US DOT Suspends Joint Venture Review Amid Airport Concerns

The US Department of Transportation (DOT) has put revision of the proposed joint venture (JV) between Allegiant Air and VivaAerobus on hold. This comes in response to actions taken by the Mexican government at the Mexico City Benito Juarez International Airport (AICM).

In a letter dated July 31, 2023, Carol Petsonk, Assistant Secretary for Aviation and International Affairs, DOT, stated that Allegiant Air and VivaAerobus' application for antitrust immunity would be paused. The reason for this decision is the presence of unresolved questions regarding the implementation of the US-Mexico air transportation agreement. Petsonk emphasized that the DOT requires a fully liberalized air transport agreement to grant antitrust immunity.

Recent actions by the Mexican government concerning US carrier operations in Mexico have raised doubts about whether the required conditions for antitrust immunity are met, as pointed out during consultations. The DOT is actively engaging with the Mexican Ministry of Infrastructure, Communications and Transportation (SICT) to resolve these issues.

The Mexican government's recent move to shift cargo airline operations from AICM to the Felipe Ángeles International Airport (AIFA) has been a point of contention. SICT stated that the move will benefit the cargo sector in the medium and long term, offering advantages such as direct access to tax precincts, proximity to logistics developments and expansion capacity. However, the International Air Transport Association (IATA) expressed criticism earlier in the year, fearing potential disruptions to Mexico's cargo connectivity and its impact on citizens and businesses.

Allegiant Air and VivaAerobus had previously announced a commercial alliance agreement designed to enhance nonstop leisure air travel between the US and Mexico. The joint venture was expected to begin in 1Q23, aiming to offer affordable and accessible travel options for residents of both nations. Nevertheless, the review process is now on hold due to the issues arising from the actions taken at Benito Juárez, with the DOT seeking clarity and compliance with the air transportation agreement before proceeding.