The first day of the last month of 2021 brought important development in the Latin American-US airline market: Allegiant and Viva Aerobus will create a commercial alliance to operate their networks between Mexico and the United States, in what represents the first agreement of its kind between two low-cost carriers.
As part of the agreement, Allegiant will also make a $50 million investment in Viva Aerobus, which will enable the company’s President and CEO, Maurice J. Gallagher, Jr. to join the Mexican company’s Board of Directors.
Joint application for the deal, which is also subject to approval by Mexico’s competition agency, has already been filed by the carriers with the U.S. Department of Transportation. It will certainly be a tough battle.
“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,” said Allegiant’s Gallagher. “This groundbreaking alliance should reduce fares, stimulate traffic, and ultimately link many new transborder cities with nonstop service. In short, it will bring meaningful ULCC competition to the U.S.-Mexico market for the first time in history.”
“The U.S. – Mexico market is currently the largest international air travel market in the world; during the pandemic, it has outperformed any other market due to a strong leisure and VFR (Visiting Friends & Relatives) recovery where both Viva Aerobus and Allegiant have excelled,” said Juan Carlos Zuazua, chief executive officer, Viva Aerobus. “This unique ULCC alliance will create new non-stop connectivity and more competition, strengthening the immense Hispanic VFR market and offering amazing holiday get-aways for residents of both nations.”
Allegiant currently offers flights to more than 130 cities in the United States but does not operate in Mexico, while Viva does have a presence in the northern giant with non-stop flights to Cincinnati, Dallas/Fort Worth, Harlingen, Houston, New York-JFK, Las Vegas, Los Angeles, Chicago, and San Antonio. According to data obtained by Aviacionline through Cirium, in December it will offer 123,156 seats each way between the United States and Mexico.
The agreement will allow Allegiant to offer destinations in Mexico, while Viva Aerobus will open the U.S. low-cost carrier’s distribution network and points of sale.
“A fully integrated and seamless alliance will allow Allegiant and Viva Aerobus to coordinate in all areas of airline operations, including code sharing, scheduling, marketing, information systems, and loyalty programs, providing seamless access and benefits for customers of both airlines”, the companies said.
As part of the DOT application process, Allegiant and Viva Aerobus identified more than 250 potential new route opportunities.
The alliance, once the respective government approvals are obtained, is expected to become effective during the first quarter of 2023.
