There is a new alliance between Allegiant and Viva Aerobus that has the potential to disrupt travel between the United States and Mexico.
Allegiant plans to start a Mexico service.
Allegiant is an ultra low cost carrier in the United States that offers point to point flights with low fares. Allegiant has carved out a niche and adds value to consumers because they don't have competition. Allegiant does not currently fly to Mexico.
Viva Aerobus is a Mexican ultra low cost carrier with a fleet of roughly 50 A320-family aircraft. The airline has flights to the United States and Mexico.
The two airlines are planning a fully integrated commercial alliance agreement that will greatly expand the options for nonstop leisure travel between the United States and Mexico. This would be the first arrangement of its kind. Here is what we know so far.
Allegiant and Viva Aerobus have applied for antitrust immunity with the US Department of Transportation, similar to the joint venture between Delta and Aeromexico.
Allegiant will make an equity investment of $50 million in Viva Aerobus, and Allegiant's CEO will join the board.
Viva Aerobus will add routes to underserved destinations in the United States, like Las Vegas, and Allegiant will add flights to destinations like Mexico, Los Cabos, and Puerto Vallarta.
Viva Aerobus will be able to grow its customer base in the United States by gaining access to Allegiant's distribution network.
The alliance will be launched in the first quarter of 2023.
Maurice Gallagher is the CEO of Allegiant Airlines.
It will be a great win for consumers seeking affordable, nonstop travel between the U.S. and Mexico, and will create rippling economic benefits for the sector. The alliance should link many new transborder cities with nonstop service. It will bring meaningful ULCC competition to the U.S.-Mexico market for the first time in history.
Juan Carlos Zuazua is the CEO of Viva Aerobus.
The U.S.- Mexico market is currently the largest international air travel market in the world due to a strong leisure and VFR recovery where both Viva Aerobus and Allegiant have excelled. This unique ULCC alliance will create new non-stop connections and more competition, strengthen the Hispanic VFR market and offer amazing holiday get-aways for residents of both nations.
There are maps showing Allegiant's two, five, and 10 year Mexico plans without an alliance, and then the alliance's combined two, five, and 10 year Mexico plans. The potential is huge.
This alliance is great for consumers.
There is always a question of whether a joint venture is good or bad for consumers. Anti-trust immunity gives airlines the ability to coordinate fares, schedules, pricing, etc., and eliminate a competitor in a particular market. The Department of Justice is challenging the concept of this alliance.
The consumer benefit would be huge, since Allegiant doesn't currently fly to Mexico, and without the alliance, the airline didn't have plans to fly to Mexico in the future. The potential here seems endless, as Allegiant is good at what it does.
Viva Aerobus has struggled to grow in the United States due to lack of name recognition and partnerships. Allegiant is smart with route planning and has a large customer base.
The bottom line.
Allegiant and Viva Aerobus are launching a new partnership that will allow travelers to travel between the United States and Mexico. The plan is for Allegiant to invest $50 million in Vivo Aerobus, and then the two airlines would launch an alliance between the United States and Mexico, allowing the airlines to coordinate routes, schedules, fares, and more.
Allegiant hasn't flown to Mexico before, so there's potential for new low fare routes between the two countries.
What do you think about the new partnership between Allegiant and Viva Aerobus?
