“Cabotage implied competition for the national airlines to the detriment of their income, their financing and investments,” said Pablo Casas, director of the National Institute of Aeronautical Legal Research (INIJA), an analysis center specialized in the sector.
“So by the time the government decides to withdraw the proposal it is obvious that the markets see it as positive,” he added.
The president of Mexico, Andrés Manuel López Obrador, reported the day before that the controversial proposal had been eliminated from an initiative that seeks to modify the Airport Law and the Civil Aviation Law. At the end of last year, the president sent the initiative to Congress, triggering a fall in Volaris’ shares.
Industry representatives had expressed concern about the bill, arguing that it would put thousands of jobs at risk in an industry just recovering from the ravages of the coronavirus pandemic.
Experts also said that removing cabotage from the administration’s plans to reform local aviation laws would pave the way for its rapid progress in Congress, an important step in the country’s efforts to regain Category 1 US aviation safety, which it was withdrawn in 2021.
With information from Reuters.