More Than $1 Billion Lost by Mexico Airlines Amid FAA Safety Downgrade

The decision by FAA authorities to downgrade Mexico’s air safety rating has cost Mexican national airlines more than a billion dollars.

The news comes on the heels of Aeromexico’s CEO expressing optimism recently that the safety rating may soon be restored, potentially as early as July.

In a new report from Reuters, another industry head said that the U.S. Federal Aviation Administration’s (FAA) decision two years ago to downgrade Mexico’s air safety rating to a Category 2 has had a detrimental impact on Mexican airlines.

“It was a huge loss,” said Diana Olivares, head of Mexico’s air transportation chamber and LATAM Airlines’ (LTM.SN) country manager, told Reuters.

The downgrade of Mexico’s air safety rating took place in May 2021. At the time, the reason given was a lack of compliance with international standards. The move by the FAA meant Mexican carriers have since been unable to add any new flight routes to the U.S.

Meanwhile, Aeromexico has said it has been unable to even fly newly delivered aircraft to the United States due to a lack of certification. At the same time, Volaris has had proposed route expansions frozen, Reuters reported.

While all of this has taken place, other carriers have begun eating away at the market share of Mexican airlines, Olivares told Reuters.

Separately, the FAA has recently completed an audit of the country’s air safety status. But the results of that process have yet to be announced.

Still, Olivares echoed comments that were made recently by Aeromexico CEO Andres Conesa, who said at a Delta public forum recently that he anticipates Mexico’s safety rating will be returned to a higher level next month.
Olivares also projects a similar timeline for such an action.

“We (the air transportation chamber) think that will come in July, by the end of July,” Olivares told journalists.
Mexican officials have also said that their aviation standards have been revamped since the action by the FAA. However, there may be some minor, remaining hiccups to resolve.