Delta’s Aeromexico Joint Venture Just Got Saved By A Federal Court—DOT’s Breakup Order On Hold Until Next Year

A federal appeals court has temporarily saved Delta’s partnership with Aeromexico by freezing the DOT’s order to end their joint venture. The decision delays any breakup until at least late summer 2026, allowing flights and scheduling to continue unchanged.

A three judge panel of the 11th Circuit Court of Appeals granted Delta’s motion to partially seal its motions from public view, and to stay the DOT’s order to end its joint venture with Aeromexico by the end of the year. Delta and Aeromexico’s current partnership can continue while they challenge the breakup in court. The 11th circuit did not offer any discussion of the merits of the dispute in its order. The stay order simply cites Nken v. Holder, 556 U.S. 418 (2009), which both Delta and the DOT agree sets the standard for whether a stay is appropriate.

• The Eleventh Circuit would have concluded that Delta made a ‘strong showing’. That’s not a substantial likelihood of prevailing on the merits (but it’s more than a “mere possibility”).
  
• And they showed irreparable injury, which is certainly plausible.
• These factors are more critical uner Nken than a showing that the joint venture is in the public interest (at this point, it probably is not).

Delta’s argument is that the Department of Transportation improperly “invented” an Open Skies “threshold” and exceeded its statutory authority; failed to treat this case like others (American-JAL and United-ANA at Tokyo); and ignored benefits and less‑restrictive alternatives than a breakup. However,

• Ending approval and withdrawing antitrust immunity after “periodic review” where an agreement “substantially reduces or eliminates competition” or is “adverse to the public interest” is standard, and the Department of Transportation made those findings based on changed facts at Mexico City and in the U.S.–Mexico markets. Delta and Aeromexico control 60% of the slots at Mexico City, and the Mexican government has blocked competition there, closing the market to new entrants. And the promised connecting benefits laid out in 2016 didn’t actually materialize.

• There’s no novel rule. Since the very first joint venture between KLM and Northwest (now Delta), Open Skies has been a prerequisite. And the position of DOT is that Mexico has been acting in violation of its Open Skies commitments, making antitrust immunity – which is statutorily at the discretoin of DOT – no longer tenable. You don’t grant antitrust immunity for airlines to collude when there are barriers to competition.

Delta says that they and Aeromexico face irreperable harm from dismantling the partnership that couldn’t be undone if they beat DOT in court. That’s why they’re getting the stay. The court buys that dismantling the network and slot-sharing and integrated operations can’t just be un-dismantled.

DOT says Delta and Aeromexico can still partner, and that they’re being overly dramatic with how they’d choose to unwind the deal. Remember that Delta even owns 20% of Aeromexico. Aeromexico isn’t just going to go find a different U.S. partner (with which it can’t get antitrust immunity under the DOT’s position). And Delta and Aeromexico can codeshare, have their frequent flyer reciprocity, etc.

The government’s position is that the public interest favors competition, ending antitrust immunity now and “legalized collusion” in a market effectively closed to new entrants.

But the court granted the stay pending review (with no discussion of the merits of Delta’s position). That freezes the September 15 DOT order (including the January 1 unwind deadline) while the appeal proceeds. Joint scheduling and pricing can continue.

Delta says U.S. – Mexico is competitive. DOT says U.S. – Mexico City is not (and access to less desireable Mexico City-AIFA airport doesn’t count). So why not just carve out Mexico City from the joint venture? Delta wouldn’t want that, of course, and it would undermine the principle that Open Skies compliance is required for a joint venture. DOT authority and action is appropriate here, and in the public interest to promote competiiton, but carving out Mexico City would accomplish the same public interest objective.

It’s also somewhat funny to see Delta arguing that ‘Newark is New York’ in its competition analysis; that New York JFK – Mexico City isn’t a market and that United flying from Newark counts. United long sent taxi cabs around Manhattan arguing that Newark was closer to a given spot than JFK (and not just Staten Island!). So maybe they should start advertising “Delta tells the government under oath: Newark is New York.”

So what’s the new timeframe for whether or not Delta-Aeromexico has to unwind? Roughly late summer 2026:

• In the Eleventh Circuit, median timing for administrative‑agency cases from docketing to disposition is 10.8 months.

• This petition was filed October 10, 2025. So you’d expect a decision around August – September 2026.

• If the decision comes based on the briefs with no argument, a decision could come somewhat earlier.

The Department of Transportation has an odd power to grant antitrust immunity between U.S. and foreign airlines. This is included in the Airline Deregulation Act, and is an artifact of international price fixing as standard in the industry. (Just as pre-deregulation, the federal government set domestic airfares, international airfares were set through industry group IATA.)

Antitrust-immunized joint ventures are a tool that the DOT agreed to as a loophole and end-run around foreign ownership restrictions. Foreign carriers can’t own more than 25% of a U.S. airline, and most foreign countries have limits on how much a U.S. airline can own of their own carriers. But these deals let airlines act as though they are commonly-owned.

That makes sense where markets are contestable, but where a government blocks competition or entry into a market and protects incumbents, greater consolidation isn’t in the public interest.

As I suggested last month, Delta’s lawsuit would delay the breakup of the joint venture and it would give them time to lobby the government to back off. In other words, their best path to victory is delay and lobbying for a favorable settlement rather than legal merits.