Viva Aerobus and Allegiant announce commercial alliance agreement
The US firm will also make a capital investment of $ 50 million in the Mexican airline
Allegiant (NASDAQ: ALGT) and Viva Aerobus announced their plans to enter into a fully integrated Commercial Alliance Agreement designed to significantly expand low-cost, nonstop flight alternatives between the United States and Mexico, thereby enabling travel more accessible to residents of both nations. This alliance is not only the first of its kind for Las Vegas-based Viva Aerobus and Allegiant, but it is also the first agreement of its kind in the aviation industry between two ultra-low-cost airlines.
Allegiant and Viva Aerobus have submitted a joint petition to the United States Department of Transportation (DOT) requesting antitrust approval and immunity for the alliance agreement. Allegiant will also make a $ 50 million equity investment in Viva Aerobus and Allegiant President and CEO Maurice J. Gallagher, Jr. is expected to join the Viva Aerobus Board of Directors. These operations are also subject to prior authorization from the Federal Economic Competition Commission.
By combining the unique value proposition of its products, its extensive route network and the market experience of two of the world's fastest growing ultra-low-cost airlines, the alliance will achieve significant consumer benefits that would not be possible to achieve. independently.
“The joint operation between Allegiant and Viva Aerobus will be a great triumph for consumers seeking low-cost, non-stop travel between the United States and Mexico; and it will generate economic benefits for the hospitality sector of both nations, "said Maurice J. Gallagher, Jr." This innovative alliance will reduce fares, stimulate traffic and ultimately connect many cross-border cities with direct flights. In short, it will increase the competitiveness of low-cost airlines in the United States and Mexico markets, for the first time in history ”.
"The international market for air travel between the United States and Mexico is currently the largest in the world, and during the pandemic it has had a great performance thanks to a strong recovery in leisure travel and to visit family and friends; segments in the that both Viva Aerobus and Allegiant have highlighted, "said Juan Carlos Zuazua, CEO of Viva Aerobus. "This alliance, unique between two low-cost airlines, will create new connectivity with nonstop flights and increased competition, strengthening the immense Hispanic market focused on visiting loved ones and offering incredible vacation opportunities for passengers from both nations."
Allegiant, the only US-based airline focused exclusively on leisure travel, currently offers nonstop flight service to more than 130 cities in this country, with no operations in Mexico. For its part, Viva Aerobus, based in Monterrey, offers a wide service within Mexico, as well as non-stop flights to the main destinations in the United States and Latin America.
Es así como esta alianza brindará a Allegiant la oportunidad de ampliar su oferta de viajes para incluir destinos vacacionales de clase mundial en México como son Cancún, Los Cabos, Puerto Vallarta, entre otros. Al mismo tiempo, Viva Aerobus tendrá acceso a la red de rutas y ventas de Allegiant, aumentando así su base de clientes en Estados Unidos. La alianza también permitirá a Viva Aerobus agregar rutas en ese país, particularmente en mercados desatendidos o sin explotar hacia México donde Allegiant tiene una presencia significativa como Las Vegas y varias ciudades en Florida, destinos muy populares para los turistas mexicanos.
This fully integrated alliance will allow the coordination of Allegiant and Viva Aerobus in all areas of the airlines' operation, including codesharing, scheduling, marketing, information systems and loyalty programs, providing agile access and benefits for customers of both airlines.
The alliance is expected to generate new cross-border, nonstop routes to destinations where only connecting flights are currently available. More than 250 potential routes have been identified as part of the DOT application, although specific routes will be announced later, following approval of the application.
As of today, Allegiant and Viva Aerobus expect to offer flights under this alliance beginning in the first quarter of 2023, pending government approval. In accordance with national requirements, Allegiant and Viva Aerobus will also be requesting approval of the alliance in parallel with the regulatory authorities in Mexico, including the Federal Economic Competition Commission.
Barclays, Goldman Sachs and White & Case acted as financial and legal advisers to Viva Aerobus. WilmerHale and Garofalo Goerlich Hainbach, PC, acted as Allegiant's legal counsel.