UNITED AEROSPACE CORPORATION

Mexico’s antitrust regulator, the National Antitrust Commission (CNA), is set to approve the proposed merger between ultra-low-cost carriers Volaris and Viva Aerobus before the end of the year, according to six sources familiar with the matter. The transaction will unite Mexico’s two dominant low-cost operators under a single holding company, Grupo Más Vuelos, creating the country’s largest airline group with few operational restrictions.

The combined group is expected to target an annual volume of roughly 60 million domestic passengers. To address market concentration concerns, regulatory authorities plan to require Grupo Más Vuelos to preserve low airfares, maintain its low-cost operating model, avoid mass layoffs, and maintain the vast majority of both airlines' current route networks due to a lack of competing carrier alternatives.

Regulatory Framework and Operating Conditions

Despite widespread market dominance concerns, regulators intend to approve the transaction with minimal operational disruption to the airlines' existing networks. According to three sources, the regulator considered modifying slot allocations and allowable flight frequencies for the group across major Mexican airports. However, two sources confirmed that regulators ultimately plan to leave those flight quotas unchanged.

To counter market concentration, three sources indicated that Más Vuelos will be required to strictly preserve its budget carrier model. Under these remedies, a designated percentage of airfares must remain within the same price band as comparable low-cost operators across the Latin American region.

The regulatory authority is currently finalizing the operational parameters for how it will define and monitor the route obligations imposed on the newly formed group.

"When you conduct this route-by-route analysis, the only condition you can realistically impose is requiring them to release slots for a third party on highly concentrated routes, such as those with Mexico City as an origin or destination, and perhaps also Guadalajara and Monterrey," said Javier Núñez, a competition expert and former antitrust commissioner.

Regulators also evaluated imposing structural restrictions on IAMSA, the transportation conglomerate owned by Viva Chairman Roberto Alcántara. IAMSA is Viva’s primary shareholder and operates both the airline’s airport shuttle transfer services and several major long-distance intercity bus lines. However, one source noted that the merger is expected to close without significant concessions required from IAMSA.

Official regulatory commentary remains limited while proceedings are active. "The body cannot issue a public statement on the process as it remains open and due process must be respected," a CNA source stated. The agency did not respond to direct requests for comment.

In a written response, Viva stated that it remains attentive to the ongoing evaluation and will continue "collaborating with the authorities" while maintaining confidence in the "strategic merits of the transaction". Volaris similarly stated that it is "working closely with regulatory authorities" and retains full confidence in the deal's strategic logic.

Deal Structure and Executive Leadership

First announced late last year, the transaction is structured as a merger of equals between Volaris—corporately registered as Controladora Vuela Compañía de Aviación—and Viva Aerobus. Both airlines confirmed that they will preserve their independent brand identities, operating certificates (AOCs), customer services, and individual day-to-day operations under a dual-brand holding company structure.

Corporate governance will be shared across both organizations. A filing submitted to the Mexican Stock Exchange (BMV) detailed that the General Extraordinary Shareholders' Assembly approved an amendment to company bylaws to align with requirements set by the Secretariat of Economy's General Directorate of Foreign Investment.

Under the approved structure, Roberto Alcántara, the current chairman of Viva, will serve as Chairman of the Board of Directors for Grupo Más Vuelos for an initial three-year term upon transaction close. Executive leadership will be drawn from both carriers. A source close to Volaris operations noted that the airline viewed the alliance as necessary, highlighting Volaris Chief Executive Officer Enrique Beltranena as a central figure in negotiating the deal.

International antitrust regulators have already cleared the transaction. The merger received approval from Colombian competition authorities in April. In early September, the US Federal Trade Commission (FTC) granted clearance for Controladora Vuela Compañía de Aviación to acquire Autobuses de la Piedad, the main shareholder of Viva, removing the primary regulatory obstacle in the United States.

Domestic Market Concentration and Route Overlap

Together, Volaris and Viva Aerobus control approximately 75% of domestic flight volume in Mexico and less than 20% of international flights. In the domestic passenger segment, Volaris holds a 36% market share while Viva commands 39%, bringing their combined domestic share to 75%. Flag carrier Aeroméxico holds 24% of the market, with regional carriers accounting for the remaining 1.3%.

• Viva Aerobus. -  39%  -  Focuses primarily on domestic low-cost point-to-point network
• Volaris. -  36%. -  High domestic share; expanding cross-border low-cost routes
• Aeroméxico. -  24%. -  Maintains lead in international routes among Mexican carriers
• Other Local Carriers. -  1.3%. Minor regional coverage
• Grupo Más Vuelos (Combined). -  75%. ~. 60M annual domestic passengers; sole operator on 55 routes

An analysis of flight route data indicates that Volaris and Viva currently compete directly on 85 overlapping domestic routes. Following the consolidation, Grupo Más Vuelos will become the sole remaining operator on 55 of those routes. Route overlap is heavily concentrated in flights originating from or destined for Mexico's key economic hubs of Guadalajara and Monterrey.

Sources involved in regulatory discussions noted that both carriers have already begun reducing flight frequencies on select overlapping corridors in anticipation of final merger approval.

Competitor opposition has been persistent. Aeroméxico has repeatedly expressed formal opposition to the transaction, raising concerns over whether regulatory conditions can effectively limit Grupo Más Vuelos' total market share. Aeroméxico did not respond to requests for comment.

Financial Pressures and Political Context

The merger comes after years of severe financial hardship for low-cost Mexican operators following the COVID-19 pandemic. Both Volaris and Viva faced prolonged aircraft groundings driven by mandatory Pratt & Whitney engine inspections, compounded by sustained spikes in global aviation fuel prices.

Unlike legacy competitor Aeroméxico, which underwent formal Chapter 11 financial restructuring, neither Volaris nor Viva entered restructuring proceedings. Furthermore, Mexican airlines received no direct government financial bailouts or relief subsidies during the pandemic.

Political dynamics in Mexico City have also influenced the regulatory timeline. Two sources cited pressure from the Mexican federal government to approve the consolidation. Both Volaris and Viva serve as the primary operators at Felipe Ángeles International Airport (AIFA), a state-operated airport outside Mexico City that has struggled to generate substantial passenger traffic since opening in 2022.

To secure federal backing, both airlines reportedly committed to increasing flight frequencies at AIFA as well as at the newly built Tulum airport, despite low initial passenger demand at both locations. The Mexican Presidency did not respond to requests for comment regarding government involvement.

The approval will represent a landmark decision for Mexico’s new competition watchdog. The CNA replaced the former Federal Economic Competition Commission (Cofece) last year, and industry analysts view the Más Vuelos ruling as a crucial test of the regulatory body's enforcement standards given the sheer scale of the aviation sector. In 2007, Mexico's previous antitrust commission blocked a proposed acquisition of Aeroméxico by legacy carrier Mexicana due to market concentration concerns; Mexicana subsequently entered bankruptcy in 2010 before being revived as a state-run entity in 2023.