Less than two hours ago, Allegiant Air and Viva Aerobus announced that Mexico’s Federal Commission for Economic Competition (COFECE) had cleared an agreement between the two airlines unconditionally.
One down, one to go
The commercial alliance agreement between Allegiant and Viva Aerobus was announced almost a year ago, in December 2021. Approval from the United States Department of Transportation is still pending, but the Mexican antitrust commission l ‘approved. Allegiant plans to acquire a strategic stake in Viva Aerobus as part of the proposed alliance.
“The authorization of COFECE is a step towards creating an alliance that will strengthen a competitive environment with a broader offer between Mexico and the United States. By working as a team, we will stimulate air travel and tourism while reaping the economic benefits associated with the travel industry.”
This commercial alliance agreement between Viva Aerobus and Allegiant is the first of its kind in the airline industry between Ultra Low Cost Carriers (ULCC). The goal is to expand low-cost service between the United States and Mexico.
Photo: Lukas Souza | single flight
Through this agreement, the two airlines will share codes, offer redemptions and rewards on their respective loyalty programs, and share sales systems and route networks. Currently, Allegiant does not have international flights, but thanks to the agreement, it will have the possibility to start flying to Mexico.
“This approval is an essential next step in achieving a historic and unique alliance between two low-cost carriers in the world’s most dynamic airline market. Together, we will enable more people to fly and enjoy the culture, traditions and unique landscapes destinations that both countries have to offer.” – John Redmond, CEO, Allegiant Airlines
Simple Flying has contacted Allegiant for comment regarding the airline’s expectations for DOT approval and has not received a response as of press time.
What will Viva Aerobus do with a $50 million investment from Allegiant?
Last month, the airlines submitted a new joint venture proposal after the DOT requested additional information about the partnership, including what Viva Aerobus planned to do with the $50 million Allegiant said it would. would invest.
The Mexican ultra-low-cost carrier said its intention is to use the net proceeds from the investment to renew and expand its fleet, repay financing for existing aircraft, add new routes, maintain current aircraft and engines and increase marketing spend. The money is used to fuel Viva’s operations and is not specific to the alliance, although some decisions made may benefit the alliance.
Photo: Viva Aerobus.
Today, Viva Aerobus has a fleet of 65 Airbus aircraft. Viva’s fleet of 40 Airbus A320s and 25 A321s is the youngest in Latin America. The carrier has an unfulfilled order for around 30 more planes from Airbus and has complained that delivery delays have impacted its ability to open new routes.
Allegiant repays its CARES Act loan
In September, Allegiant announced that it had repaid its $24.8 million loan received under the CARES (Coronavirus Aid, Relief, and Economic Security) Act. The CARES Act provided relief to many businesses in various industries in the United States, and Allegiant was able to repay the full amount in just over two years.