Flight delays: Will the lower rating of the Mexican Federal Aviation Administration hurt the tourism industry? | Aviation News

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With many newly vaccinated Americans making holiday plans after staying at home for a year, Mexico remains one of the most popular international destinations—the country’s troubled tourism industry is ready for the much-needed boost.

Approximately 10.5 million U.S. tourists visit Mexico each year, of which tourism accounts for 8.7% of Mexico’s economy, According to the Organization for Economic Cooperation and Development. After the coronavirus pandemic has had a major impact on tourism revenue in 2020, Mexico is eager to welcome tourists again.

But after the Federal Aviation Administration (FAA) last month, the sky between Mexico and the United States may be quieter than expected in the next few months Downgrades the safety rating of Aeromexico From the first category to the second category.

Carlo Torres, an economic strategist at the consulting group’s strategic affairs, said this could have serious consequences for the Mexican economy.

“The aviation industry went through a very difficult period last year, with a historic decline in passenger traffic,” Torres told Al Jazeera, explaining that the downgrade occurred during the US economic recovery and the holiday season to push more people to Mexico.

He explained that because Aeromexico cannot add more routes, “Mexico cannot meet this positive increase in passenger traffic.”

As demand picks up, Mexican airlines like low-cost company Volaris will not be able to increase new routes to the United States [Courtesy: George Hamlin]

The FAA downgrade also means that Aeromexico will be banned from sharing codes with American Airlines until the FAA is convinced that the country’s aviation authority-the FAA, or AFAC-fully complies with the FAA regulations safety standard. International Civil Aviation Organization (ICAO), a specialized United Nations agency. These standards involve technical expertise, personnel training, record keeping, inspection procedures, and resolution of safety issues.

Madhu Unnikrishnan is the editor of Airline Weekly, the magazine covering the commercial aviation industry and Skift, a media company focused on the travel industry.

He said that although the downgrade is best seen as a “government-to-government technical problem”, the decision may affect the bottom line of Aeromexico and may prevent them from occupying the growth market at a critical moment.

“Mexico cannot add new flights to the U.S. when demand starts to take off. This may affect them [those airlines’] Have the ability to capture some growing markets,” Unnikrishnan told Al Jazeera. “Maybe American Airlines will step in to fill the vacuum. “

Rating impact

AFAC stated in a press release that it intends to “restore Category 1 as soon as possible,” and Mexico’s Deputy Minister of Transportation Carlos Moran told Reuters that he hopes to recover within three months.

Mexican President Andres Manuel López Obrador said that the national authorities will follow the requirements of the FAA, but in the process they attacked the United States.

“Sometimes, some countries think that they are world governments; they forget that there are about 200 countries in the world that are free, independent, and sovereign, so they stand up as juries and they are qualified to review everything,” he said on May 27 Said in the morning press conference.

After the Federal Aviation Administration announced a downgrade, the share price of Aeromexico Aeromexico fell nearly 10% [File: Ted S. Warren/AP Photo]

But Henry Harteveldt, president of Atmosphere Research Group and travel industry analyst, said that the downgrade is not targeted.

“It’s not like the United States said,’Let’s choose Mexico.’ It’s Mexico’s turn to be censored,” Hartwirt told Al Jazeera.

“It is in the best interest of the United States to ensure that security issues are resolved,” he added. “Currently, travel between the United States and Mexico is the largest international destination for American tourists-the airlines between the two countries have a lot of trade, tourism, business travel, air cargo, etc.”

The Mexican authority AFAC pointed out in its statement that the aviation sector was understaffed during the evaluation conducted by the Federal Aviation Administration between October 2020 and February 2021.

Also in these few months, Mexico has become one of the countries with the highest number of COVID-19 infections and deaths in the world.

‘Consumers need not worry; shareholders do’

Mexico is still fighting the pandemic, and its vaccination program has been stable but slow. According to data from the Johns Hopkins University Coronavirus Resource Center, so far, only about 10% of the population has been vaccinated, and the country has an average of about 900 new cases every day, well below the historical high of 28,115 cases in October.

Skift data for Mexican beach vacations (such as the resorts in Cancun and Puerto Vallarta) shows that the number of bookings currently exceeds 2019 levels [File: Emilio Espejel/AP Photo]

But Unnikrishnan predicts that the FAA’s safety downgrade will not affect Mexico’s tourism industry to a large extent, especially in the context of “the United States has a hugely suppressed demand for travel.”

He said: “It is important to remember that this is a downgrade by the Mexican civil aviation regulatory agency, not Aeromexico” and they can continue to operate the same number of flights as before the downgrade.

He pointed out that Skift data for beach vacations in Mexico (such as the resorts in Cancun and Puerto Vallarta) shows that bookings have now exceeded 2019 levels.

“I don’t think any impact will penetrate to the consumer level,” Unnikrishnan said. “People don’t actually think when they make travel decisions,’Oh, well, that country’s civil aviation regulatory agency has been downgraded to Category 2.’

For example, when the FAA downgraded the aviation authorities of Costa Rica and Indonesia in 2019 and 2007, “people are still going to Bali, people are still going to beaches and adventurous holidays,” he said.

However, Unnikrishnan explained that there may be more specific impacts on individual airlines, such as Aeromexico, which has a joint venture with American airline Delta Air Lines.

Tourism accounts for more than 8% of Mexico’s economy, and workers in this industry are eager to rebound after a difficult 2020 [File: Emilio Espejel/AP Photo]

He said that the two companies are negotiating, “this brings everything to a deadlock until the civil aviation regulator is upgraded back to the first category.” The debt-laden Aeromexico “relies on Delta relations for future financial success.”

After announcing the downgrade, the stock price of Aeromexico Aeromexico fell nearly 10%.

“Consumers have nothing to worry about, shareholders do,” Unnikrishnan said.

For Torres, the Mexican president should pay more attention to this situation.

“The aviation industry accounts for about 3% of the country’s GDP [gross domestic product], Especially because of the tourism industry,” he said. “The North American market accounts for 70% of flights and passenger traffic. What if it takes a long time to remove the downgrade? “



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