Navigating Mexico: Turbulent Skies
By JUAN DE JESÚS BREENE
After 28 months of downgraded status, the U.S. Federal Aviation Administration (FAA) finally returned Mexico to a Category 1 safety status last week, clearing the way for airlines of both countries to add transborder capacity to their schedules.
This means that the Mexico’s three airlines can once again resume growth into the United States.
The FAA had downgraded Mexico’s safety status to Category 2, its lowest rating, in May 2021.
Category 2 means that the FAA does not consider the country in question to have adequate laws or regulations needed to support safe air travel, and prevents their airlines from opening new routes to the United States, thus stymieing any international growth.
The FAA ruled that the Mexican government did not meet the International Civil Aviation Organization (ICAO) safety standards.
Meanwhile, the country’s carriers have been revving up business through other more creative means, including low cost tickets.
At the moment, certain Mexican carriers actually have some of the lowest prices ever, with promotions that include “pay a peso, plus the taxes, if you purchase within the next 24 hours.”
While the Mexican airline industry has recovered quicker and stronger than most other countries from the covid-19 pandemic, it is still cash-strapped, due in large part to its Category 2 status.
Undeterred, Mexican President Andrés Manuel López Obrador (AMLO) announced earlier this year that he intended to resuscitate Mexicana de Aviación, which had been defuncted after a complex bankruptcy in 2010, as a state-owned carrier to be operated by the Mexican Defense Secretariat (Sedena).
AMLO, who is known for his pie-in-the-sky ideas, has, during his five years in office, turned over a number of previously privately owned and/or operated corporations and facilities to the Army, almost invariably leading to their eminent financial collapse or indebtedness, as well as increased inefficiencies.
And the resurrection of Mexicana is not likely to turn out any differently.
Frankly, the creation of another airline, government owned, does not make any sense.
Mexico has never had such a large fleet as it does today. Its 369 operating commercial planes are the greatest number of aircraft in the history of Mexican aviation.
The largest carriers are Aeroméxico. with about 40 percent of the fleet, Volaris in second place, with 31 percent, and Viva Aerobús in third place, at 19 percent. The rest, mostly regional airlines, control the remaining 10 percent.
While Aeroméxico has more planes, Volaris actually runs more flights.
Because these carriers have not been able to expand routes to the United States, they have been forced to create additional national routes that never would have existed.
They obtained additional planes during the pandemic and have on order more, having anticipated that Category 1 status never would have taken so long to be re-earned.
Volaris, for example has approximately 50 national flights a day arriving to Tijuana. Viva Aerobús has about 22 and Aeromexico has 10. Are people dying to vacation or visit Tijuana?
No. Those flights were trying to capture the lost inroads to U.S. routes, getting Mexicans to the border, so they could cross over and continue their journey.
Poor Volaris and Viva Aerobús simply had to do something with their fleets since they could not expand into the United States.
Once Mexicana is operational, these carriers will likely have to take a back seat on national routes,, since the state-run airline will no doubt get preferential treatment from the AMLO administration.
So, in the short term, the low prices are great news for the consumer. But, in the long term, the financial health of Mexico’s Big Three is at risk because even with a Category 1 rating, it will take some time to get the new routes approved and operational.
In short, there seems to be some turbulence in Mexico’s airspace, and it is not being caused by Mother Nature.