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MayaviaERJ190
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 7:45 pm

Pilot, flight attendant and other unions demonstrate today at Juarez International against the possibility of open skies coming to the new bilateral agreement that Mexico and the United States should negotiate between tomorrow and Friday.

They argue enormous disparities in commercial aviation between both countries:

Mexico fleet: 0.3K, US fleet: 7K
Mexico 158K posts, US 9,300K posts.

They also seek anti-monopoly immunity from US DOT, so that they can make alliances with US and European airlines for intercontinental flights through the USA.

Source (Spanish): http://www.eluniversal.com.mx/nacion...gos-protestan-t2-aicm-1051491.html
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LAXintl
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 7:54 pm

Open skies rightfully is a big concern in Mexico.

The market is already heavily tilted in favor of US carriers which hold a 86.7% market share in enplanements between the nations as of 2013.

Lifting restrictions will only cause US carriers to pump in even more capacity further marginalizing Mexican market position.
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travelin man
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 8:05 pm

It may have a negative impact on the Mexican airline industry, but for Mexico overall Open Skies would be a net benefit (and it would be for the US as well).

Canada is dwarfed by the US in population and by the airline industry, but Canada has held its own with Open Skies. The US-Mexico Open Skies agreement should have been signed a long time ago.
 
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LAXintl
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 8:13 pm

US - Canada has a wonderful market equilibrium.

US carriers only hold a 52.3% market share on routes between the nations.

Both sides were already placed on quite equal terns to benefit from the liberalized marketplace when introduced.

Mexico however is coming from significant handicap spot with US carriers already control 9/10th of the market.
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Prost
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 8:13 pm

With Mexico's cost base, I'd think Mexico's carriers could offer a better product for less cost. I wouldn't fear competition, I'd embrace it. As it stands now, most American's seem to prefer foreign carriers over domestic ones, why not for Mexico as well? If they have the product and the service, they should thrive.
 
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United787
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 8:16 pm

Quoting travelin man (Reply 2):
Canada is dwarfed by the US in population and by the airline industry, but Canada has held its own with Open Skies.

I wonder if this is more because of geography. Mexico seems to be much more capital centric whereas Canada's economy is more evenly spread throughout the country. This allows AC to have many more hubs from which to feed the US.
 
DesertAir
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 8:37 pm

Mexico has only three major gateways to the United States: Mexico City, Guadalajara and Monterrey. They have some secondary cities like Los Cabos, Mazatlán, Cancún and Puerta Vallarta. The USA has a lot of major gateways, from the many hubs that carriers have. Volaris and Aeromexico are the only major Mexican carriers with significant USA presence. Interjet has limited service and Viva a couple of US routes. To keep the playing field just there may need to be an agreement as to which cities would have Open Skies and which ones not.
 
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 8:40 pm

Quoting United787 (Reply 5):
I wonder if this is more because of geography. Mexico seems to be much more capital centric whereas Canada's economy is more evenly spread throughout the country. This allows AC to have many more hubs from which to feed the US.

That's not it, particularly. Among the top 20 international airports as gateways to the U.S. Canada has four airports: #2 YYZ, #10 YVR, #11 YUL, and #13 YYC. Mexico also has four: #6 CUN, #7 MEX, #16 GDL, and #18 SJD. US-MX traffic is not MEX-centric.
 
travelin man
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 8:55 pm

Quoting LAXintl (Reply 3):

US - Canada has a wonderful market equilibrium.

US carriers only hold a 52.3% market share on routes between the nations.

Both sides were already placed on quite equal terns to benefit from the liberalized marketplace when introduced.

Mexico however is coming from significant handicap spot with US carriers already control 9/10th of the market.

Shouldn't the objective be to economically benefit both nations, vs. shooting for perfect equilibrium between the two countries' airline industries?

The increase in tourism and trade between the two countries should be more than enough to offset any negative impact on one specific industry. And it's not like AM, Volaris, etc are weak carriers. They could benefit as well.

I have yet to see a case where "Open Skies" totally decimated one country's airline industry at the expense of another. If there are examples I'd like to hear about them.
 
