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SALT LAKE CITY — Utah business and political leaders say an order issued earlier this year by the U.S. Department of Transportation to cancel an agreement between Delta Air Lines and Aeromexico, one struck in 2016 that has since led to 45 million passenger trips between the two countries, will have widespread negative impacts on the state's economy and the consumers and communities that rely on the airline routes.
The tentative decision, which becomes final Oct. 26, came after the transportation department determined recent changes at some Mexican airport facilities led to an anti-competitive environment.
"Actions taken by the Mexican government regarding operations at (Mexico City International Airport) have been raised by the U.S. government with counterparts at the highest levels within the government of Mexico in formal consultations as being fundamentally out of compliance with the existing bilateral air service agreement and international norms governing capacity management at airports," the Department of Transportation order reads.
Last year, Mexican officials moved cargo flights out of Mexico City International Airport, the country's busiest airport, to a new facility just outside the capitol in a decision they said was aimed at easing traffic ahead of planned renovations.
But the Department of Transportation says the renovation work has not been forthcoming, and the slot reassignments have unfairly throttled competition.
Why it matters to Utah
Airline routes out of Salt Lake City International Airport that are currently supported by Delta's joint cooperation agreement with Aerovias de Mexico, Aeromexico's parent company, include flights to Mexico City and Guadalajara and new service to Monterrey that was scheduled to begin this year. Those Salt Lake City routes, along with other flights to beach markets, carried over 310,000 passengers in 2023.
Across the country, the agreement supports almost two dozen routes between the U.S. and Mexico.
In a letter to Transportation Secretary Pete Buttigieg, Salt Lake airport director Bill Wyatt said Utah has been an "enormous beneficiary" of the joint cooperation agreement and that without it, the service would simply not exist.
"The (joint cooperation agreement) is the only thing that brings our community service to Mexico City, Guadalajara and in the future, Monterrey," Wyatt wrote. "Our market is simply not large enough to support these services without the connectivity which this (joint cooperation agreement) brings.
"I cannot express in sufficiently strong terms to underscore the importance this represents to the economy of our state," Wyatt said.
Utah Gov. Spencer Cox also penned a letter to Buttigieg asking for reconsideration of the order, noting Mexico's importance to the state's economy, including its status as one of the top trading partners for Utah businesses.
"As the fastest-growing state in the nation, Utah continues to look to the future, and these direct flights to Mexico are a crucial piece of the puzzle," Cox wrote. "Many businesses in our state rely on Mexico for near-shoring the manufacturing of essential goods as a more secure alternative to China."
Cox also noted his concerns that the Department of Transportation decision "stands to punish Utahns in order to achieve an unrelated diplomatic goal" and asked the agency to look for other solutions to the policy dilemma.
"The tentative decision to end the (join cooperation agreement's) approval sets a dangerous precedent," Cox wrote. "It will punish Utahns and apply unnecessary pressure on our state's economy. Instead, I encourage the administration to seek out other measures, through continued negotiations and other regulatory options, to ensure that the government of Mexico honors the U.S.-Mexico air services agreement."
Mexico: Utah's No. 2 trading partner
In a Deseret News interview, World Trade Center Utah President and CEO Jonathan Freedman noted Mexico had recently ascended to the state's second-largest trading partner, and Utah enjoys a "vital relationship" with its southern neighbor, one fueled in part by the state's 340,000 residents of Mexican heritage and signified by the Consulado de México that has operated in the state for over 100 years.
"At (World Trade Center), we are so motivated to grow and strengthen our ties with Mexico," Freedman said. "For many Utah companies, it just makes a ton of sense to develop business with Mexico, selling products or siting manufacturing facilities there."
Freedman said the supply chain issues exposed by the pandemic underscored the value of diversifying supply portfolios and, in particular, looking for near-shoring opportunities as alternatives to overseas suppliers. And Mexico, Freedman noted, ticks a lot of boxes for companies who don't want to see a repeat of critical components stalled on oceangoing freight ships.
"We've spent a lot of time on trade missions to Mexico with Gov. Cox talking about near-shoring and friend-shoring," Freedman said. "We encourage Utah companies to have a diverse supply chain. Mexico is closer to home, has shorter transport times and is affordable ... and a critical alternative to China."
Diplomacy vs. business?
Mike Cameron, CEO of Utah-based Christopherson Business Travel, said the Delta-Aeromexico agreement supports thousands of jobs and, should the agreement be terminated, would lead to "devastating consequences for the economy, consumers and communities that rely on these routes."
"These routes have facilitated thousands of jobs and convenient air travel for citizens and businesses from both countries," Cameron wrote in a letter to Buttigieg. "These routes, and the competition they provide, help keep airfares low to the benefit of consumers. Eliminating these routes will reduce supply and raise costs."
Cameron also underscored his disappointment that the Department of Transportation was employing the tactic of leveraging a business agreement to achieve policy goals.
"We are especially concerned about the department's tentative decision given the airlines' commitment to continued investment in, and expansion of, this partnership," Cameron wrote. "This action by the (Department of Transportation) to achieve a diplomatic end at the expense of economic partnership and consumers is without precedent."
In an op-ed published last month by The Atlanta Journal-Constitution, Delta CEO Ed Bastian and Aeromexico CEO Andrés Conesa pleaded for transportation officials to seek an alternative path to address concerns over Mexican airport management issues and leave the cooperation agreement between their two companies in place.
"As the chief executives of Delta and Aeromexico, we recognize the importance of the diplomatic goals of both nations," Bastian and Conesa wrote. "But we also agree that punishing consumers and jeopardizing thousands of jobs in both nations is a punitive and counterproductive approach that will not produce a positive outcome for the Transportation Department. There is ample time for both governments to engage in further negotiations and make meaningful progress without harming the American and Mexican people."
Federal transportation officials did not respond to Deseret News emails requesting comment.
