Think tank links Mexico aviation downgrade to budget cuts

While precise reasons for downgrading Mexico’s aviation rating from category 1 to 2 have not been fully explained, a local think tank is linking the US decision with budget cuts and poor administrative practices of the Andrés Manuel López Obrador government. 

“If you ask me why they demoted us, I would tell you that it had to do more with mismanagement of resources than lack of resources,” Sofía Ramírez Aguilar (in photo), director of economic think tank México ¿Cómo Vamos? told BNamericas. 

The think tank compared the funds assigned and budget spending by communications and transportation ministry SCT and federal civil aviation authority AFAC in the last 13 years. 

The figures (shown below) signal a decline in resources since the AMLO administration took office at the end of 2018. 

When the US Federal Aviation Administration (FAA) announced on May 25 that it had decided to cut Mexico’s rating, it did not give specific details of safety failings. 

However, news outlets such as The Wall Street Journal suggested it had to do with “insufficient legal authority, training and compensation for Mexican air safety regulators.”

The move places Mexico in a group of nine countries with the rating and prevents carriers from adding new flights and agreements such as code-sharing in the US market.

“The downgrade is due to a lack of supervision… lack of personnel in the verification area and little training on the Mexican side. But this is a literal demotion for the Mexican aviation agency, not the airlines,” Ramírez said. 

This is not the first time the US has downgraded Mexico’s rating over safety concerns. It also happened in 2010 and the country did not recover its category 1 status for four months. 

Shortly after that downgrade, the government boosted AFAC's 2011 budget, even though it did not spend as much as expected. 

Ramírez said she believes the government will allocate more funds to AFAC after the latest downgrade, as it has vowed to recover the category 1 rating in the next couple of months. However, “we also have a lack of supervision and expertise, and it has to do more with the austerity policy,” she said.

INDUSTRY AT RISK 

Ramírez said the most worrisome factor with the downgrade is linked to the country’s slow economic recovery, “which is very tied to the US.”

She said the transport sector, including air traffic, makes up 6.5% of Mexico’s GDP, and it has not fully bounced back since the pandemic, remaining at around 70% of levels compared to 1Q20.  

“What this blocking of new routes is implying is that there will be fewer flights, fewer jobs, less investment from airlines. But it also stops the traffic recovery we have achieved since May 2021, when we were just beginning with the process of economic recovery,” Ramírez said. 

The companies that will be most affected are Aeroméxico, Volaris, VivaAerobus and Aeromar, which all have flights to the US.

The day after the downgrade, SCT minister Jorge Arganis Díaz-Leal met with the airlines’ top executives and directors to lay out a plan to recover the country’s category 1. 

On May 28, the ministry said an expert team was established to achieve that goal. The ministry also said it will consider budget adjustments to meet the necessary steps to guarantee Mexico’s aviation safety.