Mexico aims to cut flight costs by up to 12% after fee change

Mexico is looking to reduce the costs of airplane tickets by as much as 12% following the modification of a fee structure for airport operators. The government estimates cost reductions of between 9% and 12%, said Miguel Vallin, the head of the Federal Civil Aviation Agency (AFAC), at the ALTA Airline Leaders Forum conference. The reduction will take place from January. “Flights will go down by a decent percentage,” he said. Mexico shocked investors earlier this month by changing the terms of the contributions airport operators pay to the government. The announcement roiled markets, with shares of airport operators falling as much as 44%, amid concerns of overreach by President Andres Manuel Lopez Obrador. On Thursday, the operators reached a deal with the government to pay it 9% of gross revenue, up from the current 5%, though it’s still unclear how consumers will be impacted. “The reduction in fees will also reduce costs,” Vallin said. “This represents a reduction of profits for the airport groups. But it’s not as drastic as some want it to seem, rather, it’s a rearrangement of how the fees should be based on growth and users’ possibilities of paying the service.” Passengers pay an airport use fee as part of their airfare, known as the TUA. Fees were previously reviewed every five years, but the government now aims for that to happen annually, Vallin added. Reviews on airport operators’ investment plans will continue to happen every five years. <br/>