Mexico's Airlines Can Resume U.S. Growth Following Safety Upgrade

The U.S. Federal Aviation Administration upgraded the safety rating of Mexico's aviation regulator to its highest rung, Category 1, on Thursday. That allows Mexican airlines to add new flights to the U.S. and resume their partnerships with U.S. carriers, including Aeromexico's joint venture with Delta Air Lines.

The move has been expected for months with Mexico's three main airlines — Aeromexico, Viva Aerobus, and Volaris — all eager to resume growth to their largest international market. They have been barred from adding new flights and destinations since the FAA downgraded Mexico to Category 2 in May 2021.

TD Cowen analyst Helane Becker, citing conversations with Volaris management the week before, wrote Tuesday that she expects the budget airline to add flights on existing routes and expand U.S. flying from its Guadalajara hub following the safety rating upgrade. New flights would likely begin in the fourth quarter, or by December. Volaris is Mexico's largest airline.

In addition to new flights, Volaris is expected to begin a delayed codeshare partnership with Frontier Airlines with the safety rating change. And Viva Aerobus could now implement its proposed joint venture with Allegiant Air if U.S. authorities sign off; U.S. review is on pause due to concerns over Mexican President Andrés Manuel López Obrador's efforts to move cargo airlines to Mexico City's new Felipe Angeles airport from Mexico City International Airport.