Mexico Aims to Cut Flight Costs by Up to 12% After Fee Change

Mexico is looking to reduce the costs of airplane tickets by as much as 12% following the modification of a fee structure for airport operators.

(Bloomberg) — Mexico is looking to reduce the costs of airplane tickets by as much as 12% following the modification of a fee structure for airport operators. 

The government estimates cost reductions of between 9% and 12%, said Miguel Vallin, the head of the Federal Civil Aviation Agency (AFAC), at the ALTA Airline Leaders Forum conference. The reduction will take place from January. 

“Flights will go down by a decent percentage,” he said. 

Mexico shocked investors earlier this month by changing the terms of the contributions airport operators pay to the government. The announcement roiled markets, with shares of airport operators falling as much as 44%, amid concerns of overreach by President Andres Manuel Lopez Obrador. 

On Thursday, the operators reached a deal with the government to pay it 9% of gross revenue, up from the current 5%, though it’s still unclear how consumers will be impacted.   

“The reduction in fees will also reduce costs,” Vallin said. “This represents a reduction of profits for the airport groups. But it’s not as drastic as some want it to seem, rather, it’s a rearrangement of how the fees should be based on growth and users’ possibilities of paying the service.”

Read More: Why Mexican Airport Fees Led to a Stock Market Selloff: Q&A

Passengers pay an airport use fee as part of their airfare, known as the TUA. Fees were previously reviewed every five years, but the government now aims for that to happen annually, Vallin added. Reviews on airport operators’ investment plans will continue to happen every five years. 

Among the ambitious plans Lopez Obrador has for the aerospace sector is the revival of carrier Mexicana de Aviacion as a state-owned airline. Still, the AFAC has not yet received from Mexicana the details of the aircraft it plans to use — including serial numbers and registration information — that are necessary to approve their operation, Vallin said. 

“We can’t yet talk about a precise date because up until Friday we hadn’t received the request to review aircraft information,” he said. “Once we receive it, we’ll give it the due process to authorize the services, but we don’t have it for now.”

No Mexicana tickets have been sold yet, and the company’s website has been modified to prevent people from attempting to do so, Vallin added. Still, various parties are working to meet  Lopez Obrador’s goal of starting operations on Dec. 1. 

Read More: AMLO’s Mexicana Airline Has No Jets or Schedule Ahead of Launch

In a different press conference, Boeing Co. Latin American President Landon Loomis said the company is continuing to work with the government on planes for Mexicana, but declined to give more details. 

–With assistance from Andrea Navarro.

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