Delta, Aeromexico ask court to block Trump order forcing end to JV

By David Shepardson WASHINGTON (Reuters) -Delta Air Lines and Aeromexico asked a U.S. appeals court on Friday to halt a Trump administration order forcing it to unwind a joint venture that lets the carriers coordinate scheduling, pricing and capacity for U.S.–Mexico flights. Aeromexico told the 11th Circuit Court of Appeals it would face substantial costs that it could not recover even if a court later upheld the arrangement. In September, the U.S. Department of Transportation ordered an end to the nearly nine-year-old joint venture by January 1, as part of several actions aimed at Mexican aviation, citing competition concerns. Delta said it would also face losses without a court order delaying the requirement pending a ruling. The airline said its flight operations "will face severe disruptions" calling the USDOT action "textbook arbitrary and capricious" and unrealistic, relying on "unsubstantiated, irrelevant and speculative reasoning." The Atlanta-based carrier has already canceled two U.S. flights to Mexico as a result and "may need to cancel additional trans-border flights for next summer." Delta also argued that USDOT held its joint venture to a stricter standard than other joint ventures including United Airlines and ANA USDOT, which on Friday rejected the airlines request to delay the order, did not comment. Aeromexico said the order requires it to "divert existing and hire new staff, establish a new brand presence in the U.S., separate its information technology platforms for U.S. pricing and sales from Delta's." In August, USDOT said the joint venture needs to end because of "ongoing anticompetitive effects in U.S.-Mexico City markets that provide an unfair advantage to Delta and Aeromexico." The carriers account for about 60% of passenger flights from Mexico City Airport to the U.S. The airport is the fourth-largest international gateway to and from the United States. Aeromexico and Delta said they hold a 20% seat share in the U.S.-Mexico market, compared with 21% for American Airlines, arguing that shows there is a very competitive market. USDOT, which is not requiring Delta to sell its 20% equity stake in Aeromexico, has said likely problems from the venture include higher fares in some markets, reduced capacity and challenges for U.S. carriers due to government intervention. Delta argues that up to $800 million in annual consumer benefits could evaporate, two dozen routes could be canceled and smaller aircraft could replace existing planes if the joint venture goes away. (Reporting by David Shepardson; Editing by Richard Chang and Sam Holmes)

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