US cargo airlines welcome DOT aviation sanctions on Mexico

Yahoo

5 days ago

U.S. cargo airlines strongly endorsed the Trump administration's decision on Saturday to target Mexico for alleged violations of a 2015 bilateral air transport agreement. Mexico's forced relocation of all-cargo carriers in 2023 to a secondary airport and limits on cargo landing rights prompted the U.S. action.
The U.S. Department of Transportation will review the flight schedules of Mexican carriers for compliance with U.S. laws, ban Mexican charter flights and consider withdrawing antitrust immunity for the Aeromexico-Delta Air Lines joint venture, Secretary Sean Duffy said. The DOT also put European countries on notice that similar measures could be taken against them if U.S. airlines are unilaterally restricted from their airports in an effort to limit noise levels in city centers.
'Today's announcement sends a clear and necessary message: the United States will not tolerate unfair, anti-competitive behavior that is counter to the tenants of the U.S. Open Skies framework and harms American businesses,' said Lauren Beyer, president of the Cargo Airline Association, in a statement. 'We thank Secretary Duffy and the entire U.S. government team — including the Departments of Transportation, State, and Commerce — for their leadership in defending the rights of U.S. carriers.'
Mexican President Claudia Sheinbaum said on Monday that her government has not yet received formal notification from the U.S. over potential measures against Mexico's airline sector, adding that she sees no justification for such sanctions, Reuters reported.
Mexico in 2023 banned freighter operators from the country's main international airport in Mexico City ostensibly to relieve chronic congestion and allow expansion projects. The government also has rescinded some take off and landing slots allotted to passenger carriers.
Cargo airlines were forced to switch to Felipe Angeles International Airport, a former military airfield about 31 miles away, with limited advance notice. The relocation, which involved airlines from all countries, added operational costs and complexity for cargo operators, especially hybrid carriers that continued to move shipments in passenger planes serving Mexico City International Airport (MEX) and now have dual facility and delivery systems to manage. Felipe Angeles also was not fully developed and ready to efficiently handle the cargo aircraft, leading airlines to invest in more equipment and facilities.
The Cargo Airline Association, which represents ABX Air, Atlas Air, FedEx and UPS, said Mexico's action disrupted 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, according to the trade group. (Amazon Air, DHL Express and Kalitta Air are CAA associate members.)
The slot restrictions and mandate that all-cargo operations move out of MEX created market turmoil, cost American companies millions of dollars and represent a 'blatant disregard' of the air transport agreement, according to the Department of Transportation.
'Joe Biden and Pete Buttigieg deliberately allowed Mexico to break our bilateral aviation agreement,' Duffy said in the announcement. 'That ends today. Let these actions serve as a warning to any country who thinks it can take advantage of the U.S., our carriers, and our market. America First means fighting for the fundamental principle of fairness.'
The slot seizures impacted American Airlines, Delta Air Lines and United Airlines, as well as Mexican carriers. Mexican airlines with confiscated slots have since been able to restore certain services to the United States.
The DOT said in an enforcement notice that Mexico has yet to provide any analysis that MEX is oversaturated, assurance that U.S. carriers can recover their slots when construction is completed and that any construction projects have been initiated.
The department has initiated a three-pronged initiative to pressure Mexico into changing its policy.
The DOT said it will require Mexican airlines to file schedules with the department for all their U.S. operations by July 29 so it can review whether any services violate the law or affect the public interest. Filings must include the type of aircraft used, flight frequency, origin-and-destination airports and arrival/departure times.
A second order prohibits Mexican airlines from operating large aircraft for passenger or cargo charter flights to or from the United States without prior DOT approval. The charter restrictions, the DOT said, are a response to U.S. cargo airlines being prevented from repositioning aircraft within Mexico on non-revenue flights or making multiple stops in Mexico to pick up or drop off international traffic without carrying domestic shipments, as allowed under the transport agreement.
The charter ban could impact carriers such as mas and Aerounion.
U.S. freighter operators took significant steps to adjust operations in response to Mexico's 2023 order. The Cargo Airline Association said all-cargo airlines 'must be free to choose service points that align with their commercial needs — not [ones] dictated by arbitrary foreign mandates.'
The DOT also proposed to withdraw the approval of antitrust immunity for the joint venture operated by Delta and Aeromexico. The U.S. government extended the approval beyond a 2020 deadline to allow for further review, but the Trump administration now says the conditions for immunity no longer exist and that the joint venture no longer serves the public interest.
A final order terminating approval of the joint venture would not become effective until Oct. 25, at the earliest.
If antitrust immunity is revoked, Delta and Ameromexico would be required to discontinue cooperation on pricing, capacity management, and revenue sharing. They would, however, be allowed to continue their partnership through arms-length activities such as codesharing, marketing and frequent flyer cooperation. Delta will also be able to retain its equity stake in Aeromexico and maintain all existing flying in the U.S.-Mexico market unimpeded.
The Department also said it reserves the right to disapprove flight requests from Mexico should the country fail to take corrective action.
'We applaud the Department's use of its authority and regulatory tools to restore fairness and accountability in the U.S.-Mexico aviation market,' said Beyer.
Wider implications
In 2023, the Biden administration expressed concern that the Netherland's decision to reduce nearly 10% of takeoff and landing slots at Amsterdam Schiphol Airport to reduce pollution and noise was done unilaterally and would impact U.S. flight levels. It said the issue should be negotiated in the context of the existing U.S.-European Union Open Skies agreement. The U.S. warned the Dutch government that flight cuts could open the door for retaliatory cuts to KLM's frequencies to the U.S. And the U.S. position is believed to have caused CMA CGM Air Cargo and Air France-KLM to abandon their cargo alliance's application for antitrust immunity on North American routes last year.
The Cargo Airline Association said it important to send a message that Mexico's actions don't set a precedent.
'Around the world, other governments are watching this case closely. If left unchallenged, such actions could erode the core tenets of the U.S. Open Skies framework and embolden other countries to impose unjustified restrictions on cargo access to key markets,' it said in the statement.
'The Cargo Airline Association and its members are committed to supporting the U.S. government's efforts to uphold international agreements and preserve the competitive freedoms that are essential to the global movement of goods,' Beyer added.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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