Summary The chief executive of Viva Aerobus has cited the current election season as the reason why the DOT has not approved its joint venture with US-based Allegiant Air. While the two applied for approval and antitrust immunity (ATI) of their joint venture in December 2021, in July 2023, the DOT suspended the review, citing the Mexican Government's actions at MEX. In retaliation for those actions, the DOT also dismissed Delta Air Lines and Aeromexico's application for the approval and ATI of their joint venture.
The chief executive of Viva Aerobus, the Mexico-based low-cost carrier, has blamed politics and the United States's election season for the Department of Transportation (DOT) not approving its partnership with Allegiant Air. Election season According to Reuters , Juan Carlos Zuazua, the chief executive officer (CEO) of Viva Aerobus, stated that the decision to delay the final decision regarding the Viva Aerobus and Allegiant Air partnership was political. Zuazua added that the US was in the middle of the election season, and the airline did not know whether the DOT would approve the partnership before or after the upcoming elections in November.
However, the CEO hoped that the US government would approve the partnership soon. Allegiant Air and Viva Aerobus announced their partnership in December 2021, saying that the pair would have a fully integrated alliance agreement, dramatically expanding options for non-stop travel between the US and Mexico. “The alliance is not only the first such venture for Las Vegas-based Allegiant and Viva Aerobus, but is also first-of-its-kind in the airline industry between two ultra low cost carriers (ULCCs).
” On the same day, the pair submitted a 77-page document to the DOT, arguing that the alliance agreement would bring new competition and service options to the US-Mexico market. Suspending the review On July 31, 2023, the DOT published a document saying that it was suspending the review of the two airlines’ request for approval and antitrust immunity (ATI) for their alliance. “The Department reviews applications for antitrust immunity to U.
S. carriers and their foreign partner carriers based on the complete implementation of a liberalized air transport agreement between the United States and the country of the partner carrier.” The filing read that the Mexican government’s actions at Mexico City International Airport (MEX) have resulted in the DOT questioning the predicate of the implementation of a liberalized air transport agreement between the two countries.
Citing the same reasons, in addition to suspending the review of the Allegiant Air and Viva Aerobus application, the DOT dismissed Delta Air Lines and Aeromexico’s application to renew their joint venture’s ATI. According to the DOT, the Mexican government ordered to move all-cargo operations from MEX to Mexico City Felipe Ángeles International Airport (NLU) . In addition, the Department said that capacity at MEX has been reduced in the past three International Air Transport Association (IATA) seasons, which has increased the difficulties for new entrants to enter MEX.
While the initial premise of the capacity reductions was renovations, the Mexican government told the DOT that no additional capacity would be added to MEX as long as operational and technical conditions at the airport prevailed. “After continued consultations that have not altered the current course, the Department tentatively concludes that the condition precedent necessary for consideration and continuation of ATI, namely the adherence by the Government of Mexico to its obligations under the U.S.
-Mexico Aviation Agreement, is no longer present.” Delta Air Lines is still seemingly hopeful that DOT would renew the antitrust immunity for its joint venture with Aeromexico. Procompetitive decision On February 26, Allegiant Air and Viva Aerobus asked the DOT to reinstate their review of their joint application, arguing that no other ATI has taken so long to review.
The two carriers added that the approval of their joint venture would likely be the “most significant procompetitive decision DOT could make today.” Allegiant Air and Viv Aerobus have applied to the US DOT to have their alliance application reinstated and its review completed..