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mercure1
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:02 pm

Quoting travelin man (Reply 8):
I have yet to see a case where "Open Skies" totally decimated one country's airline industry at the expense of another. If there are examples I'd like to hear about them.

You can say the EU open-skies has killed the national carriers of many nations.

Prior traffic traffic rights and frequencies were given out in gentlemanly 1:1 basis.
With Open skies everyone is free to pile in and act as irrationality as ones bank account can support.

Even inside the US, one could argue open-skies (AKA - deregulation) destroyed many things such as Americas then great airlines, plus more recent harm such as elimination of air service access to many communities.
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Byrdluvs747
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:12 pm

Unless Google translated the article wrong, it seems as though the labor groups are protesting domestic Mexican flights. That seems very understandable to me.

Quoting MIflyer12 (Reply 7):
That's not it, particularly. Among the top 20 international airports as gateways to the U.S. Canada has four airports: #2 YYZ, #10 YVR, #11 YUL, and #13 YYC. Mexico also has four: #6 CUN, #7 MEX, #16 GDL, and #18 SJD. US-MX traffic is not MEX-centric.

If we narrow that down to premium/business traffic, CUN and SJD get scratched off the list.

Quoting LAXintl (Reply 1):
Lifting restrictions will only cause US carriers to pump in even more capacity further marginalizing Mexican market position.

I predict that AA will announce LAX-MEX shortly after the agreement is signed.
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aznmadsci
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:19 pm

Quoting DesertAir (Reply 6):
To keep the playing field just there may need to be an agreement as to which cities would have Open Skies and which ones not

But isn't that just keeping up with the status quo? MEX is the only one with limited entrants of 2 US airlines and 2 Mexican airlines from each city, correct?
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travelin man
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:20 pm

Quoting mercure1 (Reply 9):
With Open skies everyone is free to pile in and act as irrationality as ones bank account can support.

So.... capitalism?
 
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ERJ170
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:24 pm

In comparison, Mexico airlines have done a piss poor US network in comparison to their Canadian brothers. AC and to some extent, Westjet have gone after significant US markets. Mexico airlines have only hit the Mexico centric locations. They need to expand beyond Texas and Caliifornia... And they need to go after the aircraft that will do that. IMO, more aircraft like E75/E90/CR9/CS100 are needed if they want to get their market share.: and hit the top 40 destinations..

Honestly, AC has got the US COVERED better than any other foreign airline I know.. And they are getting their market share.. Mexico airlines need to take a lesson...
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commavia
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Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:26 pm

Quoting Byrdluvs747 (Reply 10):
I predict that AA will announce LAX-MEX shortly after the agreement is signed.

I agree that, in a hypothetical Open Skies environment, this massive local market would likely be one of AA's top priorities, and JFK-MEX also wouldn't surprise me.
 
travelin man
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RE: Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:35 pm

I think the other thing to think about is that Open Skies will allow AM and DL to implement the long-discussed JV where they share revenue across the border. This could actually be beneficial for AM.
 
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MayaviaERJ190
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RE: Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:37 pm

Mexican domestic traffic is not at stake in the bilateral. By no means.

On the other hand, what worries the Mexican industry is a strictly geographical problem:

1.- Houston's privileged location where everywhere in Mexico is under a thousand miles away, and the world's largest offering of international destinations from IAH and anywhere USA, just take a look at United's Mexican network out of IAH:

http://www.gcmap.com/mapui?P=aca-iah...tam-iah,+trc-iah,+ver-iah,+vsa-iah

2.- The fact that straight south of Mexico there is nothing but open ocean. Central and South America lie much further east (for which MIA is the option). This makes it impossible for Mexican companies to offer "interesting services" (namely a strong 'upside down' offer) "beyond Mexico".

So, if open skies come, the open skies will not be the problem at all. The problem will be "everywhere beyond" the USA and that includes Latin America and the caribbean out of MIA. What are Mexican airlines to do? Just become feeder airlines for LAX, SFO, DFW, IAH, ORD, JFK, ATL and MIA which lead to the rest of the world?

