An agreement between Mexico and the United States, scheduled to become effective by Jan. 1, 2016, would remove all limits on the number of airlines that can provide passenger or cargo service between destinations in both countries.
If enacted, the new policy would allow new carriers to enter the market, while carriers already in the market would have the freedom to fly to new cities. A release from the U.S. Department of State said that, under the agreement, “cargo airlines, for the first time, will have expanded opportunities to provide service to new destinations that were not available under the current agreement.”
The U.S. Department of Transportation (USDOT) said the agreement would provide “unlimited market access for U.S. and Mexican air carriers, improved intermodal rights, pricing flexibility and other important commercial rights.”
The agreement, hammered out on Friday, would also have an impact beyond the two countries, due to the inclusion of fifth freedom rights, allowing U.S. and Mexican airlines to pick up passengers and/or freight in the other country and carry on to a third country.
UPS, which currently operates 20 UPS Express centers and serves about 60 international airports within Mexico, said on Monday that it applauded the agreement for potentially allowing it to develop deeper connections between the US, Mexico and the rest of Latin America.
“This new U.S.-Mexico aviation agreement will improve the optimization and connectivity of our intermodal network in the region,” said Mitch Nichols, UPS’s senior vice president for transportation and engineering. “UPS continues to experience strong growth in Mexico, and the all-cargo fifth-freedom rights in this tentative agreement will help ensure we can provide our customers, large and small, reliable and efficient global distribution solutions.”
“This air transport agreement further elevates and strengthens the dynamic commercial and economic relationship between the United States and Mexico by facilitating greater trade and tourism,” the State Department said. “It is a key element of the U.S.-Mexico High Level Economic Dialogue, that aims to promote competitiveness and connectivity, foster economic growth, productivity and innovation, and partner for regional and global leadership.”
The decision to remove the airfreight limits comes at a time when business between the two countries is on an upswing. According to data from DOT’s Bureau of Transportation Statistics, U.S. trade with Mexico and Canada under the North American Free Trade Agreement increased by US$7.8 billion in September, year over year, to reach US$102.2 billion, driven by an increase in manufacturing and cargo shipments for all three partners.
U.S. gross domestic product (GPD) expanded 4.6 percent, year over year, in the second quarter of 2014 and 3.9 percent in the third quarter, according to the U.S. Commerce Department. Meanwhile, Mexico’s GDP enjoyed a year-over-year growth of 2.2 percent in Q3 2014 after a mild 0.8 percent rise in Q2.