Mexico, U.S. extend agreement on air transport

Mexican FlagAn increase in trade and pleasure travel is expected as a result of an extension to an existing agreement between the United States and Mexico on air transport that dates back to 1960. Under the old agreement, only a limited number of U.S.-based carriers could fly between any given city in Mexico. The new deal, once ratified, will removed that restriction, so the cross-border city pairs can be unlimited.

Mexico’s Transportation Secretary Gerardo Ruiz Esparza signed the new agreement with U.S. Transport Secretary Anthony Foxx in Washington, D.C., on Dec. 18, describing the accord as “transcendental” as they expect it will improve trade and connectivity.

Foxx and U.S. Secretary of State John Kerry forecast a significant increase in trade and travel between the two countries. “Cargo carriers will now have expanded opportunities to provide service to new destinations that were not available under the current, more restrictive agreement,” they said in a joint statement. Expansion of air cargo is anticipated on a global scale because a Mexican or American carrier will be able to transport freight from either country to a third country, as well.

The agreement, however, has caused disputes between Mexican airline executives and labor unions, as well as fears that U.S.-based fleets, which have about 7,500 aircraft, will overwhelm their Mexican counterparts, which have roughly 300 aircraft, according to Mexican media.

“The new agreement will benefit airlines, travelers, business, airports and locations in the U.S. and Mexico to allow greater market access to passenger and cargo airlines,” officials from both countries said in a joint statement.

The new agreement will be implemented once it is approved in Mexico and receives a green light from the U.S. Department of Transportation. Workers and industry analysts agree that Mexican airlines must seek partnerships with U.S. firms that allow them to survive under the new agreement, which will intensify competition in the market.

Aeromexico is the best-positioned Mexican airline to gain from the agreement since it has alliances with Delta Air Lines and American shareholders, allowing them to combine frequencies, pricing and marketing.