Volaris and Viva Aerobus Set to Soar: Merger Plans Create Mexico's Largest Domestic Carrier

Mexican budget airlines Volaris and Viva Aerobus plan to merge, aiming to reduce aircraft ownership costs and form Grupo Mas Vuelos, the largest domestic carrier. The merger, deemed a 'merger of equals,' faces regulatory challenges, with significant industry implications due to their combined passenger share.

The anticipated merger between Mexican budget airlines Volaris and Viva Aerobus is poised to create a formidable entity in the aviation sector. Dubbed Grupo Mas Vuelos, the new airline conglomerate aims to leverage its enhanced bargaining power to mitigate high aircraft ownership costs, a significant financial burden surpassing fuel expenses.

Executives revealed that the strategic move is expected to position the group as Mexico's leading domestic carrier. Both carriers currently operate exclusively with Airbus machinery, covering similar routes. News of the merger agreement saw Volaris shares surge, marking an unprecedented spike of nearly 17%.

Despite the merger of equals framing, challenges lie ahead with regulatory approval, as competitors, especially Aeromexico, are likely to contest. The recent dissolution of Mexico's independent anti-competition regulator adds layers of complexity, transferring oversight to an economy ministry-controlled agency.

(With inputs from agencies.)