US Regulators Temporarily Halt Review of Joint Venture between Allegiant and Viva Aerobus Amid Transparency Concerns

The review of a proposed joint venture between Allegiant Air and Mexican airline Viva Aerobus has been temporarily halted by US regulators due to concerns over transparency from the Mexican government regarding flight operations at Mexico City's main airport.

The decision by regulators to suspend the review, which was announced earlier this month, is believed to be linked to recent actions taken by the Mexican government that have affected the Mexico City International Airport (AICM). However, the specific actions in question were not disclosed by the regulators.

Mexican officials have speculated that a government decree requiring cargo flights to be relocated from the AICM to the military-run Felipe Angeles International Airport (AIFA) may be the cause of the friction. In response to concerns raised by US airlines, Mexico extended the deadline for carriers to make the move to September.

In a presentation made public on Wednesday, Allegiant Air argued that while transparency is a concern, the cargo move does not harm American interests. Allegiant also claimed that the Mexican government appeared to be favoring the launch of a military-run commercial airline, Mexicana, and the AIFA, at the expense of Mexican carriers.

Mexican President Andres Manuel Lopez Obrador has been increasingly delegating civil aviation duties to the military during his term, leading to concerns within the industry that the government's involvement in both an airline and airports like the AIFA could disadvantage national carriers.

Allegiant also cited slot constraints at the AICM as a reason for their proposed joint venture focusing on beach and leisure destinations rather than the capital. However, on Thursday, Mexico announced a further reduction in slots at the AICM, adding to the existing concerns.

The International Air Transport Association (IATA) has expressed its worries about potential decisions that could disrupt air connectivity and impact tourism. In a statement to Reuters, IATA urged the Mexican government to consider alternative measures instead of announcing flight reductions at the AICM, emphasizing the importance of maintaining connectivity.

While flight reductions have occurred in the past, the Mexican government has not yet officially announced a new round of cuts at the AICM, which is the busiest airport in Latin America. The government has previously implemented flight caps in an effort to alleviate congestion in the capital's airspace.

Carlos Velazquez, the director of AICM, confirmed earlier this month that flight cuts were being considered, along with other measures. However, the Mexican Transportation Ministry has not yet responded to requests for comment.

In an attempt to diversify its airspace, Mexico opened the Felipe Angeles International Airport (AIFA) north of Mexico City and revived the largely forgotten Toluca airport to the west of the city last year. However, these airports still handle only a small fraction of the traffic seen at the AICM.

The Mexican government's intervention at the AICM has increased since the decree earlier this year to relocate cargo airlines from the hub. The International Air Transport Association's regional head, Peter Cerda, emphasized the need for collaborative decision-making processes involving all stakeholders when considering capacity reductions at the AICM.

The air transportation chamber, CANAERO, criticized the lack of consultation with the sector regarding potential flight cuts and instead called for funds to be allocated for repairs at the aging AICM. The chamber highlighted the high airport usage tax at the AICM, which goes towards paying off outstanding bonds for the canceled Texcoco airport project.

Mexican President Lopez Obrador canceled the Texcoco airport project after his election, citing cost concerns and corruption. Instead, he chose to convert a military base into the AIFA on the outskirts of Mexico City.