Tijuana, Los Cabos at the Forefront of Airport Recovery

According to information from the Ministry of Communications and Transportation (SCT) and airport groups, the Tijuana airport had a 14.8 percent decrease in passenger flow from 490,900 to 418,200 passengers in September of this year compared to 2019, while the Los Cabos International Airport showed a 19.9 percent contraction in the same period from more than 143,000 passengers to just over 115,000 users. These are the two airports leading the recovery with the least pronounced drops in passenger traffic. Meanwhile, AICM showed a 61.5 percent drop, from 3.9 million users in September 2019 to 1.5 million in the same period in 2020, according to a note by Expansion. 

Now let’s jump into the Week in Aerospace!

Interjet Could Become the Next Mexicana de Aviación

SCT reported that Interjet’s turbosine debt to Aeropuertos y Servicios Auxiliares (ASA) amounted to MX$2.6 billion (US$126 million), which is causing severe economic problems to the airline. Jorge Arganis Díaz Leal, head of the SCT, stated that the will of the government is to not repeat a case like that of Mexicana de Aviación. "Interjet is in a crisis, it has strong fiscal problems and it also owes MX$2.6 billon (US$126 million) to ASA. We are trying to help them, but they have to solve this internally," commented Díaz to Milenio. Raquel Buenrostro, head of the Tax Administration Service (SAT), stated that Interjet has a structural financial problem and has no "cash," so the tax authority "will hold" the payment of debts until the company is capitalized, according to a note from El Financiero.

Millions of Aviation Jobs at Risk

The International Air Transport Association (IATA) and the Transport Workers’ Federation (ITF) released a joint statement warning that 4.8 million jobs are at risk after the abrupt contraction in demand for air travel caused by the COVID-19 outbreak, which almost completely halted the global aviation industry. As airlines grapple with the fixed costs of storing and maintaining aircraft as their cash flow dry up, many of them may resort to shrinking their workforce to keep costs down. For instance, US’ United Airlines furloughed 13,000 employees, while American Airlines cut 19,000 jobs last month. “Aviation faces an unprecedented employment catastrophe. Airlines have cut costs to the bone, but have just 8.5 months of cash left under current conditions. Tens of thousands of jobs have already been lost and unless governments provide more financial relief, these are likely to increase to the hundreds of thousands,” said Alexandre de Juniac, Director General and CEO of IATA.

US Election and Mexico’s Aerospace Industry

During his four years at the White House, President Donald Trump touted an “America First” policy, vowing to put the needs of the US ahead of international concerns. This approach resulted in numerous tariffs on foreign products, which aimed to reduce the US’ trade deficit with other nations. In 2018, the US imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum to many countries, including Mexico. These tariffs were lifted for Mexico and other countries in May 2019 but President Trump later warned that he would pursue a 5 percent tariff on all imports from Mexico that would gradually increase until illegal immigration stopped. These tariffs did not materialize. On the contrary, US tariffs on Chinese products and USMCA have helped Mexico become the US’ main trade partner.

However, Trump’s contender, Joe Biden has showed support for USMCA and even stated that it was better than NAFTA. While Biden has criticized Trump’s policies in the past, the former Vice President is not expected to implement significant changes in current foreign trade policy as he has also backed a “Made in America” platform that aims to support US-made products.