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WestJet, Delta proposed joint venture moves forward

The U.S. Department of Transportation on October 23 announced the tentative approval for the proposed alliance agreement submitted by Delta Air Lines and WestJet. The approval clears way for a request from the two carriers to be granted antitrust immunity for their alliance agreement and joint venture to operate new services between Canada and the United States.

The tentative approval from the U.S. Department of Transportation (DOT) comes in the form of a Show Cause Order, which requires Delta and WestJet to file answers within 14 calendar days to conditions DOT has put on the approval. WestJet through Twitter commented, “We are pleased that the USDOT has issued Show Cause Order, one of the major final steps towards the approval of our joint venture with Delta. We are taking some time to review the details.”

Delta and WestJet aim to operate a joint venture between the United States and Canada, through which they plan to coordinate their services, including network planning, pricing, and sales activities. This would expand capacity on some existing routes while introducing services on  new routes, allowing for more options for travel to and from Canada.

DOT’s review examines the proposed alliance’s impact on competition in relevant markets, including the nonstop overlap market between New York City and Toronto. As part of the tentative approval, the Show Cause Order issued on October 23 includes a range of conditions proposed by DOT, including that the carriers remove Swoop, an ultra-low-cost carrier affiliate of WestJet, from the alliance.

Another condition includes divesting 16 takeoff and landing authorizations (slots) at New York City’s LaGuardia Airport. DOT is also proposing for WestJet to provide interline access to select carriers flying to Canada, and reviewing the proposed alliance in five years’ time.