Delta wants Aeromexico to be ‘second-tier’ transatlantic JV member

Delta Air Lines is exploring making Aeromexico a “second-tier” member of the Delta-Air France-KLM-Alitalia transatlantic joint venture (JV), according to Delta CEO Ed Bastian.

Atlanta-based Delta and Aeromexico launched an antitrust-immunized transborder JV in May 2017. Delta owns 36.2% of Aeromexico. Delta is also part of two antitrust-immunized transatlantic JVs: one with Air France-KLM and Alitalia and another with Virgin Atlantic (Delta owns 49% of Virgin Atlantic). Delta is seeking to form a new Delta-Air France-KLM-Virgin Atlantic JV following a 10% stake purchase in Air France-KLM.

The transborder and transatlantic JVs create the odd circumstance of Aeromexico—which is in full partnership with Delta on US-Mexico flying—competing against Delta’s transatlantic partners on Mexico-Europe flying.

“We have an opportunity now that we’re in an ownership position at Aeromexico for them to take advantage of the transatlantic JV flows that exist today,” Bastian told reporters last week during a question-and-answer session at Delta’s headquarters. “Right now they compete against the European partners.”

Bastian said Delta is “looking at a way to bring” Aeromexico into a “second-tier membership” in the Delta-Air France-KLM-Alitalia transatlantic JV. “We’re working with our European partners as well as Aeromexico to try to figure out a way to do that,” he said. “We do see some nice growth opportunities between Mexico and Europe.”

Bastian called the Delta-Aeromexico JV “a great success” so far. “We’re growing our traffic into Mexico at a double-digit clip and Aeromexico is growing their traffic into the US at a double-digit clip,” he said, adding that the Delta-Aeromexico JV is expected to continue to grow “in a significant way.”