Investing in the new airline would mean a great financial risk for Mexico, if it does not return to Category 1, according to what Juan Carlos Machorro comments.
One thousand 800 million dollars would be allocated to the generation of a new commercial airline.
Mexico has been in Category 2 for more than a year and a half, that is, routes and air frequencies are frozen.
through the leaks of Macaw Leaksit was learned that the Secretariat of National Defense (Sedena) and the Government of Mexico are on their way to developing a new airline in the framework of a downgrading of 17 months to Category 2. This increases doubts about whether the investment being sought represents an effective business.
For this, the opinion of an expert in the field of law was requested, as well as the impact of the structural reforms in the country, including projects of public and private initiative, highlighting those that concern the aeronautical industry.
Should Mexico invest in an airline without having Category 1?
in conversation with Juan Carlos Machorro, partner of Santamarina + Stetawho is also the leader of the firm’s transactional and financial practice area, with a track record of 30 years, was asked about the relevance of carrying out a project as large as the Sedena airline in Mexico would be.
This, recognizing that the commitment of the 4T has been framed to a great extent in the elaboration of projects that connect the country, such as the AIFA and the Mayan Train. “I think the answer, personally, is negative. It is not necessary, it is not effective, it is not efficient and it is not responsible, ”she points out in the first instance.
“There is talk that at least 1.8 billion pesos would be needed. That would have to be seen, because then they are very cheerful figures and it could be more. We should ask ourselves if these resources, within this Communications and Transportation sector and specifically within the Aviation subsector, could not be used in a more responsible manner”.
“We have airlines that are going bankrupt in Mexico. We have a sector where the Government did not support the airlines with a penny cut in half during the pandemic. We have a sector where we have been downgraded to Category 2 for 17 months, due to the United States Federal Aviation Administration (FAA). That had never happened in the country’s commercial aviation history. The last time a downgrade to Category 2 occurred was during President Calderón’s six-year term.”
The downgrading to Category 2 by the FAA represents a great impact for airlines in Mexico. Juan Carlos Machorro explains in detail what a downgrade to Category 2 implies for Mexico in commercial terms and points out the precedent presented in recent years.
With this, it highlights that the commercial aviation sector operates based on bilateral agreements between different countrieswhich allow airlines from other countries to transit and fly over the airspace of the first country or even land at its airports for technical scale purposes “or to drop off and pick up passengers or cargo.”
However, it points out that the United States of America maintains a policy of auditing the aviation authorities of the countries, whose airlines fly to the United States and intend to transit through North American airspace, this framed in the security standards proposed by the International Civil Aviation Organization (ICAO). The objective of this is to generate peace of mind in the North American Government, that there will be no incidents or accidents derived from a deficient application of these security policies by other governments.
“When the American Government carries out an audit and determines that the minimum security standards are not met, it downgrades you to Category 2. This was declared for Mexico on May 25 of last year. It means that they are going to monitor with much greater scrutiny the operations that come from Mexico. Second, the opening of any new route to the United States is suspended, you are left with the frozen routes. Third, you cannot add new frequencies to already established routes, you are frozen with the ones you already had”.
“The difference between routes and frequencies is, for example, a route from Mexico to Dallas and Dallas to Mexico. One frequency is Puebla weekly to Dallas. Thus, you cannot increase neither one nor the other, you cannot operate shared codes and, finally, you cannot increase the fleet of aircraft that you already had authorized to operate”.
This in the written sense affects the country and the aviation industry taking into account that airlines cannot include new models of existing airlines. This, in a sense, “eats the market” for Mexican lines, since US lines do not have these restrictions.
The reflection made by the specialist is that a new Government airline is not needed, nor is the investment of public resources justified. On the other hand, it is necessary to allocate budgetary resources, human resources and technological resources to thinking, with the aim of reversing this degradation from Category 2 to Category 1.
“And more than that, a fundamental solution, that here we must recognize that this has not been the exclusive responsibility of this administration, is to have a comprehensive long-term aviation policy,” he says.
The policy must include all interest groups: passengers, airlines, the aeronautical authority, airport groups and the tourism sector. With this, it will be possible to give sufficient importance and resources to issues of aviation safety, flight operators and pilot unions.
Sedena’s new airline, has the purpose of operating routes that commercial lines do not want to operate and generate profits for pensions. However, the expert points out that this represents potential risks, since commercial lines are guided by the law of supply and demand, which makes it impossible for a government-operated line to provide a better utility.
Likewise, being a business subject to important pressures of all kinds that make even investors fear to enter, it is unthinkable that the Government, with public resources, could have a better result.
Now read:
Weber Shandwick: “human connection, engine of commercial work”
AMLO points to low insecurity; they question attention in public prosecutor’s offices and procurator’s offices
Fourth Fair of the Neighborhoods in CDMX; this is how culture is lived
Exclusive with Luuna: technological transformation at rest