Why is AMLO in favor of cabotage?
The possibility of foreign companies operating domestic flights, which until now is only allowed for Mexican airlines, seems to be the only way for foreign airlines to show interest in opening operations at the new Felipe Ángeles International Airport (AIFA), something which to date has not occurred.
Avianca executives said in December 2022 that they considered it viable to operate in the AIFA if domestic flights were opened for foreign airlines. Months before, Isidoro Pastor, general director of AIFA, said at a press conference that Copa Airlines he was considering flying from Panama to the new airport and making “cabotage flights” in the country.
One of the arguments of President Andrés Manuel López Obrador to promote his initiative – sent last December, and which would also allow an airport operator to have its own airline – was that cabotage would lower the prices of plane tickets.
But the national airlines argue that there is a risk that their foreign competitors will focus on the most profitable routes, thus there would be no general benefit for users.
How does it affect national airlines?
At the beginning of this year, the national aviation sector closed ranks to pronounce against of the changes to the Civil Aviation Law that would allow the air cabotage in the country, with which foreign companies could operate domestic flights, something that currently only Mexican airlines can do.
Airlines such as Aeroméxico, Viva Aerobus and Volaris had spoken out against the cabotage component, considering that it brought a risk of unfair competition by opening the skies through a scheme rarely seen in the world.
José Humberto Gual, general secretary of ASPA de México, pointed out last January that the opening of cabotage to foreign companies could have negative consequences for the sector and its workers, as seen in Peru, where the entry of foreign airlines resulted in a contraction of the sector and in the loss of workers, who were hired by foreign airlines paying taxes under other regimes, which in turn left an opportunity cost in terms of revenue.
The National Chamber of Air Transport (Canaero) said that it entailed a risk for tax collection, since income taxes (ISR) would remain in the countries of origin of the airlines.
What will happen to AMLO’s initiative on cabotage?
President López Obrador said this Tuesday that the cabotage initiative it had been left out of the package of modifications to the Civil Aviation and Airports laws that it sent for review last December.
“The initiative no longer deals with cabotage, so that those who were concerned about it can celebrate it,” he said during his morning conference.
Months before, Ramón Alcantara Flores, a specialist in aeronautical law, warned that the initiative to modify the Civil Aviation and Airport laws and allow air cabotage to foreign airlines went against the Mexican Constitution, which establishes the preference of pilots Mexicans over foreigners under equal circumstances.
With information from Juan Tolentino