By Skies Magazine | October 26, 2020 Estimated reading time 3 minutes, 20 seconds.
Calgary’s WestJet and Atlanta-based Delta Air Lines received tentative approval from the U.S. Department of Transportation (DOT) on Oct. 23, 2020, for their antitrust immunity request to operate a transborder joint venture that would offer increased travel choices between Canada and the U.S.
The two airlines signed an agreement to enter into a U.S.-Canada transborder joint venture in July 2018, and received clearance from the Canadian Competition Bureau in June 2019. The recent regulatory approval from the U.S. DOT is a step forward in the agreement.
However, the U.S. DOT said the approval is subject to several conditions. WestJet and Delta must sell a total of 16 takeoff and landing authorizations (slots) at New York’s LaGuardia Airport. This condition comes after expressed concern from U.S. competitors — Southwest Airlines, Spirit Airlines, and JetBlue.
The carriers must also remove Swoop, WestJet’s ultra-low-cost carrier, from the alliance. And WestJet must “provide interline access to select carriers flying to Canada,” the U.S. DOT said. As well, the Department has stated a condition to review the proposed alliance in five years.
In an Order to Show Cause document issued by the U.S. DOT on Oct. 23, the department said it “recognizes that despite the unprecedented market turmoil, ATI [antitrust immunity] under the current circumstances may help the Joint Applicants during the recovery period, and the Department intends to monitor the long-term effects of the proposed alliance closely through its oversight process, annual reports, and the proposed five-year review to determine whether the alliance has produced public benefits that outweigh any reduction in competition.”
Under the WestJet-Delta joint venture arrangement, passengers would benefit from coordinated flight schedules for new nonstop flights to new destinations; expanded codesharing; and seamless connections on the airlines’ networks in the U.S. and Canada, Delta said in a press release.
“This agreement will bring heightened competition and an enriched product offering to the transborder segment, both of which will benefit our guests,” said Ed Sims, WestJet executive vice-president, Commercial. “This is an important step in WestJet’s mission to become a global airline.”
The approval would see the combined service operating approximately 27 per cent of traffic across the U.S.-Canada border, with Air Canada holding the top position at 45 per cent, and United Airlines following at 12 per cent.
