US-Mexico Market Stifled by Low Safety Rating

from The Avion Issue 3 Spring 2023

HIGHLIGHTS OF THIS ISSUE

ARTICLE BY JAVIER MORALES / Staff Reporter

Photos In The Public Domain

DESIGN BY JACOB RAINERSON / Staff Reporter

In the spring of 2021, the FAA downgraded Mexico’s safety rating from Category 1 to Category 2, imposing additional restrictions on the country’s airline industry. Currently, Mexican airlines are barred from adding flights to the United States beyond their current schedule, and they can’t codeshare with American airlines. Mexico is the largest international airline market for the United States. It grew significantly during the COVID-19 pandemic because of increased leisure traffic and more people visiting friends and relatives. Yet, much of that demand has gone untapped due to the downgrade. Mexico is currently making the well-needed changes required by the FAA to restore its Category 1 status. Until then, many key markets on both sides of the border will remain underserved.

Before the downgrade, Allegiant Air announced a Commercial Alliance Agreement with a fellow low-cost carrier, VivaAerobus of Mexico. This alliance would allow the two airlines to lower fares and more effectively compete on transborder routes while stimulating traffic for their domestic networks.

Per Allegiant Air’s DOT application, a partnered Allegiant and VivaAerobus would’ve added more than 250 new connections between underserved destinations in the US and Mexico with their combined strength. However, though this partnership was approved by Mexican regulators and is slated to be approved by the US Department of Transportation, it won’t be implemented until Mexico regains its Category 1 status. Existing commercial partners, Delta/Aeromexico and Frontier/Volaris are also limited in how they can work together and capitalize on growing demand.

Mexico’s domestic aviation industry is currently in turmoil, partly due to the country’s airlines’ inability to expand profitable service to the United States while also bearing the cost of implementing belated safety measures. The Mexican carrier Aeromar already filed for bankruptcy this past February. The Mexican government is currently exploring the possibility of creating a new military-run airline or granting cabotage, or the ability for foreign airlines to establish domestic routes in Mexico, to increase connectivity. Moreover, in Mexico City, the government is forcing airlines to switch from the main international airport, Benito Juárez (MEX), to the newer and purportedly safer Felipe Ángeles airport (NLU) by restricting capacity at Benito Juárez. Volaris has alleged this transition has negatively impacted its business since the new Felipe Ángeles airport is too undeveloped and far from the city center to serve as a viable alternative for short-haul, low-cost flights.

Until Mexico can implement the proper systems and processes to ensure safety across its aviation sector and regain Category 1 status, these problems will persist. However, given the growing pent-up travel demand between the United States and Mexico, passengers do have a lot to look forward to. Once safety concerns are resolved and Category 1 status is restored, passengers will undoubtedly see a flurry of new routes, codeshare agreements, and lower fares practically overnight. Let’s stay hopeful and see what the future holds.

ARTICLE BY JACOB RAINERSON / Sta Reporter