The president’s initiative Andres Manuel Lopez Obrador of reforms to Aviation Law to allow air cabotage (transportation of passengers, cargo, mail or a combination thereof between two points in Mexico by foreign airlines) has the argument of favoring connectivity, tourism and generating lower costs for users. It is a unilateral opening, so it does not propose the possibility of reciprocity for Mexican airlines.

It is about the ninth freedom of the air, what is called “open skies”. Next, we will explain what those freedoms are:

First freedom: Right to fly non-stop over the territory of the signatory States (non-stop overflight).

Second freedom: Right to land in the territory of the signatory States for non-commercial reasons (technical stopover).

Third freedom: Right to disembark passengers, mail and cargo in the territory of a State in which the aircraft is not registered.

Fourth freedom: Right to board passengers, mail and cargo destined for the territory of the State in which the aircraft is registered.

Fifth freedom: Right to embark and disembark passengers, mail or cargo destined for the territory of any contracting State.

Sixth freedom: Right to transport between two States other than the one in which the aircraft is registered, flying over the territory of this country.

Seventh freedom: Right to operate correctly outside the State of registration and to embark and disembark passengers, mail and cargo coming from or destined for a third State, which is not the one of registration.

Eighth freedom: Right to transport passengers, mail or cargo from one point to another in the same State, other than the one in which the aircraft is registered. Also known as cabotage.

Ninth freedom: Right to carry cabotage traffic of the granting State in a service that is carried out entirely within its territory (Autonomous cabotage right).

AMLO’s proposal is based on the ninth freedom, forgetting the peculiar national factors that allow companies to compete. Empirical findings appearing in competitiveness guru Michael Porter’s book “The Competitive Advantage of Nations” include the association between vigorous domestic rivalry for the creation and persistence of competitive advantage in an industry. AMLO’s law would destroy the possibility of this national rivalry.

The sector is concerned about the issue of cabotage due to the effects that it would imply in the face of eventual competition in different scenarios, since many countries grant incentives to their national airlines, distorting real competition. The effect of the bill would be to force national airlines to compete under unequal circumstances.

In the reform presented to the Chamber of Deputies on the last day of the ordinary period that ended last December, the modification to article 17 Bis of the Civil Aviation Law stands out, which currently indicates:

Cabotage practices by foreign permit holders in Mexican territory are prohibited.

President López Obrador’s proposal on the article reads:

Cabotage practices by foreign permit holders in Mexican territory will only be authorized under the terms of article 17 Ter of this law.

Article 17 Ter specifies that companies may request the corresponding authorization from the Federal Civil Aviation Agency (AFAC), which will be authorized as long as the following is met: “Causes of public utility, public interest or security are addressed national; that the route be of strategic interest for the development of the airport infrastructure of the Mexican State; have the favorable opinion of the National Security Council; that the airport that is the object of the request has creditable technical and operational capacity and meets the other requirements established in this Law and its regulations”.

It seems that the authentic intention of the presidential initiative is to encourage the use of the Felipe Ángeles Airport (AIFA). With the wording proposed regarding the eventual authorization of cabotage, it is clear that AIFA is in a position to be one of the two points of operation for foreign airlines, which could not happen with the saturated Benito Juárez International Airport of the City of Mexico.

Moreover, some authors have highlighted that even expressly, in the Base Document to comply with the Presidential Instruction to increase air operations in AIFA, it is mentioned that the Secretariat of Infrastructure, Communications and Transportation, the Secretariat of Tourism, the Ministry of Foreign Affairs and the Ministry of National Defense must carry out “the necessary actions so that airlines from other countries (United Arab Emirates, Portugal and Turkey) can make flights to the international airports of Cancun-AIFA-Cancun- countries of origin”.

According to the Pilots Union Association (ASPA), “the Mexican government seeks to authorize it with the mistaken idea that foreign companies will encourage competition; On the contrary, cabotage opens the door for them to harm Mexican aviation, since they will take the profitable routes, not the ones that the government offers them.”

This is added to the possibility of creating a State airline, with the problems that this implies for maintaining competitive neutrality. Nor should we forget the downgrading of our country’s aviation category due to failures in safety supervision imposed by the US government’s Federal Aviation Administration, which prevents our airlines from competing in the same position as US airlines.

However, it doesn’t necessarily have to be that way. Claudio Agostini points out in a study that open skies in Chile -albeit with reciprocity for Chilean airlines- have not implied a lack of competition and abusive exercise of rights of dominant power. Other studies are not so conclusive: there are indications of possible abuses of a substantial position due to the size of the company, in this case Latam Airlines, the result of the merger of several South American airlines. The FDN consultancy indicates that there have been new entrants and an increase in the number of passengers in recent years in Chile.

Competition without adjectives? Skies open to all? Force everything to use a remote airport with no nearby infrastructure like AIFA? Perhaps it would be better to maintain control over the companies that fly over our streets and establish other types of more specific instruments to promote the use of the airport, which constitutes presidential obstinacy, or if an open skies policy is played to artificially manipulate the market of our country, require reciprocity and a prior feasibility study for the entry of new competitors.