Ever since Mexican President Andrés Manuel López Obrador (AMLO) took office in December 2018, it has been a wild and terrible ride for the country’s commercial aviation sector. The latest decision — to buy the remains of Mexicana and turn it into a government-run airline — could very well be the strangest of all. But it’s not clear if it’s actually any worse than the others.
Killing the New Mexico City Airport
The first decision was actually the result of a campaign promise. Mexico City’s primary airport was overburdened and a replacement was well underway. By November 2018, more than $5 billion had been spent and it was a third complete, as I wrote about at the time.
When AMLO took office, he shut the whole project down, leaving it to die. Instead, he had a grand plan to reform the old Santa Lucia Air Force base on the north side of town and create a messy regional airport strategy that no airline would ever want.
Since that time, the Felipe Ángeles International Airport has been born. It cost $4 billion according to official sources, but a media report says it ballooned to $5.6 billion. Combine that with the $5 billion already spent on the new Mexico City airport and the estimated $9 billion to scrap it, and you can see how this decision makes no sense at all for a globally-important city.
Airlines rushed into Felipe Ángeles. Oh wait, no they didn’t. Of course, they couldn’t ignore it, because the president backed it, so they had to make nice. Still, as Cirium data shows, service at the new airport is a fraction of the primary airport in town.
Departures by Month at Mexico City Airports
Aeroméxico is the largest tenant with about 15 daily flights to Acapulco, Cancún, Guadalajara, Mérida, Monterrey, Oaxaca, Puerto Vallarta, and Veracruz. Volaris is next with less than 10 a day to Cancún, Guadalajara, Huatulco, La Paz, Mérida, Mexicali, Oaxaca, Puerto Vallarta, Puerto Escondido, San Jose del Cabo, and Tijuana. Viva Aerobus is in third with about 4 a day to Acapulco, Cancún, Monterrey, Oaxaca, Puerto Escondido, and Tijuana. It also has one of the only international flights to Havana.
The other international flights? The most notable is Copa with 3x weekly to Panama City, but there is also Conviasa with an occasional (maybe weekly?) flight to Caracas, and start-up Arajet with 4x weekly to Santo Domingo. That’s it.
This plan has not gone well. While there’s a ton of room up at the old air force base, Mexico City’s main airport remains saturated. Thanks to a near-accident in May, operations at Mexico City were reduced even further. This is in theory temporary, but the flight levels at MEX are indicative of just how much better it is for airlines than some far out air force base. And the cherry on top is that in the end, the best case scenario is that it didn’t save much money. More likely is that it will be even more costly than the original, superior plan.
Category 2 For Life
We know MEX is full, so how to fix it? One great way to help reduce flying is to royally screw up your air traffic oversight. Problems with Mexico’s system led to the US Federal Aviation Administration (FAA) downgrading Mexico to a Category 2 IASA rating from the usual Category 1, meaning the country is found to not comply with International Civil Aviation Organization (ICAO) standards.
What does this mean? Most importantly, Mexican airlines can continue to operate what they had been operating at the time of the change, but they are not able to add new routes and grow. That certainly helps keep a lid on traffic demand in Mexico City.
Further, this restricts a US airline from codesharing with an airline in a Category 2 country. That means Delta’s joint venture with Aeroméxico is a shell of what it could and should be, all because the country can’t get its act together.
AMLO says a Category 1 rating is coming back, but it has now been close to two years since the change happened in May 2021, and everyone is still waiting. Recent footage of terrorists shooting at an Aeroméxico airplane in Culiacán — not to mention the massive theft of copper wiring required to run MEX systems — have not helped instill confidence.
How do you distract from such systemic failures across the board within Mexico? You start a new airline, of course.
Mexicana Returns After a Long, Long Time
AMLO has a vision for how he thinks air travel should work in his country, and when he doesn’t get what he wants, he throws a tantrum. The tantrum this time has resulted in the decision to establish a new government-run airline.
This idea is bad enough on its face — it’s simply not needed — but AMLO’s plan is particularly terrible.
Instead of a clean-sheet plan, AMLO had the military purchase the remains of Mexicana for a little over $40 million. Mexicana hasn’t flown in over a decade — since 2010, to be specific — and has very little to its name. The purchase includes the ability to use the airline’s brand and a couple of buildings.
The beneficiary of this purchase is… the unions which were left holding the bag when Mexicana failed. They will get some money from the government and they will also undoubtedly have a prominent place in the new airline which will only make things less efficient and more expensive.
There is not room for two full-service airlines in Mexico, especially now that Volaris and Viva Aerobus have done such a good job of covering the country with low-fare options. Some may argue there isn’t room for even one full-service airline, but that’s at least debatable. Starting off with burdensome union agreements and nothing else shows that this airline isn’t going to be run to be an airline. It’s a jobs program.
What does this mean for the actual, functioning airlines of Mexico? It means non-rational competition in a market where it’s already tough to exist at all. Government policy has only made the situation worse, and AMLO does not seem to care. My condolences to everyone who works in the Mexican airline industry as well as to whoever is in charge of the Aeroméxico relationship at Delta. At least AMLO has less than 2 years left in the job.