- Joe Breitfeller
Allegiant Travel and Viva Aerobus Announce Fully-Integrated Commercial Alliance Agreement
Allegiant and Viva Aerobus have announced plans for a fully-integrated Commercial Alliance to expand direct leisure air travel connectivity between the U.S. and Mexico. The agreement is the first of its kind in the industry between two ultra-low-cost carriers.
On Wednesday (December 1, 2021), Allegiant Travel Company announced the launch of an industry-first fully-integrated Commercial Alliance Agreement with Mexican ultra-low-cost carrier (ULCC) Viva Aerobus. The alliance will expand nonstop options for leisure travelers between the U.S. and Mexico. The airlines have submitted a joint application to the U.S. Department of transportation (DOT) requesting approval and antitrust immunity for the alliance. As part of the partnership, Allegiant will make an equity investment of $50 million in Viva Aerobus and Allegiant’s Chairman and CEO, Maurice J. Gallagher, Jr., will join Viva Aerobus’ Board of Directors.
In Wednesday’s announcement, Allegiant’s Chairman and Chief Executive Officer, Maurice J. Gallagher, Jr., said,
“Allegiant and Viva Aerobus operating together will be a tremendous win for consumers seeking affordable, nonstop travel between the U.S. and Mexico, and will create rippling economic benefits for hospitality sector business across both nations. This groundbreaking alliance should reduce fares, stimulate traffic, and ultimately link many new transborder cities with nonstop service. In short, it will bring meaningful ULCC competition to the U.S.-Mexico market for the first time in history.”
Also commenting on the proposed alliance, Viva Aerobus’ Chief Executive Officer, Juan Carlos Zuazua, said,
“The U.S. – Mexico market is currently the largest international air travel market in the world; during the pandemic it has outperformed any other market due to a strong leisure and VFR (Visiting Friends & Relatives) recovery where both Viva Aerobus and Allegiant have excelled. This unique ULCC alliance will create new non-stop connectivity and more competition, strengthening the immense Hispanic VFR market and offering amazing holiday getaways for residents of both nations.”
Under the Commercial Alliance Agreement, Allegiant will broaden their travel offer to include new world-class vacation destinations in Mexico including Cancun, Los Cabos and Puerto Vallarta. At the same time, Viva Aerobus will gain access to Allegiant’s distribution network and point-of-sale process, thereby growing their U.S. customer base. The alliance will also enable Viva Aerobus to add U.S. routes, especially in underserved markets to Mexico where Allegiant has a substantial presence such as Las Vegas and several gateways in Florida. A fully-integrated and immunized alliance would allow the airlines to coordinate across all areas of operations including codesharing, scheduling, marketing, information systems and loyalty programs.
Additionally, the alliance is expected to add new transborder routes and nonstop competition where only connecting service is currently available. As part of the DOT application process, over 250 new potential routes have been identified. Pending government approvals from both the U.S. DOT and the Mexican Economic Competition Commission and other regulatory authorities, Allegiant and Viva Aerobus expect to offer flights under the alliance from the first quarter of 2023. Barclays, Goldman Sachs and White & Case acted as financial and legal advisors for Viva Aerobus, while WilmerHale and Garofalo Goerlich Hainbach, PC acted as legal advisors for Allegiant.
Viva Aerobus is a Mexican ultra-low-cost carrier (ULCC) founded in 2006. The company currently operates the youngest aircraft fleet in Latin America with 52 Airbus A320 Family aircraft. The airline is committed to the democratization of the airline industry, giving all people the opportunity to fly, by offering the lowest fares in México.
Founded in 1999, Allegiant links passengers from small to medium cities to world-class leisure destinations with all non-stop flights and industry-low average fares. The company offers base airfares that are often half the price of a typical roundtrip ticket and operates an all-Airbus A320 Family fleet.
Source(s): Allegiant Travel Company, Grupo Viva Aerobus