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Future Of Am And MX, Open Skies?  
User currently offlineAR385 From Mexico, joined Nov 2003, 6177 posts, RR: 30
Posted (9 years 7 months 2 weeks 5 days 7 hours ago) and read 3291 times:
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Seeing how the administration in CINTRA is basically in turmoil all the time, I was wondering what would be the best solution for MX and AM. As a lot of members here know, I have always argued for MX and AM to merge completely while at the same time Mexico gradually introduces a total open skies policy including cabotage rights. Opinions welcome.


MGGS
12 replies: All unread, jump to last
 
User currently offlineAM773 From Mexico, joined Dec 2004, 78 posts, RR: 0
Reply 1, posted (9 years 7 months 2 weeks 5 days 6 hours ago) and read 3269 times:

I think that a merge in this case won't be the best solution at this point.
AM and MX are making in my opinion bad movements when eliminating the competition they had in some routes, as is happening with HMO, GDL, MTY, TIJ, DGO, CUN, VER, LAX, DFW, etc...

The structure and markets they serve, are completely different one from the other, as fleet commonality... In my opinion, both would have to reach an important precence in the USA and Canada... MX could handle the routes to South America, and add new destinies to Europe from a hub in Cancun, serving vacation travelers, while AM could open new routes from MEX to cities as LHR, FCO, FRA, AMS, MXP, IAD, GIG, etc... to serve the mexican business market, which is huge.

The government should also create a new airline or group after selling CINTRA to create a real competitive environment, and not only "prepared" markets as AM and MX are doing with QA and 5D.
AM should merge not with MX, but with 5D, to create a really strong airline serving regular and express routes, while MX could keep QA but as a low cost option to some destinies, not only as a regional airline.

If things go on as they're doing today, we'll see a new regional airline serving all mexican routes with ERJ's and Fokkers, while MX would be a monster in the USA, Canada and Central/south America, and AM will be a non-profitable airline flying to some destinies in the US with few frecuencies, and to MAD/CDG/SCL/GRU with 762's.
As someone stated before, we need a TAESA to compete with our expensive airlines.

Cheers,
AM773


User currently offlineGhost77 From Mexico, joined Mar 2000, 5217 posts, RR: 51
Reply 2, posted (9 years 7 months 2 weeks 4 days 8 hours ago) and read 3193 times:

Good for the passengers but not the brightest idea for our national industry.

In the first to second year of operation we would have MXAM flying and loosing market share. On the third to fourth we would have MXAM cutting jobs, routes and fleet. By the 5th year they would have dissappeared.

If now a days MXAM can't compete in the long haul markets, beach destinations I doubt they will be able to survive with an open skies policy.

Ricardo APM




Ricardo Morales - flyAPM - ¡No es que maneje rapido, solo estoy volando lento!
User currently offlineEddieDude From Mexico, joined Nov 2003, 7569 posts, RR: 43
Reply 3, posted (9 years 7 months 2 weeks 4 days 1 hour ago) and read 3145 times:

While I openly opposed any plans to merge AM and MX into a single entity in the past, now I tend to lean towards a pro-merger position. I still find it a bit akward how the new strategy for AM and MX will work out once the integration process is officially complete, but somehow feel that a full combination would have been a better idea (of course fleets, corporate identities and a lot of stuff would have presented major complications, but I think that the same could have been dealt with successfully with the correct strategy). Anyway, while a merger might be a good thing for AM and MX in the future (provided that AeroNacional, 6A and ZE would represent strong and viable competition to the combined airline), I don't think that allowing foreign carriers to fly cabotage routes is a good idea. Believe me, I am not protectionist, I am for free and open markets; it is just that it would be completely unfair to allow foreign carriers to come and fly domestic routes when foreign countries do not allow this within their own territories. And no matter how much efforts the domestic airlines AM/MX, 6A, ZE, AeroNacional, etc. do to become lean, efficient and profitable, allowing foreign carriers to suddenly come down to Mexico and do domestic flights would immediately kill our carriers. Foreign airlines with sufficient free cash and steady profits could get a large fleet of A319's or EMB-190's and offer a wide variety of routes within Mexico at killer prices, and they would be able to cross-subsidize the losses they would obviously have during the first few years of operations in Mexico with their cash reserves and with the profits from their domestic and international flights (AA has already used this cross-subsidization strategy very successfully when protecting DFW from the low cost carriers that decided to compete with AA in DFW during the late nineties through a predatory pricing scheme).


Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineAnthsaun From Mexico, joined Apr 2004, 544 posts, RR: 3
Reply 4, posted (9 years 7 months 2 weeks 3 days 22 hours ago) and read 3098 times:

They will not have a future if this becomes a reality.

For MX/AM merge to work and become a strong business it is necessary to push them up right from the beginning instead of crashing them down at the starting point. I think that the new owner, who ever this one is, will request for some warranties for a while in order to become a strong hold. Let us remember that several million dollars will be on high risk.



Over 80 years in business say a lot about success
User currently offlineJoFMO From Germany, joined Jul 2004, 2211 posts, RR: 0
Reply 5, posted (9 years 7 months 2 weeks 3 days 22 hours ago) and read 3092 times:

You don't need to give cabotage to anybody, just opening the bilateral with the USA is more than enough. It is a shame that only four carriers can fly from LAX to MEX. Let the market decide who wants to offer transborder flights.

User currently offlineAR385 From Mexico, joined Nov 2003, 6177 posts, RR: 30
Reply 6, posted (9 years 7 months 2 weeks 3 days 21 hours ago) and read 3087 times:
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I don't believe 6A or ZE are strong enough to compete with a merged AeroMexicana. That's why I believe that offering cabotage at the same time will at least scare the conglomerate in not behaving monopolistically. Furthermore, both airlines already behave like that, even though 6A and ZE exist.

Apparently EddieDude believes foreign airlines will practically invade Mexico. That's a valid assumption and he provides good analysis, but I don't really think so. Plus, I don't think Mexicans would fly them.



MGGS
User currently offlineAM773 From Mexico, joined Dec 2004, 78 posts, RR: 0
Reply 7, posted (9 years 7 months 2 weeks 3 days 21 hours ago) and read 3084 times:

AR385:

Just imagine this situation... You are planning a trip to Cancun from Mexico City... and you have 2 options available: you have a Mexicana flight that will cost around 4500-5000 pesos roundtrip (390-430 USD), full service in a 2 hour flight(A319/320); by the other side, you have XXX Air, offering a flight that will cost around 1500 pesos one-way (130 USD), and a beverage for the short flight (B735/B752) which one would you chose, of course, in the second case, you have 15 flights a day to choose from.

Eddie: I'll contact you as soon as I can... Regards

AM773


User currently offlineEddieDude From Mexico, joined Nov 2003, 7569 posts, RR: 43
Reply 8, posted (9 years 7 months 2 weeks 3 days 12 hours ago) and read 3036 times:

AR385, I think that, loyalties aside, it all comes down to fares, and no matter how loyal Mexicans are to AM and MX, as AM773 mentions, price will be the issue determining who gets our business in the end.

On the other hand, if you think about it, cabotage rights would necessarily come together with the opening of the industry to 100% foreign investment (otherwise it would be an even more direct death sentence to Mexican carriers and a totally ridiculous thing), so most if not all Mexican carriers would end up being swallowed by the healthiest global airlines. Again, not that this is "wrong" or "evil" per se, but something that clearly the government, Congress and a large percentage of the population are not willing to allow and, therefore, will not happen in the forseeable future.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineGhost77 From Mexico, joined Mar 2000, 5217 posts, RR: 51
Reply 9, posted (9 years 7 months 2 weeks 3 days 8 hours ago) and read 3008 times:

Instead of an open skies treaties with US or the rest of the world we first need open skies within mexican airspace! When 6A, ZE or other apply for a domestic route, SCT/DGAC takes longer replying than what they take when its MX, AM, QA or 5D requesting a route!

