Eleventh Circuit Vacates DOT Order, Restoring Delta-Aeromexico Antitrust Immunity

The U.S. Department of Transportation (DOT) attempted to use its ultimate regulatory weapon against a foreign government's aviation protectionism: breaking up a massive, multi-billion-dollar airline partnership. But a federal appeals court has abruptly grounded that effort, ruling that the agency violated its own standards to do it.[1][8]

On August 20, the U.S. Court of Appeals for the Eleventh Circuit vacated a September 2025 DOT order that would have stripped Delta Air Lines and Aeromexico of their antitrust immunity. The ruling ensures that the two SkyTeam carriers can continue operating their highly integrated joint venture, which controls roughly a fifth of all passenger capacity between the United States and Mexico.[1][4][7]

To understand the stakes, one must understand what antitrust immunity allows airlines to do. Under a standard codeshare, airlines can sell seats on each other's flights but cannot collude on fares or capacity. With antitrust immunity, Delta and Aeromexico operate a "metal-neutral" joint venture. They legally coordinate schedules, set prices together, and pool revenue across their transborder networks as if they were a single commercial entity.[1][6][8]

The DOT originally approved this arrangement in 2016. However, relations soured when the Mexican government began aggressively intervening at Mexico City's Benito Juárez International Airport (MEX). Citing congestion and infrastructure needs, Mexico slashed available takeoff and landing slots and banned all-cargo flights at MEX, attempting to force traffic to a newer, less popular airport outside the city.[1][2][4][8]

The DOT argued these actions violated the 2015 U.S.-Mexico Open Skies agreement. Because Aeromexico holds the dominant share of slots at MEX, the DOT concluded the government's interventions gave the Delta-Aeromexico partnership an unfair, anti-competitive fortress hub. In response, the DOT ordered the joint venture to unwind by January 1, 2026.[1][4][7]

The airlines fought back, arguing that punishing them for the sovereign actions of the Mexican government was an overreach that would harm consumers. They petitioned the Eleventh Circuit, arguing the DOT's sudden reversal violated the Administrative Procedure Act.[3][4][8]

In a decisive opinion authored by Judge Elizabeth Branch, the Eleventh Circuit labeled the DOT's termination order "arbitrary and capricious." The court identified two fatal flaws in the agency's reasoning, concluding that the DOT failed to apply the same breadth of market analysis it used when it originally approved the partnership nearly a decade earlier.[1][6][8]

First, the court pointed to inconsistent market definitions. When the DOT approved the joint venture in 2016, it analyzed competition across the entire U.S.-Mexico market, evaluating 1,687 individual city pairs. But when it moved to kill the deal in 2025, the DOT focused almost exclusively on conditions at MEX—which accounts for only 21 percent of transborder flights. The agency failed to explain why a narrow bottleneck justified dismantling a nationwide network.[1][4][6][8]

Second, the court highlighted a glaring double standard regarding Open Skies compliance. The DOT insisted that a fully functioning Open Skies environment was a mandatory precondition for antitrust immunity in Mexico. Yet, as the court noted, the DOT has approved and maintained similar immunized joint ventures between U.S. and Japanese airlines at Tokyo's Haneda Airport, despite severe, government-imposed slot restrictions there.[1][4]

The immediate impact is operational continuity. Delta and Aeromexico never actually stopped coordinating, as the court had previously stayed the DOT's order pending the appeal. Schedules, frequent-flyer reciprocity, and joint pricing remain intact, and Delta issued a statement praising the court's "careful review."[3][5][6]

However, the underlying diplomatic dispute remains unresolved. The DOT stated it is reviewing the court's decision and considering all legal options, while continuing to press the Mexican government for full compliance with the bilateral aviation treaty. The agency could appeal the ruling or attempt to issue a new termination order supported by a broader market analysis.[1][4][6][7]

For the broader aviation industry, the ruling establishes a high bar for regulators attempting to unscramble the eggs of airline consolidation. Once carriers spend years stitching their networks, fleets, and commercial systems together, unwinding them requires more than a localized competitive grievance. The DOT may still attempt to break up the partnership, but it will now have to build a comprehensive, network-wide case to do so.[6][8]