US signs off on Delta and WestJet partnership, if they give up LaGuardia slots

U.S. officials have signed off on a long-planned partnership between Delta Air Lines and WestJet on flights between the U.S. and Canada.

Two years after the airlines applied for government approval, the Department of Transportation OK'd the pact with minimal conditions on Friday. Delta and WestJet must divest eight slot pairs -- one slot pair is needed for a takeoff and landing -- at New York LaGuardia (LGA) and exclude the latter's budget arm Swoop from the joint venture to move forward.

The approval comes as the U.S.-Canada border remains closed to all but essential travel due to the coronavirus pandemic. The border is tentatively scheduled to reopen on Nov. 21 pending an improvement in COVID infection rates in the U.S.

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Travelers would benefit from a more seamless travel experience when flying Delta and WestJet under the proposed partnership. DOT approval allows the airlines to coordinate schedules and fares, as well as work more closely together on everything from sharing reservations to data to sharing airport lounges and gates.

Together, Delta and WestJet carried 28% of the 31.5 million flyers between the U.S. and Canada in 2019, according to Bureau of Transportation Statistics data via Cirium. This is second only to Air Canada's 44% share of the market.

Delta and WestJet have argued that the joint venture will allow them to better compete with Air Canada. This includes the addition of at least six new transborder routes, according to their initial 2018 application.

Conditions for a new joint venture are common. Delta and Aeromexico had to give up slots in both Mexico City (MEX) and New York JFK when their partnership was approved in 2016.

Related: WestJet Dash 8s Could Soon Take Over These Delta Routes to Canada

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JetBlue Airways and Southwest Airlines called for the divestiture of eight LaGuardia slot pairs as a condition to the Delta-WestJet pact. Both carriers argued that without forcing them to give up the rights, the slots would effectively end up back in Delta's hands after the airline divested them as part of its LaGuardia slot-swap with US Airways in 2011.

The DOT proposes a blind auction to sell eight slot pairs from either Delta or WestJet in one package to an "eligible carrier." While it does not define "eligible," past processes have limited this to airlines with a small or no presence at LaGuardia. The auction will occur within eight weeks of final sign off, or likely sometime early in 2021.

WestJet spokesperson Lauren Stewart told TPG that the airlines' "welcome" the DOT's decision and are "reviewing" the conditions.

Canada approved the Delta-WestJet pact in June 2019.

Related: Southwest Airlines wants WestJet to give up New York slots under Delta pact

The pact could prove something of a lifeline for WestJet. The airline has been hit hard by Canada's travel restrictions, as well as the U.S. border closure, that have kept much of its fleet grounded since the coronavirus pandemic hit North America early in the year.

Earlier in October, WestJet announced that it would end service to five cities in eastern Canada. The move will leave competitor Air Canada as the only network carrier serving four of them.

Delta spokesperson Drake Castañeda said the airline is reviewing the DOT's ruling but declined to comment further.

Related: WestJet cuts 5 cities in eastern Canada, blames coronavirus and fee increases

Updated with Delta comment.