Thread: U.S. and Mexico Agree to Liberal Air-Service Treaty

U.S. and Mexico Agree to Liberal Air-Service Treaty

Deal still requires ratification by Mexican Senate


An Aeromexico plane prepared to land at Benito Juarez international airport in Mexico City in July. Friday the U.S. and Mexico signed a liberal air treaty that paves the way for airlines on both sides of the border to ply any route with unlimited frequencies. PHOTO: REUTERS


By SUSAN CAREY
Dec. 18, 2015 12:56 p.m. ET 2 COMMENTS

Government transportation ministers from the U.S. and Mexico on Friday signed a liberal air treaty between the two nations after two years of negotiations, U.S. officials said, paving the way for airlines on both sides of the border to ply any route with unlimited frequencies and set their own prices.

The U.S. currently has 118 such treaties with foreign governments. Mexico was one of the largest countries with which the U.S. lacked such an agreement. The others are Russia and China. The U.S.-Mexico accord must be ratified by the Mexican Senate, and U.S. officials said they couldn’t predict when that would occur.

Thomas Engle, U.S. Deputy Assistant Secretary of State for Transportation Affairs, said in a briefing that the agreement would drive growth by airlines and also sectors such as tourism and manufacturing. He said it would do away with rules that limited service on about 30 cross-border routes to just two or three airlines from each country. That means those routes were closed to new entrants. The enhanced competition “should help keep fares affordable,” Mr. Engle said.

The main airport in Mexico City is congested and airlines must have slots, takeoff and landing appointments, to access that facility. Mr. Engle said the rights in the new treaty allow an unlimited number of carriers to apply to serve routes, but he acknowledged that that airport requires slots, as do a few in the U.S.

Delta Air LinesInc., which has had a code-sharing agreement with Grupo Aeromexico SAB since 1994, currently owns or has options for about 17% of the equity in the company, Mexico’s flag airline. Last month Delta said it intended to tender for an additional 32%, which would bring its stake to 49%. The two carriers last March applied for U.S. government permission for antitrust immunity so they could operate a tight joint venture in which they would share revenue and jointly set schedules and prices.

Susan Kurland, the U.S. Transportation Department’s Assistant Secretary for Aviation and International Affairs, said Friday that the application is pending, with the review focused on whether it is complete. It hasn’t been evaluated on its merits, she said.

http://www.wsj.com/articles/u-s-and-...aty-1450461412

Why change these rules now?