Few opportunities are left under the shadow of the USA. One of them are the US visa requirements, so people wanting to travel to/from Central/South America-Asia without a US visa can do it through MEX, but other than this, only the domestic market and international point-to-point travel remain.

CVJ-MCI or anything else exotically similar, will never be feasible for as long as... ever!

[Edited 2014-11-04 13:42:10]
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Byrdluvs747
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RE: Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 9:44 pm

Quoting commavia (Reply 14):
and JFK-MEX also wouldn't surprise me.

Very true. Which leads me to wonder why US doesn't operate PHL-MEX
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phlwok
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RE: Unions At MEX: No Open Skies MX-US!

Tue Nov 04, 2014 10:36 pm

[quote=Byrdluvs747,reply=17Very true. Which leads me to wonder why US doesn't operate PHL-MEX [/quote]

Given that there doesn't seem to be tons of PHL-MEX traffic - I can't remember anyone trying it in recent years - it probably just has made more sense georgraphically for them to route via CLT.
 
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RE: Unions At MEX: No Open Skies MX-US!

Wed Nov 05, 2014 7:02 am

For the first time in eons, I side with the unions. Mexico should not get into an open skies agreement with the US.
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RE: Unions At MEX: No Open Skies MX-US!

Wed Nov 05, 2014 7:25 am

Quoting mercure1 (Reply 9):
You can say the EU open-skies has killed the national carriers of many nations.

While it might have, it has also led to increased travel, trade and economic activity, so in total the countries have benefitted from this, even though some have had to "sacrifice" a national carrier
 
EddieDude
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RE: Unions At MEX: No Open Skies MX-US!

Wed Nov 05, 2014 5:29 pm

Quoting PHLwok (Reply 18):
Given that there doesn't seem to be tons of PHL-MEX traffic -

In 2003, US announced in its inflight magazine it was launching PHL-MEX nonstop services. That never came to fruition.

Quoting aznmadsci (Reply 11):
MEX is the only one with limited entrants of 2 US airlines and 2 Mexican airlines from each city, correct?

I think so. I believe that in all city pairs involving a Mexican airport other than MEX, it is 3 and 3.

Quoting Byrdluvs747 (Reply 10):
f we narrow that down to premium/business traffic, CUN and SJD get scratched off the list.

I would think SJD could command more premium fares relative to lenght of flight than GDL. While there is a tangible demand for business travel between GDL and other countries, most of the GDL-bound traffic is V.F.R., which is very sensitive to price. That is why Volaris has done so well at GDL and why AM has launched a tighter seat pitch, lower fare service ex-GDL to several U.S. destinations. On the other hand, while SJD is an almost pure play leisure market, it tends to attract very affluent tourists and retirees who want live there every winter.

Quoting Prost (Reply 4):
As it stands now, most American's seem to prefer foreign carriers over domestic ones, why not for Mexico as well?

I dunno if it is a myth, but it has been said may times on airliners.net that when traveling to Mexico, Americans prefer to fly a U.S. carrier than a Mexican carrier mostly because of perception. Spring breakers probably prefer AM though because of the full bar service after noon in coach.

Quoting adriaticus (Reply 19):

For the first time in eons, I side with the unions. Mexico should not get into an open skies agreement with the US.
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I tend to agree with you. Before saying anything though, I think we need to see exactly what the new bilateral will be about. Anybody has access to a proposed draft or outline?
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RE: Unions At MEX: No Open Skies MX-US!

Wed Nov 05, 2014 5:59 pm

Quoting EddieDude (Reply 21):
I would think SJD could command more premium fares relative to lenght of flight than GDL

Pretty much anything commands a fare premium to GDL, with the possible exception of TLC.

Quoting Byrdluvs747 (Reply 10):
I predict that AA will announce LAX-MEX shortly after the agreement is signed.

That is such a tough market, much lower cost AS has trouble sticking around. There's really no reason for AA to get involved as long as it has AS*, and even if that were to go away, it would just get uglier with AS and AA and god knows who else entering the market.

Quoting mercure1 (Reply 9):
You can say the EU open-skies has killed the national carriers of many nations.

