Delta and WestJet drop planned joint venture after US demands

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© Reuters. FILE PHOTO: A WestJet Boeing 737 aircraft lands at Vancouver International Airport in Richmond,

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By David Shepardson

WASHINGTON (Reuters) – Delta Air Lines (N 🙂 and Canadian WestJet said Friday night they had scrapped a proposed U.S.-Canada joint venture after the U.S. government demanded changes from airlines insisted that they were “unreasonable and unacceptable”.

Last month, the US Department of Transportation, as part of its interim antitrust immunity approval, said it would require carriers to remove Swoop, a WestJet-affiliated low-cost carrier, from the alliance , and cede 16 take-off and landing slots to LaGuardia in New York. Airport.

The airlines said in a filing that the US requests 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 immediately comment on Friday.

The Delta-WestJet joint venture would have held a combined 27% share of scheduled air carriers’ cross-border capacity, while the dominant carrier, Air Canada (TO :), at 45%.

WestJet is owned by private equity firm Onex Corp (TO :).

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 the demand for transborder air travel.

Cross-border flight capacity between the United States and Canada has increased 15% over the past five years to 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.

U.S. airlines had urged the divestiture of slots at LaGuardia, noting that American Airlines (O :), Delta and United Air Lines (O 🙂 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 centers in Delta’s global network at a time when Delta is

invest billions of dollars of its own capital in a comprehensive project to improve the facilities at this airport. “

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

ensure that they would be sold at a fire sale price. “

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