Delta, WestJet drop joint venture plans over ‘arbitrary and capricious’ US conditions
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Delta Air Lines and WestJet‘s plans for a broad partnership is off, like a wedding cancelled on objections of one party’s parents after “onerous” conditions put forth by U.S. officials.
The carriers withdrew their application for an immunized joint venture, calling the conditions “arbitrary and capricious,” in a regulatory filing on Friday (Nov. 20). The pact would have allowed Delta and WestJet to coordinate on flights between the U.S. and Canada.
Delta and WestJet will re-evaluate “options to deepen our commercial alliance,” the former told staff in a message on Friday viewed by TPG.
Want more airline-specific news? Sign up for TPG’s free new biweekly Aviation newsletter!
The airlines already codeshare on some flights and have a frequent flyer pact that allows travelers to earn and redeem miles for flights on the other carrier.
The proposed joint venture, however, would have significantly deepened their ties. The carriers argued that the proposed partnership would benefit consumers by allowing them to coordinate flights and add new service between the two countries. This would have created a stronger competitor to Air Canada, which dominates the market and had a nearly 44% share of flyers in 2019.
Slots at sought-after New York LaGuardia (LGA) airport were central to Delta and WestJet’s decision. The Department of Transportation required the carriers divest eight slot pairs — one pair is needed for both a takeoff and landing — at the popular New York airport as a condition to their joint venture. The number of slots is equal to the number owned by WestJet, which uses them for flights between LaGuardia and Toronto Pearson (YYZ).
“The divested slots would almost certainly not even be used to compete with the [joint venture],” said Delta and WestJet in their filing. “They would likely be redeployed by the recipient to use in domestic or other markets which are outside the [joint venture] scope.”
Related: US signs off on Delta and WestJet partnership, if they give up LaGuardia slots
Alaska Airlines, Allegiant Air, Southwest Airlines and Spirit Airlines all submitted comments supporting the slot divestitures to the DOT. Of those, Alaska alone flies to Canada, but only along the West Coast and not from either New York or Toronto.
The LaGuardia-Toronto route was the single busiest between Canada and the U.S. in 2019, according to U.S. Bureau of Transportation Statistics data via Cirium. Air Canada, American Airlines and WestJet were the only airlines flying the route. Delta, Porter Airlines and United Airlines also flew between other New York- and Toronto-area airports.
However, much about future Canada-U.S. air service remains up in the air amid the coronavirus pandemic. The border is closed to all but essential travel through Dec. 21 as it has been since March. And airlines plan to fly just 11% of what they flew a year ago in the market in December, Cirium schedules show.
Related: WestJet cuts 5 cities in eastern Canada, blames coronavirus and fee increases
In addition, Porter known for its popular, business-friendly flights to Toronto’s close-to-downtown Billy Bishop Airport (YTZ) has suspended flights through at least February.
In their filing, Delta and WestJet also called DOT conditions onerous for excluding WestJet’s budget subsidiary Swoop from the partnership and requiring WestJet to interline with other U.S. carriers onerous.
Canadian regulators approved the airlines’ proposed pact with no conditions in 2019.
Related: Delta Air Lines, WestJet Partnership Gets Canadian Sign Off
Featured image by Robert Alexander/Getty Images.
Sign-up Successful!
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in the first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants in the first three months of card membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 Bonus Miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees
Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.
Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.