General

In 2023, the Mexican aviation industry has seen significant growth, becoming the largest market in Latin America, surpassing Brazil. This growth has been driven by both domestic and international demand, resulting in a notable 16% increase in passenger numbers compared to pre-pandemic figures. Between January and June, the industry recorded a total of 58.15 million passengers. Mexico's three major airlines – Aeromexico, Viva Aerobus, and Volaris – have made great progress in recovering from the unprecedented challenges that the aviation sector faced during the COVID-19 pandemic.

Despite this positive momentum, the Mexican aviation industry faces a set of intricate challenges, with one of the most significant being the degradation of Mexico's aviation safety rating to Category 2 status by the Federal Aviation Administration (FAA). This downgrade was issued due to Mexico's failure to meet International Civil Aviation Organization (ICAO) safety standards, a decision made in May 2021. The government has yet to regain its original categorization, resulting in financial repercussions for the industry. A Category 2 ranking comes with its own set of challenges, including restrictions on Mexican airlines' ability to launch new services and routes to the United States. 

1. Efforts to regain Category 1

Experts within the aviation sector share a consensus that Mexico's primary goal should be the restoration of its Category 1 status. The Mexican government has expressed its commitment to achieving this reclassification and assures that it is in progress.

José Ricardo Botelho, Executive Director at the Latin American & Caribbean Air Transport Association, stated: "Once Mexico regains Category 1, airlines will have the opportunity to increase the number of flights, routes, and options to the largest source market for tourists in our region. It's worth noting that, as of April 2023, 66% of the international market was controlled by 12 North American companies, and domestic airlines have been losing ground."

2. Improve cargo opportunities

After the COVID-19 pandemic, the cargo segment experienced a swifter global resurgence, including in Mexico. Nonetheless, cargo-only airlines face obstacles in the country, notably the relocation of operations from Mexico City International Airport (MEX) to the newer Felipe Ángeles International Airport (NLU). The Category 2 downgrade continues to pose a challenge in this sector as well.

Luis Sierra, CEO at mas, highlighted how the Category 2 demotion has put Mexican firms at a disadvantage against unrestricted international players. He emphasized the need for Mexico to regain Category 1 status and advocated further operational deregulation, reduction of administrative burdens, and exploration of non-traditional markets.

3. Mexico City airport and Mexicana de Aviación 2.0: uncertainties

Parallel to the Category 2 downgrade, the greatest ongoing challenge for the Mexican aviation sector revolves around the uncertainty involving the Mexico City metropolitan airport system, encompassing MEX, NLU, and Toluca International Airport (TLC). The current administration's push for increased usage of NLU has resulted in reduced operations at MEX (from 60 to 52 flights per hour) and the relocation of all cargo activities. These changes, where the industry seemed largely excluded from the decision-making process, have shown the need for greater collaboration between authorities and industry stakeholders.

Additionally, the Mexican army plans to launch a new airline, Mexicana de Aviación, based in NLU, operating domestic flights to 20 destinations with a fleet of ten Boeing 737-800s. The government is investing four billion Mexican pesos (about $238 million USD) for the launch of this new company in December. The industry is concerned regarding potential subsidies to the new State company.

4. The need for a State aeronautical policy

Moving forward, the Mexican aviation industry is in dire need of a comprehensive State aeronautical policy to ensure strategic decisions are made collaboratively and with a long-term view. Erándeni G. Calderón Martínez, an aviation law specialist and Director of the Bachelor's Degree program in Airport Management at the Universidad Regional del Norte, underlined the necessity for a collaborative State aeronautical policy, ensuring transparent rules, fostering orderly growth, and benefiting both companies and air transport users.

5. Net-zero 2050 goals

As a member of ICAO, Mexico adopted the collective long-term global aspirational goal of achieving net-zero carbon emissions by 2050. However, substantial work remains. The country's lack of infrastructure for Sustainable Aviation Fuel (SAF) development hinders progress toward this goal. SAF could contribute around 65% of the reduction in emissions needed by aviation to reach net-zero in 2050.

Peter Cerdá, regional vice president for International Air Transport Association (IATA) in the Americas, underscored the industry's commitment to environmental sustainability, emphasizing SAF's crucial role in reducing the carbon footprint. He also noted the region's potential to become a global leader in SAF production.

A comprehensive analysis

In the coming months, IBS Software and the Latin American & Caribbean Air Transport Association (ALTA) will release a comprehensive analysis of the Mexican aviation industry.

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