Photo: Daniel Martínez Garbuno.
In 2022, Mexico’s civil aviation industry was a complex story to tell. On one side, the country soared back to pre-pandemic traffic levels, but on the other, the local government seemed to be lost on how to help the industry, often adopting measures that could have long-term damage. Let’s take a look at the ups and downs in the North American country this year.
A new airport – is it helping?
In March 2021, the Mexican government inaugurated the new Felipe Ángeles International Airport (NLU). Located north of Mexico City, this new airport was the solution to the cancellation of a previous mega-hub project that would have allowed up to 120 million passengers per year. It would have also solved the airspace saturation problem in the country’s capital.
Instead, the new Felipe Ángeles International Airport currently has a capacity for around 20 million passengers. It works simultaneously with the Mexico City International Airport (MEX) and Toluca International Airport (TLC) but has so far lacked the impact the government would love it to have. According to data released by the Infrastructure, Communications, and Transportation Secretariat (SICT), NLU is set to have around two million passengers in its first year of operations.
The new airport is quite good. But it lacks the ground connectivity it needs to become a real option for travelers in Mexico City. Depending on the hour, getting to the new Felipe Ángeles can take up to two hours.
Additionally, the airport needs more offers from airlines. Six carriers are currently operating there, three domestic (Aeromexico, Volaris, and Viva Aerobus) and three international (Arajet, Copa Airlines, and Conviasa). The Felipe Ángeles has around 214 weekly flights, just 6% of the weekly flights operated from MEX. Time will tell if NLU becomes a true hub or a white elephant.
Category 2 – what’s going on?
In May 2021, the Federal Aviation Administration (FAA) downgraded Mexico’s rating to Category 2 from Category 1. The Government of Mexico did not meet the International Civil Aviation Organization safety standards, the FAA said.
Since then, Mexico has remained downgraded. This has profoundly impacted the development plans for Mexican carriers, unable to launch new routes to the United States nor expand their partnerships with US carriers (Aeromexico and Delta, Volaris and Frontier, and the proposed Viva Aerobus and Allegiant Air).
The Mexican government claims to be working to regain Category 1 status as soon as possible. Nonetheless, all the information points out that Mexico could remain downgraded at least until 2023’s second quarter, turning two years downgraded in Category 2 status. The question is if Mexico will remain in Category 2 until Andres Manuel Lopez Obrador, the current president, leaves office in 2024. That would be dreadful but a likely possibility.
Allowing eighth and ninth freedoms?
In December, Mr. López Obrador filed a law reform to authorize cabotage flights in the country. This would allow foreign carriers to operate domestic services in Mexico if approved, particularly from Lopez Obrador’s pet project, the Felipe Ángeles International Airport. The project has gained extreme opposition from the local aviation industry, claiming it would do more harm than good.
This project is set to be discussed next year by the Mexican chambers and could become a new controversial topic in the country. It could also be a political maneuver from the government to force domestic airlines to add more capacity to the Felipe Ángeles Airport, something that has been unable to achieve as expected despite lowering the taxes and fees at the new hub, raising them for 2023 at MEX, and lowering the cap of hourly operations at MEX.
As we said, Mexico’s airline industry in 2022 was a complex story. Next year will be as complex because all these storylines will continue for the foreseeable future. The good news for the airline industry is its incredible recovery. Between January and November 2022, Mexico received over 96 million passengers, a 5% growth compared to 2019, prior to the pandemic. Moreover, Mexico’s top three carriers –Volaris, Aeromexico, and Viva Aerobus, in that order– have all bounced back and are carrying more passengers than they did three years ago. Now, is that translating to financial profitability? So far, not. We’ll have to wait and see the fourth quarter results next year.
