Mexico airlines lost over $1 billion due to US safety downgrade –industry head

By Kylie Madry

MEXICO CITY (Reuters) – Mexico’s two-year-old air safety rating downgrade by U.S. authorities has caused a more-than-billion-dollar hit to national airlines, an industry head said in an interview Wednesday.

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

Mexico was downgraded to the Category 2 air safety rating by the U.S. Federal Aviation Administration (FAA) in May 2021 due to lack of compliance with international standards. This blocked Mexican carriers from adding new flights to the U.S. and prevented some marketing tie-ups.

Carrier Aeromexico has said it has been unable to fly newly delivered planes to the U.S. due to a lack of certification. Its rival Volaris has a number of route expansions frozen, pending the rating’s return.

In the meantime, foreign carriers have been free to boost flights, expanding their market share at the expense of Mexico’s domestic airlines, Olivares said.

This month, the FAA wrapped up an audit into the country, which Mexican officials say was the “last” after a series of earlier reviews.

The FAA has yet to make public its decision on Mexico’s recovery of the air rating. The agency’s Mexico head, Norma Campos, declined to comment.

“We (the air transportation chamber) think that will come in July, by the end of July,” Olivares told journalists.

Mexico has revamped its aviation standards since the downgrade, but some sticking points remain.

A source at Mexico’s aviation authority told Reuters FAA auditors found three low-level concerns in its most recent audit regarding procedures for publication and transmission of information and medical exams for aviation workers.

“The medical issue was up for review,” Olivares said, deferring further comment to the transportation ministry.

Mexico’s aviation authority, which is controlled by the ministry, declined a request for comment.

The week after the FAA wrapped up its audit, Mexico’s aviation regulator announced it would temporarily accept expired medical exams for aviation workers.

Those in the field have decried slowdowns in recent months, with just a handful of centers nationwide carrying out the medical exams.