Agreement would allow Allegiant to provide nonstop flights to Mexico; XNA wants to offer them

An agreement between two carriers would allow low-cost carrier Allegiant to offer nonstop flights to tourist destinations in Mexico as early as 2023, but it’s uncertain whether the flights would come to Northwest Arkansas.

Still, Northwest Arkansas National Airport (XNA) in Highfill has expressed interest in nonstop flights to Mexico, but offering them would require establishing a U.S. Customs operation at the airport.

According to a Wednesday (Dec. 1) news release, the agreement between Allegiant and Viva Aerobus would expand options for nonstop leisure travel between the United States and Mexico and lower fares for travel between the countries. The companies have submitted a joint application to the U.S. Department of Transportation seeking approval of and antitrust immunity for the agreement. Also, Allegiant will make a $50 million equity investment in Viva Aerobus, and Allegiant Chairman and CEO Maurice Gallagher Jr. is expected to join the Viva Aerobus board of directors. The agreement also must receive clearance by the Mexican Federal Economic Competition Commission.

“Allegiant and Viva Aerobus operating together will be a tremendous win for consumers seeking affordable, nonstop travel between the U.S. and Mexico and will create rippling economic benefits for hospitality sector business across both nations,” Gallagher said. “This groundbreaking alliance should reduce fares, stimulate traffic, and ultimately link many new transborder cities with nonstop service. In short, it will bring meaningful (ultra-low-cost carrier) competition to the U.S.-Mexico market for the first time in history.”

The agreement would allow Allegiant to offer flights to Mexico, including vacation destinations such as Cancun, Los Cabos and Puerto Vallarta. The application to the Department of Transportation identifies more than 250 new route opportunities, but specific routes targeted for service will be announced at a later date after the application is approved. The first flights under the agreement are expected to take place in the first quarter of 2023.

Asked whether the agreement could lead XNA to offer nonstop flights to Mexico, CEO Aaron Burkes said it “might open up possibilities for XNA in the future. We are not in active discussions with Allegiant about routes to Mexico, but we have expressed to them in the past that we would be interested should they become available. Having an international route is an exciting opportunity that we will definitely explore with any interested carrier.”

While the airport doesn’t have any direct international flights, Mexico is its biggest international destination via connecting flights.

Burkes noted the challenges in offering international flights include the lack of a U.S. Customs operation at XNA and the costs for the required facilities and staffing at the airport. XNA previously completed a study on setting up such an operation, and it showed that in addition to the up-front capital costs and physical space, the staffing and operations costs would range between $350,000 and $400,000 annually.

“As you can imagine, you have to have quite a few additional enplanements to justify that ongoing annual expense,” Burkes said. “Nevertheless, we are planning for that operation in our long-term design plans for the new western concourse.”