applicants will implement the JV. The antitrust immunity is effective from the date of the notice.
6. The Joint Applicants prepare for a potential transfer of Phase 2 slots.

=
From the desert to the sea, to all of Southern California
 
dmorbust
Posts: 116
Joined: Thu Feb 21, 2013 11:50 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu Dec 15, 2016 4:45 am

LAXintl wrote:
dmorbust wrote:
DOT has made their final decision, upholding their intitial approval with a few key tweaks:


I am not sure where you got that quote, but DOT is sticking with its 24 MEX slots and 4 up to 4 JFK pairs.

We determine that the Joint Applicants shall divest up to 24 slot-pairs at Mexico City’s Benito Juarez International Airport (MEX) and up to four (4) slot-pairs at New York’s John F. Kennedy International Airport (JFK), subject to the processes, terms, and conditions set forth in Appendix A to this Final Order;

The remedy slot divestiture is built in 2 phases
Phase 1- 14 MEX and 2 JFK
Phase 2- 10 MEX and 2 JFK
Phase 1 goes into immediate effect, and Phase-2 goes into effect by IATA Summer 2018 season (late March 2018), should desirous airlines not be able to obtain their own commercially viable slots at MEX. Basically DOT is creating clever mechanism whereby airlines would apply themselves for new slots at MEX since both AM/DL and Mexican slot administrators state slots are available at MEX, and based on the outcome of such request the DOT would activate Phase 2 of remedy slot divestitures.

DOT also stuck to only granting the JV for 5-year period.

The approval and grant of antitrust immunity shall expire five (5) years from the date upon which the Joint Applicants submit the notice described in Ordering Paragraph 2;

Airlines have 7-days to accept DOT terms including all remedies and conditions.

DOT has set 6 step timeline:

1. Joint Applicants indicate their acceptance or rejection of the terms and conditions – within 7 business days of the issuance of this Final Order
2. DOT issues an instituting notice requesting proposals for remedy slots.
3. DOT selects eligible carriers to receive remedy slots in show-cause and final orders.
4. The Joint Applicants and carriers receiving Phase 1 slots negotiate slot transfer agreements and the Joint Applicants seek prior approval of the agreements prior to execution.
5. The Joint Applicants submit a notice on the record indicating the date the execution of the Phase 1 slot transfer agreements are complete and approved by the slot coordinators, and the date that the Joint Applicants will implement the JV. The antitrust immunity is effective from the date of the notice.
6. The Joint Applicants prepare for a potential transfer of Phase 2 slots.

=


I got that quote from the Final Order link I posted, specifically from the middle of page 3.
 
jbs2886
Posts: 2112
Joined: Wed Apr 01, 2015 9:07 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu Dec 15, 2016 6:57 am

dmorbust wrote:
LAXintl wrote:
dmorbust wrote:
DOT has made their final decision, upholding their intitial approval with a few key tweaks:


I am not sure where you got that quote, but DOT is sticking with its 24 MEX slots and 4 up to 4 JFK pairs.

We determine that the Joint Applicants shall divest up to 24 slot-pairs at Mexico City’s Benito Juarez International Airport (MEX) and up to four (4) slot-pairs at New York’s John F. Kennedy International Airport (JFK), subject to the processes, terms, and conditions set forth in Appendix A to this Final Order;

The remedy slot divestiture is built in 2 phases
Phase 1- 14 MEX and 2 JFK
Phase 2- 10 MEX and 2 JFK
Phase 1 goes into immediate effect, and Phase-2 goes into effect by IATA Summer 2018 season (late March 2018), should desirous airlines not be able to obtain their own commercially viable slots at MEX. Basically DOT is creating clever mechanism whereby airlines would apply themselves for new slots at MEX since both AM/DL and Mexican slot administrators state slots are available at MEX, and based on the outcome of such request the DOT would activate Phase 2 of remedy slot divestitures.

DOT also stuck to only granting the JV for 5-year period.

The approval and grant of antitrust immunity shall expire five (5) years from the date upon which the Joint Applicants submit the notice described in Ordering Paragraph 2;

Airlines have 7-days to accept DOT terms including all remedies and conditions.

DOT has set 6 step timeline:

1. Joint Applicants indicate their acceptance or rejection of the terms and conditions – within 7 business days of the issuance of this Final Order
2. DOT issues an instituting notice requesting proposals for remedy slots.
3. DOT selects eligible carriers to receive remedy slots in show-cause and final orders.
4. The Joint Applicants and carriers receiving Phase 1 slots negotiate slot transfer agreements and the Joint Applicants seek prior approval of the agreements prior to execution.
5. The Joint Applicants submit a notice on the record indicating the date the execution of the Phase 1 slot transfer agreements are complete and approved by the slot coordinators, and the date that the Joint Applicants will implement the JV. The antitrust immunity is effective from the date of the notice.
6. The Joint Applicants prepare for a potential transfer of Phase 2 slots.

