Viva Aerobus boss says politics grounding Allegiant tie-up

By Kylie Madry

MEXICO CITY (Reuters) - Mexican airline Viva Aerobus believes the U.S. government's pause on reviewing a proposed tie-up with Nevada-based Allegiant Air is political rather than technical, the Mexican carrier's chief executive said on Wednesday.

U.S. regulators suspended the review of the joint venture last year, citing concerns over actions by the Mexican government affecting Mexico City International Airport (AICM).

Mexican officials and executives have said the concerns referred to a government-mandated move of cargo flights from the capital's main airport to a newer, farther-away airport spearheaded by the president, as well as a reduction in take-off and landing slots at AICM.

"I would think (it's political)," Viva CEO Juan Carlos Zuazua told reporters. "Obviously we're in the middle of election season in the United States right now, we don't know if it will be before or after, but let's hope (the tie-up is passed soon)."

The U.S. Department of Transportation (DOT), which has alleged the airport changes are to the detriment of existing carriers and potential new entrants, also moved to unwind a similar joint venture between Delta Air Lines (NYSE:DAL ) and Aeromexico this year.

Mexico has seen a boom in tourism from the United States in the years after the COVID-19 pandemic, however Mexican airlines have seen their capacity hit by engine issues, plane shortages and the airport slot limitations.

Viva currently has around 21 planes grounded due to Pratt & Whitney engine problems that have affected airlines globally, Zuazua said. Competitor Volaris has between 30 and 34 planes out of service, its chief executive later added after a joint event to launch an anti-fraud campaign with U.S. firm Accertify.

Viva has turned to "wet leasing" - a practice in which one airline provides an aircraft, crew and maintenance to another carrier - to boost its capacity in the meantime, despite an outcry from unions over the use of foreign crewmembers.

Volaris, meanwhile, is not "at a point where it could pay for" wet leases, its CEO Enrique Beltranena said.

Domestic flight prices have risen around 15% in the past year, analysts say, due to restricted capacity and a government-mandated reduction in slot assignments at AICM.

Mexican President Andres Manuel Lopez Obrador has been hostile to the nation's airlines during his administration, often attacking Aeromexico in his morning press conferences.

Last year, he launched the military-run carrier Mexicana.



Lopez Obrador's mentee and successor Claudia Sheinbaum is set to take office in October.

"We need to work with (the incoming administration), to talk with them," Beltranena said. "Sometimes it's easy to say, 'We're going to move things here, or get rid of this, or reduce slots,' but sometimes we don't see the implications that has."

Source: Investing.com