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Delta Air Lines and Canada’s WestJet said late Friday that they scrapped a proposed US-Canada joint venture after the US government called for changes that the airlines insisted were “unreasonable and unacceptable.”
Last month, the U.S. Department of Transportation, as part of its provisional antitrust immunity approval, said it would require carriers to remove Swoop, a very low-cost affiliated carrier of WestJet, from the alliance, and to release 16 takeoff and landing slots at New York’s LaGuardia Airport.
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The airlines said in a statement that the US requests were “arbitrary and capricious”, particularly slot disposals. They argued that the alliance would “optimize aircraft utilization, improve programs and reduce costs.”
The airlines said in a joint statement that they remain committed to developing a joint venture “but in the meantime they will explore the deepening of the alliance.”
The US Department of Transportation did not immediately comment on Friday.
The Delta-WestJet joint venture would have a combined 27% stake in the airliner’s 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 people, is the second largest international passenger air market in the United States after Mexico, with flights to Toronto accounting for more than 50% of the demand for cross-border air travel.
US-Canada cross-border flight capacity has grown 15% over the past five years to 39 million seats per year, but passenger traffic has plummeted in the face of the coronavirus pandemic.
The airline application had been pending with US officials for more than two years. The Canadian Competition Bureau conducted its own review and granted an unconditional “no action” letter in June 2019.
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US air carriers had urged the divestiture of slots to LaGuardia, noting that American Airlines, Delta and United Air Lines control 83% of all slots, with Delta controlling 45% of flights.
WestJet and Delta said the loss of slots would deprive them of “critical operating rights in one of the most important strategic hubs of Delta’s global network at a time when Delta is investing billions of dollars of its own capital in a comprehensive improvement project facilities at this airport. “
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| FROM | DELTA AIR LINES INC. | 37.13 | -0.78 | -2.06% |
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They would be forced, the airlines added, “to sell these strategic corporate assets during a global pandemic that inflicted an unprecedented crisis on this industry, virtually guaranteeing that they would be sold at a clearance price.”
(Reporting by David Shepardson; Editing by Lincoln Feast and Jacqueline Wong)
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