US threatens Mexican flights over cargo, competition issues

The Trump administration said on Saturday it will take action against Mexico after the Mexican government cut flight slots and forced cargo carriers to relocate operations in Mexico City, affecting U.S. airlines.

U.S. Transportation Secretary Sean Duffy said in a statement the department could disapprove flight requests from Mexico if the government fails to address U.S. concerns over decisions made in 2022 and 2023. 

The Department of Transportation is also proposing to withdraw antitrust immunity from Delta Air Lines' joint venture with Aeromexico to address competitive issues.

Mexico is the most popular international destination for U.S. airline travelers.

Delta said if the DOT withdraws approval, it "would cause significant harm to consumers traveling between the U.S. and Mexico, as well as U.S. jobs, communities, and transborder competition."

Aeromexico said it was preparing a joint response to the order, which it plans to issue in the coming days.

MEXICO CITY SHAKE-UP

The DOT alleges Mexico has violated a bilateral air agreement by slashing slots for passenger flights and forcing all-cargo carriers to relocate operations. 

Then-President Andres Manuel Lopez Obrador defended the decisions, arguing that the capital's main airport was too crowded and that the new, farther-away Felipe Angeles International Airport (AIFA) could handle the extra traffic.

Officials are rushing to renovate the aging Benito Juarez International Airport (MEX) ahead of next year's World Cup, for which Mexico is a host country.

"By restricting slots and mandating that all-cargo operations move out of MEX, Mexico has broken its promise, disrupted the market, and left American businesses holding the bag for millions in increased costs," the DOT said.

The AIFA is already at full capacity for cargo handling and needs to be expanded. For passenger flights, it lags far behind MEX as transportation to and from the city remains spotty.

"The move not only disrupted critical air cargo operations and set a dangerous precedent for how all-cargo carriers may be treated in global markets, it also created uncertainty about how potential safety emergencies could be handled," said the Cargo Airline Association, which represents major U.S cargo carriers.

Mexico's Transportation Ministry did not immediately respond to a request for comment.

THE MEASURES

The DOT issued orders requiring Mexican airlines to file schedules with the department for all their U.S. operations by a late-July deadline while requiring prior U.S. approval for large charter flights to or from the United States.

Airlines set to be affected by the measures, including Volaris and Viva Aerobus, did not immediately respond to requests for comment.

If the U.S. rescinds antitrust approval for Delta and Aeromexico, they would be required to end their cooperation on pricing, capacity, and revenue sharing. Delta would be able to retain its equity stake in Aeromexico and continue other aspects of its partnership. 

The DOT also said it could take action against European countries over limitations at airports. 

(Reporting by David Shepardson in Washington and Kylie Madry in Mexico City; editing by Diane Craft and Rod Nickel)