US Suspends Joint Venture Between Allegiant Air and Viva Aerobus

The US Department of Transportation (DOT) suspended the review process for the joint venture application submitted by Allegiant Air and Viva Aerobus. The DOT's decision cites unresolved questions surrounding the implementation of the US-Mexico air transportation agreement as the reason for the delay.

Allegiant Air, an American carrier, remains optimistic that the differences between the US and Mexico can be swiftly resolved. The ultimate goal is to ensure that travelers from both countries can take advantage of the joint venture's promises of affordability and convenience.

The DOT's decision to halt the review comes after the agency confirmed the suspension of the procedural schedule for the application review. The joint venture was initially announced in December 2021. Allegiant and Viva, both well-known ultra-low-cost carriers, have been at the forefront of this initiative, seeking to enhance their presence in the market.

This joint venture's approval is contingent upon green lights from both the Mexican Federal Economic Competition Commission (COFECE) and the DOT. However, the agency's recent decision to pause the review stems from concerns related to the sustained implementation of the US-Mexico air transportation agreement.

The joint application  sought approval for antitrust immunity for an alliance agreement that pertains to air transportation between the US and Mexico. The process encountered a brief interruption soon after its initiation, prompting Viva Aerobus and Allegiant Air to submit a revised proposal in August 2022.

Earlier this year, the DOT completed an initial review of the joint venture application, marking a significant step forward. On Jan. 12, the DOT revealed that it had successfully concluded the initial assessment of the application and accompanying materials. However, this progress was followed by a suspension of the process as the DOT requested additional information from both airlines.

For Viva Aerobus, the joint venture offered an avenue to enhance the company's brand in the US. The Mexican ultra-low-cost carrier has faced challenges in establishing successful routes in that country, attributing some difficulties to customer preferences. Partnering with Allegiant Air presented an opportunity to address these issues and redefine its market approach.

If the joint venture comes to fruition, both carriers will be able to synchronize various operational aspects, including codesharing, scheduling, marketing, information systems and loyalty programs. As a part of this cooperative initiative, Allegiant Air has also proposed an investment of US$50 million in Viva Aerobus.