Delta Air Lines and Canadian WestJet said Friday night they had scrapped a proposed U.S.-Canada joint venture after the U.S. government demanded changes that airlines insisted they were “unreasonable and unacceptable”.
The US Department of Transportation last month, as part of its interim antitrust immunity approval, said it would require carriers to remove WestJet-affiliated low-cost carrier Swoop from the alliance , and cede 16 take-off and landing slots to LaGuardia in New York. Airport.
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The airlines said in a filing that the US demands were “arbitrary and capricious”, especially the slot transfers. They argued that the alliance “would optimize the use of planes, improve schedules and reduce costs”.
The airlines said in a joint statement that they remained committed to developing a joint venture “but in the meantime they will explore deepening the alliance.”
The US Department of Transportation did not comment immediately on Friday.
The Delta-WestJet joint venture has reportedly held a combined 27% share of scheduled air carriers’ cross-border capacity, while the dominant carrier, Air Canada, holds 45%.
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WestJet is owned by private equity firm Onex Corp.
Canada, with 38 million inhabitants, is the second largest international passenger air market in the United States after Mexico, with flights from Toronto accounting for more than 50% of cross-border air travel demand.
The capacity for cross-border flights between the United States and Canada has increased by 15% in the past five years to reach 39 million seats per year, but passenger traffic has fallen sharply in the face of the coronavirus pandemic.
The airlines’ request had been pending with US authorities for more than two years. The Canadian Competition Bureau conducted its own review and granted an unconditional letter of non-intervention in June 2019.
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U.S. airlines had urged the divestiture of slots at LaGuardia, noting that American Airlines, Delta and United Air Lines controlled 83% of all slots, with Delta controlling 45% of flights.
WestJet and Delta have said the loss of slots would deprive them of “critical operating rights to one of the most important strategic hubs in Delta’s global network at a time when Delta is investing billions of dollars of its own capital in a global project to improve the facilities at this airport. “
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They would be forced, the airlines added, “to sell these strategic corporate assets during a global pandemic that has inflicted an unprecedented crisis on the industry, virtually guaranteeing that they would be sold at an incendiary selling price.”
(Reporting by David Shepardson; Editing by Lincoln Feast and Jacqueline Wong)