Viva, Volaris Merger Plan Triggers Regulatory Scrutiny

Viva and Volaris are under review by Mexican and international competition authorities following their December 2025 announcement to form a joint airline group. Legal experts have warned that the proposed structure could constitute a market concentration under Mexico’s Federal Economic Competition Law. The transaction would combine the country’s two low-cost carriers, which together account for nearly the entire ultra-low-cost segment of Mexico’s aviation market.

Juan Carlos Machorro, partner, Santamarina & Steta, said the proposed alliance raises immediate concerns for competition authorities because Viva and Volaris are the only airlines operating at scale under a low-cost model in Mexico. In an interview with A21, Machorro said that when two direct competitors come under common ownership, “it triggers red flags for any antitrust authority anywhere in the world.” He added that the case will test how Mexico’s newly created National Antimonopoly Commission (CNA) evaluates mergers, following the replacement of the Federal Economic Competition Commission (COFECE).

Machorro noted that while Mexican authorities will review the transaction under domestic competition law, international scrutiny will also focus on the interaction between Mexico’s Federal Civil Aviation Agency (AFAC) and the US Department of Transportation (DOT). He recalled that the DOT withdrew antitrust immunity from the Aeroméxico-Delta alliance after concluding that competitive conditions in Mexico in 2025 differed materially from those in 2015, when the immunity was granted. “If the merger is approved in Mexico without conditions, in light of the DOT’s recent statements, it could prompt renewed concern over Mexico’s aviation market,” Machorro said.

Ivan Szymanski, partner, Vázquez Tercero y Zepeda, wrote in MBN that the merger is particularly sensitive due to three structural factors. First, while both airlines would retain separate brands and operating certificates, common ownership under a holding company would align incentives and eliminate independent strategic rivalry. Second, the transaction would consolidate the ultra-low-cost model that has driven domestic aviation growth in Mexico for two decades into a single dominant player. Third, infrastructure constraints—especially limited slot availability at Mexico City International Airport (AICM)—increase the risk of durable market power and reduce route contestability.

Szymanski said the regulatory debate will hinge on market definition. A route-by-route analysis would highlight the elimination of a close competitor on numerous city pairs, while a broader national or multimodal market definition could dilute concentration metrics while understating barriers to entry created by slot scarcity and network effects. “The CNA must strike a balance between analytical rigor and economic reality,” he wrote.

Machorro acknowledged that operational efficiencies could arise from both airlines operating Airbus A320 fleets and using similar point-to-point business models, but stressed that regulatory approval remains the central issue. “The main challenge is not aeronautical, political or commercial,” he said. “It is whether the Mexican authority authorizes the merger.”

The alliance was formally announced in December 2025, when Viva and Volaris disclosed plans to create a Mexican airline group under a holding company structure. The companies said the objective is to expand low-cost travel options and improve domestic and international connectivity. Volaris CEO Enrique Beltranena said at the time that the group would “drive growth opportunities and value creation through the expansion of our low-cost, point-to-point fleet across the region.”

Viva CEO Juan Carlos Zuazua described the deal as a milestone for domestic aviation. “Viva and Volaris are taking a major step to accelerate the future of air transportation in Mexico,” he said. Beltranena added that the structure is designed to expand reach while preserving each brand. “This creates a unique footprint to strengthen our presence, continue expanding the market and advance the democratization of aviation in Mexico,” he said.

Under the proposed structure, the combined group would control roughly 71% of Mexico’s domestic passenger market, a level expected to draw intense scrutiny from competition authorities. Aeromexico, which holds most of the remaining share, is widely expected to formally oppose the merger during the review process. Volaris’ largest shareholder is private equity firm Indigo Partners, which also controls Frontier Airlines in the United States and JetSMART in Chile. Viva is owned by transportation group IAMSA, led by Roberto Alcántara, who would chair the new group’s board, alongside representatives from both airlines.

The companies argue that the merger would generate operational synergies, including lower fleet ownership costs, improved access to capital and greater resilience to disruptions such as aircraft delivery delays and engine manufacturer issues. In a market where these challenges disproportionately affect smaller carriers, scale is viewed as a key competitive advantage. Zuazua said the transaction would allow both airlines “to offer low fares and more point-to-point flights to additional cities in Mexico and abroad, benefiting passengers as well as local economies.”

Operational disruptions have weighed on both carriers in recent years. Volaris averaged 30.5 grounded aircraft per month over a 27-month period due to inspections of Pratt & Whitney PW1100G and PW1400G engines, according to aviation consultant Armando Sánchez Mata. During that period, the airline relied on temporary measures, including wet leases, after AFAC authorized up to seven aircraft for a maximum of 43 days to maintain schedules during peak demand.

Viva faced similar challenges, averaging 21.3 grounded aircraft per month between September 2023 and October 2025 as its fleet  expanded from 78 to 119 aircraft. In August 2024, 26 aircraft—nearly a quarter of its fleet—were out of service. Despite these constraints, both airlines have said the merger would preserve separate operating certificates and brand identities.