The antitrust immunity for a commercial alliance agreement between Allegiant Air and Mexican ultra-low-cost carrier Viva Aerobus is not pleasing some Allegiant Air employees, according to public comments posted by the Department of Transportation (DOT). The International Brotherhood of Teamsters, the union representing more than 1,150 Allegiant Air pilots, opposed the joint venture between both carriers.
The joint venture is facing opposition
In December 2021, Allegiant Air and Viva Aerobus announced they would push for a joint venture looking to become the largest low-cost option between the United States and Mexico.
Both companies also announced they would pursue antitrust immunity for their partnership, citing that any other type of alliance (for instance, a codeshare agreement) would not generate the kind of growth they could achieve with a fully immunized collaboration. The carriers would have up to 150 routes between Mexico and the United States by 2030, according to Allegiant’s John Pepper, Vice President of Corporate Development.
The DOT finished its initial review of the application earlier this year. It launched a procedural schedule for public comments. Several parties have expressed their support for the partnership, but others have stated their concerns, particularly Allegiant employees.
Replacing American pilots
In a letter of opposition, the International Brotherhood of Teamsters said that approving Allegiant and Viva’s antitrust immunity request would “significantly undermine the capacity for our Union to protect American jobs and improve the working conditions of our membership.”
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The union added that Allegiant’s intention is to replace American airline pilot jobs with those of Mexican pilots “whose salaries are approximately five to six times lower than our members’ negotiated salaries, which are already far below the industry standard.” This would give Allegiant an unfair competitive advantage over other US airlines, the International Brotherhood of Teamsters added.
Additional public comments made by anonymous people state that this venture,
“Would only reward a few executives within the organization. Not the employees.”
“I applaud the recommendation that this agreement would not go into effect if approved if the Mexican flight safety rating is not upgraded by the FAA.”
“This is a sad attempt by Allegiant to undercut our jobs and pay during a heated pilot contract negotiation.”
Volaris also requested the rejection of the alliance
While it may not be a surprise, Mexican ultra-low-cost carrier Volaris requested the DOT to deny the Joint Application of Viva Aerobus and Allegiant. At least, the DOT should defer the approval until Mexico is restored to Category 1, the DOT completes a review of market access in Mexico City, and Viva and Allegiant show “some form of progress concerning their future commercial integration,” Volaris said.
Volaris said that Viva and Allegiant’s promises remain questionable at best. For instance, Allegiant may not be prepared to launch international services until late 2025 at the earliest. And even before launching international flights, Allegiant must reach a new labor agreement addressing the fact that its crews must return to their home base each day.
Viva and Allegiant touted the efficiencies they might enjoy by having a combined fleet of over 200 aircraft by 2027. Some of these benefits would be increasing their presence at numerous airports and providing consumers greater options that compete with legacy carriers, they said.
Nonetheless “the constraints on the stage lengths of services that may be operated by Allegiant would appear to undercut any ability of the carriers to swap their services in response to operational problems,” said Volaris.
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