=


I got that quote from the Final Order link I posted, specifically from the middle of page 3.


It's confusing, but dmorbust is correct, the Show Cause Order was amended in this Final Order.
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu Dec 15, 2016 7:24 am

Pretty clear that they don't want to approve this ATI but if DL goes through with it then we will have an idea of just how valuable these arrangements are. Personally I would be surprised if they accept the MEX divestitures. B6, WN, and AS would be elated if they did I bet.

tortugamon
 
mikesbucky
Posts: 51
Joined: Sat Sep 22, 2007 7:17 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu Dec 15, 2016 7:00 pm

I agree. This basically makes the JV more trouble than its worth. Perhaps that's the DOT's new MO. Approve the JV, but demand so many concessions to nullify the benefit. That way they can say, it was the airlines that backed out and DOT doesn't come across as the bad guy. Can DL/AM reapply when the new administration takes office or are they prejudiced if they turn it down?
 
User avatar
mercure1
Posts: 4359
Joined: Sun Jul 13, 2008 5:13 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu Dec 15, 2016 11:07 pm

.
DOT holds to Delta-Aeromexico JV conditions
http://atwonline.com/regulation/dot-hol ... conditions

The US Department of Transportation (DOT) has granted final approval to the proposed Delta Air Lines-Aeromexico transborder joint venture (JV), but is continuing to demand divestitures that the airlines have said are objectionable.

DOT was not persuaded by Atlanta-based Delta and Mexico City-based Aeromexico that the required divestitures—which include 24 slot pairs for Mexico-US services at Mexico City International Airport (MEX) and six slot pairs for US-Mexico services at New York JFK International Airport.

Delta CEO Ed Bastian, speaking to investors Dec. 15, declined to comment on what Delta will do. “We’re still looking at [DOT’s final order] and going through the details,” he said. But Bastian added that Delta is “committed to Aeromexico,” in which it owns a minority stake that Delta has said could rise to as much as 49% once the JV is cleared.
mercure f-wtcc
 
User avatar
N717TW
Posts: 521
Joined: Sun Feb 14, 2016 9:24 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 1:39 pm

Color me shocked....DL is going to accept the the DOTs restrictions. I would have sworn they were going to make a lot of noise and wait for the new administration, although it would probably take over a year to get the new Trump appointees in place and even then no guarantee they would chance the decision.

DL announcement
http://news.delta.com/delta-and-aeromex ... artnership
 
keitherson
Posts: 240
Joined: Wed Sep 03, 2014 3:00 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 1:49 pm

For the love of god maybe now AM will move their operations to the DL terminals at LAX and JFK... always such a mess to connect.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 1:54 pm

N717TW wrote:
Color me shocked....DL is going to accept the the DOTs restrictions. I would have sworn they were going to make a lot of noise and wait for the new administration, although it would probably take over a year to get the new Trump appointees in place and even then no guarantee they would chance the decision.


I'm not surprised at all. Given the competitive landscape at MEX that the DOT laid out, it seemed hard for Delta and Aeromexico to really argue successfully against what they were being asked to relinquish, and I'm not even sure that a new administration would have come to a conclusion materially more advantageous to Delta. In the end, the value of a JV with Aeromexico is worth way more than a few slots at MEX and JFK, particularly since - as the DOT states it - Aeromexico is already sitting on plenty of unused MEX slots as it is.
 
n515cr
Posts: 1611
Joined: Wed Oct 03, 2007 1:49 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 3:13 pm

keitherson wrote:
For the love of god maybe now AM will move their operations to the DL terminals at LAX and JFK... always such a mess to connect.


DL is moving to LAX T2/T3 in 2017, so that will take care of one messy connection.
 
jetlanta
Posts: 1633
Joined: Thu Jul 12, 2001 2:35 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 3:16 pm

commavia wrote:
N717TW wrote:
Color me shocked....DL is going to accept the the DOTs restrictions. I would have sworn they were going to make a lot of noise and wait for the new administration, although it would probably take over a year to get the new Trump appointees in place and even then no guarantee they would chance the decision.


I'm not surprised at all. Given the competitive landscape at MEX that the DOT laid out, it seemed hard for Delta and Aeromexico to really argue successfully against what they were being asked to relinquish, and I'm not even sure that a new administration would have come to a conclusion materially more advantageous to Delta. In the end, the value of a JV with Aeromexico is worth way more than a few slots at MEX and JFK, particularly since - as the DOT states it - Aeromexico is already sitting on plenty of unused MEX slots as it is.


And the new MEX airport opens in 2020. It shouldn't even have slots.
 
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LAXintl
Topic Author
Posts: 23634
Joined: Wed May 24, 2000 12:12 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 3:24 pm

AM and DL are out with their formal response to the DOT.

