Volaris fears forceful relocation to Mexico City’s new airport

The Mexican ultra-low-cost carrier Volaris fears the Mexican government could force relocation to Mexico City’s new Felipe Ángeles International Airport (NLU) for passenger airlines. Last week, the government issued a decree forcing cargo operators to move to the new hub within the next 108 days. In a comment sent to the US Department of Transportation (DOT) regarding Allegiant Air and Viva Aerobus’ approval of and antitrust immunity for their commercial alliance agreement, Volaris informed the US government it fears the Mexican government could force a relocation shortly. The Mexican airline said: “Although the Mexican government has not yet issued an order requiring passenger carriers to move all operations to NLU, the recent actions taken by the Mexican government demonstrate a clear intention to do so. Indeed, Mexican government officials have stated their intent to move passenger airlines providing scheduled service to NLU.” Moreover, such a direct order from authorities to forcefully relocate to the new airport would be consistent, Volaris said. Last week, a decree was issued by Mexico’s Ministry of Transportation confirming that cargo providers must leave Mexico City International (MEX) and move to NLU within the next few months. We should take this statement from Volaris with a pinch of salt. The airline's intention in saying it fears a forceful relocation is to request the DOT to deny Viva Aerobus and Allegiant’s Joint Application. Using the forceful relocation fears is an argument given by Volaris’ management to show that the market access in Mexico City is in a complex scenario; therefore, the DOT should complete a detailed review before granting antitrust immunity to Volaris’ ultra-low-cost competition. Looking at the facts Nonetheless, it is interesting to see these fears by Volaris. The Mexican government has indeed shown interest in the past in moving more flights and airlines to the Felipe Ángeles International Airport, which was inaugurated in March 2022, and it is the pet project of current president Andrés Manuel López Obrador. The president has said in the past that the government could sign a decree and force the relocation at any time. Nevertheless, he prefers to ‘negotiate and convince’ rather than to force. He would like to reduce as much as 25% of all operations at MEX and send them to NLU. Volaris, Aeromexico, and Viva Aerobus have already moved a fraction of their operations to the new airport. Aeromexico even announced last week it will launch a service to the United States from NLU, reaching Houston on May 1, 2023. Aeromexico found a way to circumvent Mexico’s current Category 2 downgrade, which would theoretically forbid Mexican carriers from launching new routes to the United States. In addition, carriers are being pushed to initiate service at NLU. Arajet and Copa Airlines have launched non-stop international services from this airport already. Volaris claimed that the viability of moving a small number of operations to NLU is yet to be seen. In 2022, Felipe Ángeles International received 972,933 domestic and 22,477 international passengers in nine months of operations. This number is only a fraction compared to the over 45 million passengers received by MEX. Could a forceful relocation take place? There’s no doubt Mexico’s president López Obrador would love to see more action taking place at its flagship project. He is entering the final year and a half of his administration and certainly would look to leave NLU stronger. By forcefully moving all cargo operations to NLU (about 3% of yearly departures at MEX), Mr. Lopez Obrador is testing the waters. He is seeing how the airline industry reacted. Both IATA and ALTA requested more time but were unable to push harder, and the Mexican government was successful in its power bid. The Mexican president is likely to repeat this attempt in the future, forcing more operations to be moved to the Felipe Ángeles International Airport despite ongoing concerns such as lack of ground connectivity, the distance from Mexico City, and airspace congestion.

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