Second, we need to lower airport landing fees and taxes. After that, 6A and ZE and the rest would be able to offer lower fares and more people would fly them. CINTRA group would loose market share in case they don't go a lá DL or AA models with better fares within domestic routes. Government should also give authorization to all start up's ASAP and they should take a month or two months not 4 to 6 or MORE as they currently take to authorize a start-up (even if you are flying Cessna's or Carvan's they like to take too long).

We first need to put in order our mess, later on we could start thinking on an open sky policy, maybe by 2100... as Im against this, our national industry would die in less than 3 years and perhaps 36 months it's a lot of time Im giving to our airlines!


Ricardo APM




Ricardo Morales - flyAPM - ¡No es que maneje rapido, solo estoy volando lento!
User currently offlinePdpsol From United States of America, joined Feb 2004, 1113 posts, RR: 5
Reply 10, posted (9 years 7 months 2 weeks 3 days 7 hours ago) and read 2999 times:

it is just that it would be completely unfair to allow foreign carriers to come and fly domestic routes when foreign countries do not allow this within their own territories.

Actually, it depends on who you believe should be afforded a degree of 'fairness'; should it be the traveling public, or Mexico's incumbent carriers?

Canada is expected to permit FULL domestic cabotage rights to foreign carriers sometime in the near future, REGARDLESS of any reciprocal rights their carriers receive from other nations. Canada has apparently decided the benefits to its citizens outweigh any costs such a policy would exert on AC or WS.

Perhaps Mexico should follow Canada's example; they could even work TOGETHER and pressure the U.S. to offer full domestic cabotage and ownership to Mexican/Canadian carriers. Now that would truly go a long way to realizing the full potential of an integrated North American market!

PDPsol


User currently offlineFly727 From Mexico, joined Jul 2003, 1789 posts, RR: 19
Reply 11, posted (9 years 7 months 2 weeks 3 days 4 hours ago) and read 2979 times:

"...we first need open skies within mexican airspace! When 6A, ZE or other apply for a domestic route, SCT/DGAC takes longer replying than what they take when its MX, AM, QA or 5D requesting a route!"

Exactly !

Now... about the airport fees, I think it should go farther than that. Besides lowering the fares, the airport group administrators should start looking for something else to do as the existing infrastructure is not really very different from what we had before becoming private (and THIS goes specially to Grupo Aeroportuario del Pacifico).

And... did I mention we must have a fair and equal-for-all business environment?

RM  Smile



There are no stupid questions... just stupid people!
User currently offlineEddieDude From Mexico, joined Nov 2003, 7569 posts, RR: 43
Reply 12, posted (9 years 7 months 2 weeks 3 days ago) and read 2969 times:

PDPsol, I feel that it is not even necessary to explain how devastatingly fast the U.S. airlines would implement a predatory pricing strategy in Mexican domestic routes to eliminate AM, MX and the other ones if commercial aviation in North America is integrated the way you propose. Don't know if that is what will happen in Canada or not and I hope not but I think I am not the only one who thinks that such thing would happen in Mexico.

Anyway, from a consumer perspective, it may have some benefits initially, though in the long run I don't think that the move would be beneficial. But it is actually a loss of time to carry the debate around the essential fairness or unfairness of such a policy, since this won't happen, and the problem is clearly political and cultural. The Mexican government and Congress would be unwilling to even think about it. Unions and regular Joes would protest and demonstrate against it. And the established local carriers would spend all it takes in order to lobby against such a policy. Moreover, with the left winning the presidential elections in 2006 a real possibility, it is more likely that hell will freeze over, than Mexico will have a North American or a global open skies policy.

I agree with Ghost and Fly727 that the government should treat all Mexican carriers equally in order to promote competition and to benefit the Mexican consumer.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
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