US Halts Allegiant-Viva Aerobus Partnership on Mexico Rift

(Bloomberg) -- Regulators in the US suspended the review of a joint venture between ultra low-cost carriers Allegiant Travel Co. and Mexican airline Grupo Viva Aerobus SA over concerns Mexico isn’t meeting the requirements of a transport agreement between the two nations.

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The US is worried about how recent actions by officials are impacting US carriers at Mexico City’s Benito Juarez International Airport, according to a letter the Department of Transportation sent on Monday to Mexican authorities. Regulators didn’t provide specific complaints in its correspondence.

The move will delay the joint venture between the carriers, struck in 2021, to operate flights together and increase connections between medium and small US cities and tourist destinations in Mexico.

This rift is unfolding as President Andres Manuel Lopez Obrador aims to boost traffic to Felipe Angeles airport, a facility that opened in March 2022 to relieve traffic at Benito Juarez. So far, the new airport — located about 50 kilometers (31 miles) north of Mexico City’s center — hasn’t made a big impact. At the behest of the president, domestic airlines have slowly been adding flights.

Felipe Angeles is politically important for Lopez Obrador. Shortly after taking office, he scrapped a more expensive airport project championed by his predecessor and then pushed a plan to turn a military base into a commercial operation. The army took about two and a half years to finish the conversion at a cost of 75 billion pesos ($3.6 billion) — about a third of the estimated price tag for the bigger project.

Read More: AMLO’s New Airport Opens With Hoopla, Criticism, 8 Flights a Day

“We trust the collaborative work between transport authorities in Mexico and the US will continue to tend to this matter and the approval process will be resumed,” Viva Aerobus, a closely held firm, said in a statement.

Allegiant said in a separate statement that the venture would give travelers better access to affordable fares and more-convenient flight options. “We hope the United States and Mexico can resolve their differences over the bilateral agreement quickly, so travelers from both countries can benefit from” the carriers’ partnership.

--With assistance from Mary Schlangenstein.

(Updates with Allegiant comment in final paragraph)

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