The United States (US) Department of Transportation (DOT) has suspended its review of the proposed Allegiant Air and Viva Aerobus joint venture (JV), citing the Mexican government’s actions at Mexico City Benito Juarez International Airport (MEX).
In a letter dated July 31, 2023, Carol Petsonk, the Assistant Secretary for Aviation and International Affairs at the DOT, said that the agency suspended its review of the application by Allegiant Air and Viva Aerobus for antitrust immunity from the DOT.
According to Petsonk, “the Department has determined that it must pause its review and will therefore not be able to meet this deadline because of outstanding questions relating to the continued implementation of the U.S.-Mexico air transportation agreement”.
Her letter emphasized that for the DOT to give antitrust immunity, there has to be a “de jure and de facto implementation of a fully liberalized air transport agreement”.
“As we have discussed in our consultations, recent actions the Government of Mexico has taken affecting U.S. carrier operations at Benito Juarez International Airport [MEX] have, in our view, called into question the existence of this predicate,” Petsonk added.
As such, the DOT suspended the case presented by the two low-cost carriers “pending additional information demonstrating compliance with, and full implementation of, the terms of the U.S.-Mexico air transportation agreement through our continued consultations with SICT”.
Secretariat of Infrastructure, Communications, and Transportation (Secretaría de Infraestructura, Comunicaciones y Transportes, SICT) is a government entity responsible for Mexico’s transport and communications networks.
In a separate notice, Petsonk noted that the DOT “is working with the Government of Mexico to resolve significant concerns”.
Moving cargo operations
Most recently, the Mexican government has been trying to move cargo airline operations from MEX to Mexico City’s new airport, Felipe Angeles International Airport (NLU).
Speaking at the event marking the inaugural cargo flight at NLU on July 7, 2023, the secretary of SICT, Jorge Nuño Lara, said that moving operations from MEX to NLU will provide medium and long-term benefits for the cargo sector.
The first flight saw an Estafeta Carga Aerea Boeing 737-400BDSF, a converted 737-400 freighter, registered as XA-GGB, landing at NLU. Since then, it has not operated a flight to or from the airport, but the Mexican cargo airline should begin doing so on August 14, 2023, according to SICT.
Meanwhile, Lara said the new airport invites cargo operators to have a “more direct entry to tax precincts, strategic proximity to logistics developments within the polygon, and an expansion capacity in the future in an orderly manner that, without a doubt, will represent savings in time and operating costs” compared to MEX.
On July 7, 2023, SICT said that it would extend the deadline to move all cargo operations from MEX to NLU to September 1, 2023, arguing that the extension guarantees “maximum operational safety for concessionaires and permit holders of the dedicated cargo air service”.
In January 2023, the International Air Transport Association (IATA) criticized the move between the two airports in the Mexican capital, with the association’s Regional Vice President of Americas saying that any interruption to Mexico’s cargo connectivity “will have a negative impact on the well-being of the citizens and the companies of the country”.
Meanwhile, Allegiant Air and Viva Aerobus announced their “first-of-its-kind commercial alliance agreement” in December 2021. The two low-cost carriers designed the agreement “to dramatically expand options for nonstop leisure air travel between the United States and Mexico, while lowering fares to make travel more accessible and affordable for residents of both nations,” an announcement revealed at the time.
The two airlines had expected the JV to begin in Q1 2023.
“Allegiant and Viva Aerobus operating together will be a tremendous win for consumers seeking affordable, nonstop travel between the U.S. and Mexico, and will create rippling economic benefits for hospitality sector business across both nations,” Maurice Gallagher, the chairman and chief executive officer (CEO) of Allegiant Air, said in December 2021.
