Insights and Analysis

Aviation initiative to amend the applicable law to carry out cabotage practices in Mexico

06 January 2023

On December 15, 2022, the President of Mexico presented before the Chamber of Deputies a bill to amend, add and repeal several articles of the Airports Law and the Civil Aviation Law (the "Bill"). The Bill is still no current law, so does not apply in Mexico yet. However, the explanatory memorandum of the Bill states that it seeks to establish different specific powers in favor of the Mexican Aviation Agency (“AFAC”), modifies various penalties for non-compliance in aviation matters and mainly seeks to allow cabotage activities to foreign permit holders in Mexico. Cabotage (eight freedom) is understood as the transportation of passengers, mail and cargo between different places within the national territory without leaving it, allowing international airlines the possibility of making flights between two points of the country. This could result in various consequences for the national air sector, so it is necessary to carry out certain studies and analysis and establish a dialogue with all actors involved.

The main objective of the Bill is to allow cabotage practices by foreign permit holders. However, the Bill establishes various requirements for the AFAC to authorize such activities and allow passenger, cargo and mail operations between two points in Mexico.

Among the requirements established by the Bill to be approved for this type of cabotage operations are: (i) public utility, (ii) public interest or national security, (iii) that the route is of strategic interest for the development of the country's airport infrastructure, and (iv) that the airport through which the operations are carried out has the technical and operational capacity for such operations.

The Bill seeks to justify the practice of cabotage, arguing that it will allow an increase in tourism, which is one of the country's main sources of income. Apparently, the objective is to benefit the users of air transportation for tourism or commercial purposes, since regional routes are expanded, connecting flights are improved and the costs for the same services are considerably lowered. However, we believe that it is essential to conduct an analysis of potential cabotage activities to determine the feasibility of carrying out these practices and the implications that it could, in turn, bring about for the airports and aviation industry in Mexico.

Likewise, we consider convenient carrying out an analysis of international aviation conventions in order to identify potential breaches in this regard. Also, we deem convenient to start a transparent dialogue with the actors involved.

With respect to the Airports Law, the AFAC would be required to issue technical-administrative provisions on airport matters for the surveillance, supervision, inspection and verification of aerodromes. In turn, the airport concessionaire would be required to prepare a master development program, which will be reviewed every five years. The purpose of this amendment is to make Mexican parameters compatible with the international parameters established by the International Civil Aviation Organization.

Currently, the initiative is pending analysis in the original commissions of the Chamber of Deputies and in the next few months we will be able to follow up on its status and its potential approval.

Next steps

Should you require additional information on this aviation initiative as well as advice on potential cabotage practices, we are available to assist you.

Authored by: Julio Zugasti and Reneé Penhos