Back in June, Delta Air Lines and WestJet had its proposed joint venture approved by the Canadian Competition Bureau. But recently Alaska Airlines, Southwest Airlines and JetBlue have all taken issue with this move while the U.S. Department of Transportation reviews it. The airlines particularly take issue with the partnership due to the scarcity of available slots at New York’s LaGuardia airport.
The original plan
According to FlightGlobal, the deal would expand the codeshare agreement between the two airlines, allowing them to coordinate schedules as well as additional network expansion. Co-locating at airports, among other joint activities is part of the plan.
“The joint venture between Delta and WestJet will create an expanded network with more frequencies and destinations, improved airport connections and significantly enhanced frequent flyer benefits,” -Ed Bastian, Delta CEO
The deal adds to the growing list of joint ventures Delta has with other airlines such as Aeromexico, Air France-KLM, Korean Air, and Virgin Atlantic. With the exception of Virgin Atlantic, the aforementioned airlines are also SkyTeam Alliance partners with Delta. With clearance from the Canadian Competition Bureau, the deal now only requires clearance by U.S. regulators.
Opposition at LaGuardia
Opposition to this deal is brewing among multiple airlines for a variety of reasons. One battleground is at New York LaGuardia airport. According to The Points Guy, Southwest Airlines has raised several objections to the joint venture with the U.S. Department of Transportation.
In fact, the Dallas-based carrier is calling for WestJet to divest its slots at New York LaGuardia due to the planned partnership with Delta. It alleges that the joint venture will reduce competition at LaGuardia because the two airlines would be cooperating closely with one another. Southwest doesn’t currently fly to Canada but BizJournal reported last year that it’s being considered.
While it doesn’t demand that WestJet divest its slots at LaGuardia, JetBlue is calling for a review of how the Delta-WestJet partnership would impact competition at the airport. Like Southwest, it also does not have any flights to Canada – although it partners with Toronto-based Porter in a relatively small partnership.
The complaint is broader at Alaska Airlines and does not have to do with LaGuardia specifically. According to The Points Guy, the Seattle-based airline says that the joint venture would “result in further concentration of U.S.-Canada transborder market power.”
Currently, the only other notable agreement is the codeshare agreement between Air Canada and United Airlines.
Conclusion
Responding to our request for comment, a Delta spokesperson said the following:
“Our proposed joint venture with WestJet will bring more choice, connectivity and competition to consumers in the U.S. and Canada.”
It makes sense that the relatively smaller airlines are concerned about this joint venture moving forward – particularly at the busy and slot-scarce LaGuardia airport. However, how much of a case do Southwest and JetBlue have? They don’t fly to Canada so it’s hard to imagine how they would lose market share to WestJet – particularly at LGA.
Ultimately the fear of consolidation of “transborder market power” is valid as smaller airlines take on the larger players. It will be interesting to see what the U.S. Department of Transportation has to say about all of this.
Do you think the opposing airlines have a case against WestJet and Delta? Let us know what you think in the comments!