Someone had to pay for those carriers regardless--in fact they were often paying twice: sky high fares to get on the plane, and sky high taxes to make sure the plane kept flying.

Quoting adriaticus (Reply 19):
For the first time in eons, I side with the unions. Mexico should not get into an open skies agreement with the US.

I'm not sure that there's that much to worry about. The only markets that are really in play are probably less than a dozen, and mostly to MEX. It's not like US carriers have dozens of markets they want to add and aren't able to today.
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lightsaber
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RE: Unions At MEX: No Open Skies MX-US!

Thu Nov 06, 2014 3:19 pm

Quoting LAXintl (Reply 1):
The market is already heavily tilted in favor of US carriers which hold a 86.7% market share in enplanements between the nations as of 2013.
Quoting LAXintl (Reply 3):
US carriers only hold a 52.3% market share on routes between the nations.

Which is it? The 2nd number shows fair competition. The first number...

Quoting adriaticus (Reply 19):
For the first time in eons, I side with the unions. Mexico should not get into an open skies agreement with the US.
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Why? While Mexico needs to reform their corruption and build up infrastructure, an open skies is known to bring jobs. Perhaps not to noncompetitive airlines, but for the whole economy. So why specifically other than fear. How do you justify holding back the rest of the economy?

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LAXintl
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RE: Unions At MEX: No Open Skies MX-US!

Thu Nov 06, 2014 3:24 pm

Quoting lightsaber (Reply 23):
Which is it? The 2nd number shows fair competition. The first number...

Re-read the thread.

Reply 3 that you quote is about another nation, not Mexico in response to discussion from Reply 2.
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rojo
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RE: Unions At MEX: No Open Skies MX-US!

Thu Nov 06, 2014 4:33 pm

Before negotiating any changes to the bilateral agreement, Mexico should improve its airport infrastructure. Most airports are operating at MAX capacity and current airport operators do not allow other airports to be built close by (i.e. Cancun / Tulum) to fuel competition. Without the infrastructure in place, you can't really chase more airlines and open your skies.

For example, MEX is operating at MAX capacity and the new airport will not be ready until 2020 (at the earliest)... how can you have open-skies with the US if the only slots available are at horrible hours.

CUN is operating at MAX capacity (terminal wise) during peak hours. ASUR built a second runway but did not forecast passengers flows correctly to understand that if it wanted good customer experience, it needed to start building a new Terminal or expand/change current terminals two or three years ago so they could be ready today. The same applies to many other airports in Mexico (SJD, TIJ, PVR, etc).

TUA's (Airport Tax) charged by Mexican airports are some of the most expensives in the world and the quality of the airports (facilities, amenities) are not even close to what AMS, SIN, HEL, HKG, DXB, AUH, offer.

Mexico needs to get its act together and improve its infrastructure soon if it wants to improve toursim and business!!
 
Marcus
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RE: Unions At MEX: No Open Skies MX-US!

Thu Nov 06, 2014 7:16 pm

Quoting rojo (Reply 25):
Mexico needs to get its act together and improve its infrastructure soon if it wants to improve toursim and business!!

Agreed....competition is good for the consumer, considering unions in Mexico are one of the biggest cancers the country has, whatever is bad for the unions chances are it will be good for the rest of the country.
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EddieDude
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RE: Unions At MEX: No Open Skies MX-US!

Thu Nov 06, 2014 8:04 pm

I think we are getting a bit lost here. This issue is not and should not be about whether unions are wrong and whether whatever is bad for them is good for the country overall. And don't get me wrong, I dislike union leadership in Mexico a lot. This is in reality about a specific legislation (international treaties are part of the legislation of the country that signs them) that may or may not be good for the domestic aviation industry and for the Mexican economy as a whole.

My uneducated guess and perception is that open skies between the U.S. and Mexico would place the Mexican carriers at a disadvantage (bigger than the one they currently face). The number of U.S. carriers who may be interested in serving Mexico, and the ability of U.S. carriers to redeploy their aicraft and change their strategies faster than Mexican carriers means that once open skies happens, we would see our cross-border routes potentially flooded by U.S. carriers, and the Mexican carriers' response would be meager and delayed. It really does not take a nuclear physics degree to anticipate that U.S. carriers will try to squeeze Mexican carriers out of profitable U.S.-Mexico rules.

