By David Shepardson
WASHINGTON (Reuters) -Delta Air Lines and Aeromexico sued the U.S. government challenging an order that they unwind a joint venture by January 1 that lets the carriers coordinate scheduling, pricing and capacity decisions for U.S.–Mexico flights.
On Thursday the companies filed a legal challenge in the 11th Circuit Court of Appeals to the U.S. Transportation Department decision issued on Sept. 15. The petition was made public Friday.
The Transportation Department ordered an end to the nearly nine-year-old joint venture as part of a number of actions aimed at Mexican aviation, citing competition concerns.
Delta said in a statement Friday the petition “is our only option at this point in time and procedurally the next step in the process to protect Delta’s and Aeromexico’s business interests, global networks, and customers.”
The Atlanta-based U.S. airline said that following the order to unwind the venture by January 1 “would be operationally and financially burdensome.” The companies plan to ask the appeals court for a stay to prevent enforcement of the Jan. 1 deadline pending the outcome of the court’s review.
The Transportation Department did not immediately comment.
Last month, USDOT said the end of the joint venture “is necessary because of ongoing anticompetitive effects in U.S.-Mexico City markets that provide an unfair advantage to Delta and Aeromexico.”
The carriers account for about 60% of passenger flights from Mexico City Airport to the U.S. The airport is the fourth-largest international gateway to and from the United States.
The U.S. government said it was not requiring Delta to sell its 20% equity stake in Aeromexico.
Delta said previously the joint venture generates nearly 4,000 U.S. jobs and more than $310 million of U.S. gross domestic product. It warned up to $800 million in annual consumer benefits could evaporate, two dozen routes could be canceled and smaller aircraft could replace existing planes.
The department warned likely problems from the venture included higher fares in some markets, reduced capacity and challenges for U.S. carriers due to government intervention.
(Reporting by David Shepardson; editing by Diane Craft and David Gregorio)
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