They applaud the DOT for its efforts and appreciate the department recognizing the substantial consumer benefits the ATI JV would provide.

While the applicants believe the slot divestiture and 5-year expiry date on the ATI are unprecedented conditions they accept the DOT conditions as set forth.

OST-2015-0070

=

Rather untypical and pragmatic view taken by AM/DL. Congrats to the airlines.

Now lets look forward to DOT launching a MEX slot award case.
From the desert to the sea, to all of Southern California
 
SFOtoORD
Posts: 1082
Joined: Tue Jul 03, 2007 2:26 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 3:33 pm

Wow, that's a surprise. They must have done some checking and decided pursuing the terms from the current administration were as good or better than they'd get from the new one.
 
EddieDude
Posts: 6969
Joined: Fri Nov 14, 2003 10:19 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 4:49 pm

keitherson wrote:
For the love of god maybe now AM will move their operations to the DL terminals at LAX and JFK... always such a mess to connect.

I heard some time ago from a good source that AM would eventually move from JFK T1 to T4 so as to be in the same terminal with DL. Dunno what has taken so long. As someone said, DL and AM will share a terminal at LAX soon.

commavia wrote:
Aeromexico is already sitting on plenty of unused MEX slots as it is.

If that is the case as so many people have indicated, satisfying these conditions should not be too complicated. I could also see AM maybe switching some 738MAX orders to the -9 model and maybe converting some 738MAX orders to Dreamliners so as to consolidate flights and be in a position to use less slots at MEX. For example, instead of DL and AM offering 13+28 weekly frequencies between MEX-JFK using 752s (DL), and 738s and 788s, maybe they could offer only 35 weekly AM-operated flights using more 788s and less 738s.

LAXintl wrote:
pragmatic view taken by AM/DL. Congrats to the airlines.

Congrats indeed! I suppose the tender offer the purpose of which is to take DL to the 49% equity ownership threshold can now proceed. I look forward to a closer integration of their elite pax benefits.
Upcoming flights:
May: AM MEX-CUN 73H (Y), AM CUN-MEX 73W (Y).
August: KL MEX-AMS 74M (J), KQ AMS-NBO 788 (J).
 
FSDan
Posts: 2485
Joined: Mon Jan 03, 2011 5:27 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 6:00 pm

EddieDude wrote:
keitherson wrote:
For the love of god maybe now AM will move their operations to the DL terminals at LAX and JFK... always such a mess to connect.

I heard some time ago from a good source that AM would eventually move from JFK T1 to T4 so as to be in the same terminal with DL. Dunno what has taken so long. As someone said, DL and AM will share a terminal at LAX soon.


It seems to me that gate space is the issue at JFK (at least during the afternoon/evening). Once T4A is extended it would be a lot more feasible to accomodate AM in T4.
This is my signature until I think of a better one.
 
EddieDude
Posts: 6969
Joined: Fri Nov 14, 2003 10:19 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 7:40 pm

FSDan wrote:
It seems to me that gate space is the issue at JFK (at least during the afternoon/evening). Once T4A is extended it would be a lot more feasible to accomodate AM in T4.

Thanks for that FSDan, I don't doubt it. Believe it or not, I have never been to the new DL facilities in T4. Last time I used that terminal, MX was still around haha. I always fly AM into and out of JFK in order to get on the Dreamliner haha.
Upcoming flights:
May: AM MEX-CUN 73H (Y), AM CUN-MEX 73W (Y).
August: KL MEX-AMS 74M (J), KQ AMS-NBO 788 (J).
 
tortugamon
Posts: 6795
Joined: Tue Apr 09, 2013 11:14 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 7:51 pm

These JVs must be super valuable to agree to give up as much as they did.

Who do we think will get them: Volaris, Interjet, JetBlue, and Southwest seem like the most likely. AS probably as well.

tortugamon
 
superjeff
Posts: 1242
Joined: Fri Feb 05, 2010 2:14 am

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Wed Dec 21, 2016 8:26 pm

AADFWFlyer wrote:
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.



:checkmark: Absolutely correct. Southwest has had pretty much everything they wanted for a long time now;
 
carljanderson
Posts: 145
Joined: Sun Apr 12, 2015 5:29 pm

Re: DOT Proposes remedies for Aeromexico - Delta ATI JV

Thu May 24, 2018 3:22 pm

Phase 2 tentative order came out yesterday -

"Of the 20 Phase Two slots that were subject to divestiture at Mexico City’s Benito Juarez International Airport (MEX) (10 pairs), and of the four slots at New York’s John F. Kennedy International Airport (JFK) (2 pairs), this Order proposes to direct the Joint Applicants to divest fewer than two less-than-daily slots at MEX and only one daily slot at JFK."

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