AM may (emphasis on "may") be relatively safe as it has DL as a shareholder, and DL will probably want to coordinate efforts with AM and seek a comprehensive cross-border joint business set-up with AM pretty much like what UA and AC have right now. However, that is still a big if, because DL might instead decide to go it alone and then AM would be screwed not just by DL, but by all U.S. legacies. I doubt AM makes a lot of money in the MEX-JFK route nowadays... now imagine what it'd be like once you have JetBlue, AA and more U.S. carriers flying this route. Add a low cost airline or two to the mix and it would just get worse. Basically a fare war and a dumping of unnecessary capacity will happen, and if AM does not have DL's full support, then, well, just imagine the consequences. Remember QF's "draw a line in the sand" policy regarding domestic market share???

Interjet, Volaris and Viva Aerobús would also struggle if suddenly the likes of Spirit, Allegiant, Southwest, JetBlue, Virgin America, and even the legacies start launching flights that compete with their own U.S. routes. Again, I dunno if the notion that U.S. customers prefer to fly to Mexico on U.S. carriers rather than on Mexican airlines is a myth or not, but simply because of their size and resources, and the fact that there are more Americans flying than Mexicans, U.S. carriers would eat most of the pie.

I think two things are needed. One is to actually know what the revised bilateral would look like. Perhaps the two nations are indeed negotiating open skies... perhaps not. And if they are, I am sure Mexico would try to secure a lot of mitigation measures that aim to create an even playing field by limiting access during a specific period of time or whatever. So, without any actual knowledge of the agreement, saying that its enactment is good or bad is just speculation.

The other thing is that we need a much more comprehensive analysis of whether open skies would benefit the Mexican economy as a whole, and whether the size and effects of those benefits outweigh the losses and difficulties that it would create on the Mexican carriers. This might also be a good opportunity to lift foreign investment restrictions in the civil aviation market in order to allow the likes of DL, LA and others to invest in Mexican carriers and work closely with them. Whose interests do those restrictions actually serve? Please don't give me that sovereignty over a strategic industry crap becuase that is anachronic and meaningless.

Finally, going back to the unions issue, if open skies is coming, this is the last call for union leadership to embrace a new way of looking at things and become more reasonable and flexible. Even if this amendment to the treaty is not about full open skies, I wish unions would become more constructive for the sake of their members.
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RE: Unions At MEX: No Open Skies MX-US!

Fri Nov 07, 2014 4:19 pm

Quoting adriaticus (Reply 19):
Mexico should not get into an open skies agreement with the US

I agree such an agreement would likely help US carriers more than Mexican carriers, but there would likely also be an uptick in US visitors south of the border with additional flights & frequencies. MEX will be a bit like LHR after Bermuda 2.
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RE: Unions At MEX: No Open Skies MX-US!

Fri Nov 07, 2014 4:51 pm

Quoting MayaviaERJ190 (Reply 16):
On the other hand, what worries the Mexican industry is a strictly geographical problem

I also worry about the managerial and operational capabilities in our country, be it the Unions OR airlines themselves. Whatever happened to Azcárraga after what he pulled with Mexicana? And De Provoisin before him? Are the airport groups investing looking into the future or just capturing rent? Unions need to be called out, but top management isn't exactly lighting it up. That is a big factor in the poor results that would be expected from such an agreement. We are just not ready for primetime.
 
Byrdluvs747
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RE: Unions At MEX: No Open Skies MX-US!

Fri Nov 07, 2014 6:54 pm

Quoting MaverickM11 (Reply 22):
That is such a tough market, much lower cost AS has trouble sticking around. There's really no reason for AA to get involved as long as it has AS*, and even if that were to go away, it would just get uglier with AS and AA and god knows who else entering the market.

I still cant imagine they will let the market go to others, especially if we end up with just an expansion of the bilateral between MEX and US airports to maybe three airlines per nation instead of just two.
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