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Discount airlines Allegiant and Viva Aerobus seek alliance

LAS VEGAS (AP) – Budget airlines Allegiant and Viva Aerobus said on Wednesday they would seek antitrust immunity from the US and Mexican governments to work together on pricing, schedules and routes on cross-border flights .

Las Vegas-based Allegiant said it would invest $ 50 million in the Mexican carrier as part of the deal, which it said was the first of its kind involving two super-low-cost airlines.

The airlines have said they plan to begin flights under the alliance in the first quarter of 2023, pending approvals from the U.S. Department of Transportation and Mexico’s Federal Economic Competition Commission.

Maurice Gallagher, CEO of Allegiant Travel Co., is expected to join the board of directors of Viva Aerobus, based in Monterrey, Mexico. Gallagher said the deal is expected to result in lower fares for cross-border travel. Allegiant aims to add new destinations in Mexico, including Cancun, Los Cabos and Puerto Vallarta.

Viva Aerobus flies to some US destinations, but admits it has failed to attract US travelers, who are unfamiliar with the brand. CEO Juan Carlos Zuazua said the US-Mexico market has grown to be the world’s largest international market and outperformed others during the coronavirus pandemic.

Similar alliances have become common among the major airlines that serve the United States and Europe and Asia. Airlines are sharing the revenue under the deals, but Allegiant and Viva Aerobus did not detail the financial terms of their deal and asked the Transportation Department to keep the information a secret.

Under previous administrations, US regulators granted antitrust immunity to several other airlines. However, in September, the Biden administration’s Justice Department filed a lawsuit to block a more limited cooperation deal between American Airlines and JetBlue Airways, saying it would lessen competition and drive up prices.

Allegiant and Viva Aerobus cater to leisure travelers and primarily serve vacation destinations. Being very low cost carriers, they usually offer cheaper fares than the major airlines, but they charge a fee for many things that are often free on other airlines, such as bottled water, sodas and bringing hand luggage.

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