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News Article

Mexican Airlines Lose US$460 million Following Category Downgrade

By Emilio Aristegui | Wed, 08/17/2022 - 20:25

Since 2021, Mexican airlines have suffered losses approaching MX$9.2 billion (US$460 million) due to their limited ability to more offer flights to the US, according to a joint report by the National Tourism Business Council (CNET) and the Anáhuac Tourism Competitiveness and Research Center (Cicotur).

The "Panorama of Tourist Activity in Mexico 36" report explains that Mexico’s downgrade to a Category 2 airspace has prevented Mexican airlines to fly 2.3 million passengers, severely affecting the competitive growth of the Mexican aviation industry. “A decrease in this proportion is observed in relation to the dynamics observed until 2019 due to the effect of the current crisis and the degradation of the national aeronautical authority. Although it is lower than the participation observed during the same period of 2021 (86.4 percent), it is still higher than the records seen until 2019,” reads Cicotur’s study according to Efe.

On May 25, 2021, the US Federal Aviation Administration (FAA) reported that it found at least 28 safety deficiencies in Mexico’s safety practices, causing it to downgrade the country’s airspace from its Category 1 to Category 2. At the time, the country’s major airlines were already suffering complex constraints due to a steep decrease in national and international flights derived from the COVID-19 pandemic confinements.

"This behavior is mainly due to the degradation of the Mexican aeronautical authority–which remains unresolved–, and means that only US airlines benefit from the expansion of the air market to Mexico from the US," explains the report.

CNET and Cicotur informed that Mexican airlines had a market share of 24.6 percent in international operations from January to April 2022, showing an important recovery from the same period in 2021, when they held a 22.3 percent market share. However, Mexican airlines are still facing a major challenge to recover their 2020 market share of 29.3 percent, and their 31.8 percent market share of 2019. Mexican airlines also registered their highest market share of the past six years in 2019.

The data used in this article was sourced from:  
EFE
Emilio Aristegui Emilio Aristegui Junior Journalist and Industry Analyst