Mexico’s government introduced fiscal incentives to boost key sectors, including aerospace. Meanwhile, the country’s airport groups saw their stocks drop due to regulatory changes, Airports and Auxiliary Services (ASA) acquired Mexicana de Aviación’s brands and some Mexican airlines face a setback in the shape of aircraft engine reviews. In other news, SEMAR took control of Mexico City International Airport (AICM) and changes in Airport Use Fees (TUA) could impact users and revenues.
Brace for turbulence, this is the week in aerospace:
The government is seeking to promote key sectors with tax incentives, driving competitiveness, innovation and investment in Mexico. These incentives encompass an accelerated investment deduction, ranging from 56% to 89% for the rest of 2023 and 2024. Additionally, the decree features an extra 25% deduction guaranteed for three years for worker training expenses, as published by the Official Gazette of the Federation (DOF).
Airport group stocks plummeted on the Mexican Stock Exchange (BMV) after the Federal Agency of Civil Aviation’s (AFAC) TUA changes took effect, raising investor concerns. However, airport groups also reported an increase in domestic passengers, totaling 3.3 million and representing a 2.1% growth from September 2022. In contrast, international traffic decreased by 1.7%, with 1.5 million passengers recorded for the month.
Airports and Auxiliary Services (ASA) secured Mexicana de Aviación brands for MX$407 million (US$22.6 million). ASA, a state-owned company that sells fuels and operates air terminals, acquired 307 brands that were once part of Mexicana de Aviación on Aug. 15. ASA paid MX$407 million (US$22.6 million) for the brands, reveals a recent report by Forbes Mexico.
Some Mexican airlines face a potential growth setback due to aircraft engine reviews. Mexico's aviation sector is gearing up for a resurgence following its recovery of the US Federal Aviation Administration (FAA) Category 1 aviation safety status. This milestone has prompted major Mexican airlines to plan new routes and increased frequencies to US cities in 2024, following a prolonged hiatus of over two years. However, an unforeseen challenge now looms large, potentially impacting the growth prospects of Volaris and Viva Aerobus.
Significant changes are taking place at AICM, which is now under the direction of SEMAR. In addition to these changes, SEMAR's responsibilities now encompass the coordination of state-owned enterprises at AICM. According to the Official Gazette of the Federation (DOF), SEMAR will also assume control of entities such as the Mexico City Airport Group (GACM) and Mexico City Airport Services. This transition involves the transfer of all federal government representative shares as mandated by applicable legal provisions.
AFAC’s decision to modify TUA has garnered the attention of major airport groups in Mexico, including Grupo Aeroportuario del Pacífico (GAP), Grupo Aeroportuario del Sureste (ASUR) and Grupo Aeroportuario Centro Norte (OMA). These changes impact the terms of the tariff regulation bases established in their concession agreements, directly influencing the fees passengers pay when booking flights.
The trend toward automation in travel and aviation is inevitable, writes Rodrigo Tame, Executive Director and Head of Latam and North America, Zamna, in MBN. “The rapid growth of our cities and the escalating demands necessitate a radical shift from the status quo. The mere expansion of airports and physical spaces is no longer sufficient. The automation and optimization of travel through data-driven technologies is inevitable,” writes Tame.