Since December 2021 Allegiant and VivaAerobus have been pursuing antitrust immunity from the US Department of Transportation to operate a transborder joint venture between the US and Mexico. Today that application took a somewhat unexpected turn, with the DOT suspending the procedural review, owing to factors well outside the control of either airline.
Mexico’s President want to see more competition in the domestic air travel market. López Obrador proposes to allow foreign airlines to operate within the country – service known as cabotage – competing against the local incumbents. But will any show up??
Allegiant sees significant potential carrying leisure travelers to Mexican resort destinations, but the cost – both real and relative to domestic expansion – is too high. Viva Aerobus wants to expand deeper into the US leisure segment, but its prior attempts mostly failed. Together, however, the two believe they can become a strong player in the transborder market, commanding a double digit share.