On Thursday, Las Vegas-based Allegiant Air and Mexico-based Viva Aerobus declared they have filed a joint application with the US Department of Transportation to create an international alliance.
In a press release from Allegiant, the two shared their plans to start into a “completely-integrated Commercial Alliance Agreement,” pending confirmation from the DOT and approval for antitrust immunity.
Currently, there are 14 active antitrust alliances approved by
Antitrust immunity allows carriers in a joint venture to collude on routes included in the agreement, meaning they can modify prices and earn profits, according to the Department of Justice. Currently, there are 14 active antitrust alliances approved by the DOT, like United Airlines and Germany-based Lufthansa; Delta and UK-based Virgin Atlantic; and American and Australia-based Qantas.
- Joining as a team, the duo will be able to coordinate their airline operations, including their data systems, loyalty programs, marketing, scheduling, and routes.
- The alliance will enable Allegiant, which does not currently fly to Mexico, to offer flights to Mexican leisure hotspots.
Meanwhile, Viva Aerobus will be able to add several routes to popular destinations in the US where Allegiant has a strong presence, like Las Vegas and Orlando. According to Allegiant, Viva Aerobus will have access to the Las Vegas-based airline’s distribution network and point-of-sale process.
Allegiant said in a press release that the pair intends the alliance to start in the first quarter of 2023, offering nonstop flights on routes that currently only have connecting service. However, there is one caveat. In May 2021, the Federal Aviation Administration downgraded Mexico to a Category 2 country, involving airlines cannot create different services or routes, though that is but subject to change by the time the alliance begins.
- Allegiant and Viva Aerobus are two individual ultra-low-cost carriers that, according to Allegiant, cannot alone create the network or meet the same level of customer advantage that the alliance will allow.
- “Allegiant and Viva Aerobus operating together will be a tremendous win for consumers seeking affordable, nonstop travel between the US and Mexico,” Allegiant CEO Maurice Gallagher told.
“This groundbreaking alliance should decrease fares, stimulate traffic, and ultimately link many new trans-border cities with nonstop service. In short, it will bring meaningful ULCC competition to the US-Mexico market for the first time in history.
” Allegiant said in a statement that it has invested $50 million into Viva Aerobus and Gallagher is preparing to join the Mexican carrier’s Board of Directors, subject to the approval of the Mexican Federal Economic Competition Commission.
“This unique ULCC alliance will create new non-stop connectivity and more competition, strengthening the immense Hispanic VFR market and offering amazing holiday get-aways for residents of both nations,” Viva Aerobus CEO Juan Carlos Zuazua said.
According to Allegiant, the deal between it and Viva Aerobus will, if approved, be the first ultra-low-cost international alliance in the airline industry.
There are two low-cost alliances currently operating in the world, including U-Fly, a collection of airlines from Hong Kong, Mainland China, and South Korea, and the Value Alliance that consists of five Asia-Pacific airlines.
Low-cost and ultra-low-cost airlines differ because ULCCs provide fewer amenities and charge more fees than traditional low-cost carriers, therefore offering even lower fares, according to airline pilot Spencer Marker.
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