Mexico Endorses Allegiant-Viva Aerobus Joint Venture Plan
The ULCCs still need approval from the US Transportation Department for their JV.
Allegiant Air and Viva Aerobus have gained approval from the Mexican government for their proposed joint venture that will see US-based Allegiant take an equity stake in the Mexican ULCC.
The two airlines unveiled their new partnership in December 2021, which includes the establishment of an immunized alliance, and plans by Allegiant to invest $50 million in Viva Aerobus. It is the first major partnership between two ULCCs in the Americas.
At the time they announced their plans, the airlines explained that an ability to coordinate on pricing, scheduling and other elements involved in gaining anti-trust immunity would allow for each to significantly broaden their reach in the US-Mexico market.
Now the Federal Economic Competition Commission (COFECE) in Mexico has authorized the commercial agreement unconditionally, Allegiant and Viva Aerobus said in a joint statement.
“Through this alliance, Allegiant, which currently does not serve Mexico, will be able to rapidly enter and expand in the market, while Viva will be able to grow its presence in multiple US markets,” the carriers said.
Allegiant and Viva Aerobus still need to secure approval for their proposed new partnership from the US Transportation Department (DOT). In a response to DOT for more information regarding their plans filed in September, Allegiant and Viva Aerobus said they could not rely on a traditional arms-length or other non-immunized relationship to compete with legacy airlines in the US transborder market.
“The alliance differs from prior ATI [antitrust immunity] immunized alliances in that it revolves not around the consolidation, rationalization and linking of existing networks, but around the creation of new nonstop and low-cost service geared substantially to small and mid-sized cities,” the carriers stated.