U.S. proposes awarding five air carriers new Mexico City slots

The U.S. Transportation Department on Thursday proposed awarding 24 slot pairs at Mexico City’s Benito Juarez International Airport to Alaska Airlines, JetBlue Airways Corp (JBLU.O), Southwest Airlines Co (LUV.N), Volaris and Grupo Viva Aerobus SAB de CV.

The tentative Mexico City allocations will result in new or additional low-fare service to 15 U.S. cities, including Chicago O’Hare, Denver, Houston Hobby, Los Angeles, New York-JFK, San Diego, San Francisco and Washington-Dulles. Slot pairs are landing and takeoff slots between two cities.

The department also proposed awarding four slot pairs at New York-JFK to Interjet, Volaris and VivaAerobus that will provide new service to Mexico City. The slot pairs were required to be divested by Grupo AeroMexico SAB de CV (AEROMEX.MX) and Delta Air Lines Inc (DAL.N) in December as a condition of antitrust immunity for the airlines’ joint venture covering air transportation between the United States and Mexico.

The Transportation Department last year demanded the slots to ensure competition, saying it would “allow for new, competitive entry at these airports that would not otherwise be possible.”

Under the tentative award, JetBlue will receive six slot pairs to Mexico City from Fort Lauderdale and Orlando, Florida, and Los Angeles, while Alaska Airlines will receive four slot pairs to Los Angeles, San Francisco and San Diego.

“This is a great win for our customers. Greater access will allow us to offer a better schedule, award-winning service and lower fares in this market as we grow,” JetBlue said.

Southwest will receive four slot pairs to Houston, Fort Lauderdale and Los Angeles, while Volaris will receive nine pairs for service to JFK, Los Angeles, Denver, Washington-Dulles, San Jose and Ontario, California, Chicago-O’Hare, Oakland, California, and San Antonio airports.

Interjet and Volaris will each get one slot pair at JFK, while VivaAerobus will get two.

The slots will be awarded in two phases, with 14 Mexico City slots transferred in 2017 and 10 by 2018, while two JFK slots will be awarded in each phase. Airlines can file objections before the decision is finalized.

Last week, Grupo Aeromexico said its board believed Delta’s revised offer to buy an additional 32 percent of its shares was fair. Delta offered about $590 million.

Delta already has a 4.2 percent stake in Aeromexico and said in November 2015 it intended to buy the additional stake at a lower price.

(Additional reporting by Alana Wise; Editing by Chizu Nomiyama and Peter Cooney)