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The U.S. Department of Transportation said Friday it has tentatively approved a proposed merger agreement between Delta Air Lines and Canada’s WestJet, which is expected to expand travel options between the United States and Canada.
The department said that as part of its temporary antitrust immunity clearance, those carriers would need to be able to carry WestJet’s ultra-low-cost carrier-enabled sweep to 16 takeoff and landing slots at New York’s Lagarde Airport.
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The department has also proposed to WestJet to provide interline provide access to select carriers flying in Canada and to review the proposed alliance within five years. The interline agreement allows customers to travel to destinations using both airlines.
The Delta-WestJet joint venture will have a combined 27% share of scheduled air carrier trans-border capacity, while the dominant carrier, Air Canada, will have 45%.
WestJet, which owns private equity firm Onex Corp., welcomed the tentative approval, saying both carriers were reviewing the order “and will respond.”
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The carriers said the proposed addition would “make the use of the aircraft more efficient, increase the schedule and reduce costs.”
With 38 million people, Canada is the second largest international passenger air market in the US after Mexico, with Toronto flights accounting for more than 0% of transborder air travel demand.
| Ticker | Security | The last | Change | Change% |
|---|---|---|---|---|
| DAL | Delta Air Lines INC. | 34.00 | +0.28 | + 0.83% |
US-Canada transborder flight capacity has increased by 15% in the last five years to reach 39 million seats annually.
The department said the competition for US-Canada flights versus transborder US flights to Mexico is not as healthy, noting that US-Canadian flight fares are up 12%.
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Considering American Airlines, Delta and United Airlines,% control% control in all slots, Air Carriers Rear at Lagardia, New York, requested slot divisors, with 45% of flights controlled.
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New York-Toronto flights account for 6% of U.S.-Canadian flights and this route is the second largest market for U.S. international air travel.
(Reporting by David Shepardsson in Washington Washington and Allison Lampert in Montreal; Editing by Chris Reese and Richard Chang)
