Interjet is bankrupt and Aeromar drags multimillion-dollar liabilities. Volaris, Aeroméxico and Viva Aerobus remain. The three have had a 2022 recovery, but everything seems to indicate that very difficult times are ahead. They will have a new competitor, the Army that will use the Mexican brand and will have public funds. In addition, the possibility of allowing cabotage and, with it, the entry of giant competitors into Mexican territory is in the air.

With cabotage, a foreign airline that, for example, flies from Los Angeles to Guadalajara could sell tickets from the Jalisco capital to Mexico City or Cancun. It would be in a position to offer much lower prices and drastically reduce the income of the companies that normally serve those destinations. In the short term there would be more offer of flights and seats for consumers. Lower prices.

What is the problem? The situation is not sustainable. The problems would appear in the medium and long term. Cabotage would put Mexican airlines in competition with much larger companies and with more efficient cost structures. The ending is predictable: the triumph of little David over the giant Goliath is so exceptional that it is for this reason that it is in the Bible. In the matter that does not occupy, it is most likely that the largest will remain with the market and Mexican consumers end up with fewer options. That is one of the reasons why many countries do not allow cabotage: they distinguish between the short-term benefits and the long-term risks and problems.

Has the decision been made to allow cabotage? Not 100%. If we listen carefully to López Obrador’s message on Monday in Campeche, the president presents it as an alternative that he continues to evaluate, although he enjoys his sympathy. It must be said that AMLO’s mind also weighs the possibility that the implementation of cabotage would allow for increased operations at the Felipe Ángeles Airport, with the entry on the scene of prestigious airlines that are not there now. This has apparently been raised by some foreign airlines, when questioned about what they would need to use AIFA.

Are we talking about saving AIFA, at the cost of bankrupting one or two airlines? It is a way of putting things in black and white. It is true that the President has been angry with the Mexican airlines for their resistance to using the Santa Lucía airport more intensively, but we must not lose sight of the fact that the most important thing for the “success” of the Felipe Ángeles is that the works are completed road infrastructure that allows easy and quick access from Mexico City and some areas of Hidalgo or Edomex.

Regarding the vulnerability of the airlines, it must be emphasized that the problems would not start with cabotage, although they would worsen substantially. Remember the blow that the pandemic meant for the aviation sector. It exposed the problems that led Interjet to bankruptcy and put Aeromar in intensive care. Aeroméxico was in Chapter 11 and came out of it, with a much smaller size. It is true that 2022 has been a year of recovery, but for some airlines the good numbers this year are not enough to compensate for the loss that 2020 and 2021 represented.

CANAERO and some unions in the aviation sector have begun to raise their voices to warn of the risks of cabotage, but have remained silent about the entry of the Armed Forces as a competitor. It is a question of a strategic silence, we can assume, in the first place, because very little is known about how Mexicana would function in the hands of the military. What would your business model be? Against them are the inexperience and inefficiencies related to the history of our parastatals. In their favor they will have the use of public resources, including subsidies and regulatory advantages.

We will have a new ecosystem, much more challenging, how many airlines will survive? How long will the weaker opponent last? How will Mexican consumers be, in the end?

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