Summary The US Department of Transportation has suspended the review of the joint venture application between Allegiant Air and Viva Aerobus, citing outstanding questions about the implementation of the US-Mexico air transportation agreement.
Mexico’s actions affecting US carrier operations at the Benito Juarez International Airport have called into question the existence of the joint venture.
Allegiant Air hopes that the US and Mexico can resolve their differences quickly so that travelers from both countries can benefit from the joint venture, which aims to provide affordable and convenient travel choices.
The US Department of Transportation (DOT) will not move forward with reviewing US-based Allegiant Air and Mexico-based Viva Aerobus’ proposed plans for a joint venture. The agency confirmed that it suspended the procedural schedule for the review of the application on Monday.
Allegiant and Viva, both ultra-low-cost carriers, initially proposed the joint venture in 2021. Their partnership reportedly requires approval from the Mexican Federal Economic Competition Commission and the DOT.
Missing the deadline
Carol Petsonk, the Assistant Secretary for Aviation and International Affairs, sent a letter to Mexico’s Undersecretary of Transport, Arq Rogelio Jimenez Pons, explaining the DOT’s decision, according to aviation journalist Edward Russell.
“I wanted to let you know that we must suspend the procedural schedule established by Notice on January 12, 2023, for our review of the application by Allegiant Air, and Viva Aerobus for antitrust immunity from the US Department of Transportation filed on December 1, 2021.”
Petsonk also said that the notice that outlined the procedural schedule established a deadline of July 31, 2023, for department action, but the agency determined that it had to pause the review due to “outstanding questions relating to the continued implementation of the US-Mexico air transportation agreement.”
Photo: Markus Mainka/Shutterstock
Based on the fully liberalized Air Transport Agreement in 2016, DOT policy requires that considerations of grants of antitrust immunity to US airlines and their proposed international partner carriers must be reviewed. Earlier this year, the DOT completed its initial review of the joint venture application. But, since the DOT could not meet the July 31st deadline, Petsonk explained the suspension of the review.
“Given these circumstances, we are not able to consider the Viva/Allegiant case pending additional information demonstrating compliance with, and full implementation of, the terms of the US-Mexico air transportation agreement through our continued consultations with SICT [Secretaría de Infraestructura, Comunicaciones y Transportes],” the Assistant Secretary said.
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US carrier operations in Mexico City
According to FlightGlobal, airlines at Mexico City’s Benito Juarez International Airport have faced capacity restrictions. While the airport is an operating base for Viva, authorities have reportedly aimed to force carriers to move their operations to the new Felipe Angeles International Airport that also serves the region.
Photo: Markus Mainka/Shutterstock
“As we have discussed in out consultations, recent actions the Government of Mexico has taken affecting US carrier operations at Benito Juarez International Airport have, in our view, called into question the existence of the predicate,” Petsonk added.
About the joint venture
According to Airline Weekly, the alliance would have been a 15-year agreement in which both airlines could share revenue and take advantage of other benefits such as coordinating schedules and distributing and selling flights jointly. Allegiant also proposed as part of the deal to buy a $50 million stake in Viva.
In a statement obtained by FlightGlobal, Allegiant responded to the DOT’s decision.
“We hope the United States and Mexico can resolve their differences over the bilateral agreement quickly, so travellers from both countries can benefit from the Allegiant/Viva joint venture.”
The airline also promoted the venture, saying it would allow the public greater access to affordable and more convenient travel choices, giving passengers the opportunity “to enjoy the incredible leisure and entertainment experiences that await them in both countries.”
The joint venture plans have not pleased some of Allegiant’s pilots, however. In February, the carrier’s pilot union opposed the commercial alliance agreement.
Sources: Edward Russell, FlightGlobal, Airline Weekly