United States halts joint venture between Viva Aerobus and Allegiant

The United States Department of Transportation (DoT) has put on hold the approval process for the joint venture between Allegiant and Viva Aerobus. This was a significant and unprecedented move for the low-cost segment by both companies, aiming to enhance their role in the lucrative cross-border traffic between Mexico and the United States, which had been announced in December 2021.

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In a letter addressed to Rogelio Jiménez Pons, Undersecretary of Transportation of Mexico, Carol A. Petsonk, Assistant Secretary for Aviation and International Affairs of the DoT, informed that the organization would not be able to meet the deadline set to evaluate the joint venture, which was due on July 31, «because of outstanding questions relating to the continued implementation of the U.S.-Mexico air transportation agreement».

«It is longstanding DOT policy that a necessary predicate for our consideration of grants of antitrust immunity is the de jure and de facto implementation of a fully liberalized air transport agreement,» continued Petsonk. She added, «recent actions the Government of Mexico has taken affecting U.S. carrier operations at Benito Juarez International Airport have, in our view, called into question the existence of this predicate.» This is the reason why they are putting the approval of the joint venture between Viva Aerobus and Allegiant on hold until the Mexican government demonstrates «compliance with, and full implementation» of the bilateral agreement between the two countries.

While the letter does not detail the specific points that are contrary to the agreement, inferred issues could include restrictions on access to slots at AICM, the obligation for airlines wishing to land in the Mexican capital to operate at Felipe Ángeles airport, and the forced transfer of all cargo airlines to this airport, among others.

When they made their presentation to the authorities, Allegiant had stated that they were not interested in operating at Felipe Ángeles airport, considering it «inconvenient,» so they would utilize Viva Aerobus’s slots as well as in Puerto Vallarta.

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Allegiant does not operate in Mexico, whereas Viva does have a presence in the US with flights to Cincinnati, Dallas/Fort Worth, Nashville, Houston, New York-JFK, Las Vegas, Los Angeles, Chicago, and San Antonio. As can be seen in Cirium, during July, Viva Aerobus has had an offer of 215,412 seats on 1,110 flights between Mexico and the United States. Viva Aerobus’s growth in that country is currently limited since Mexico continues under category 2 in terms of air safety according to the Federal Aviation Administration (FAA).

With the joint venture, Allegiant could offer destinations in Mexico, while Viva Aerobus would gain access to the distribution network and points of sale of the American low-cost carrier, which includes more than 130 destinations.

Both companies had identified dozens of new connection opportunities thanks to the alliance.