Mexico's airlines continue transborder push as they await a new bilateral agreement to take effect

A newly revised air services agreement between Mexico and the US that eases limits on the number of airlines allowed to operate on routes between the two countries is a welcome development for airlines operating in both regions. But it is particularly interesting for Mexico's airlines given that their penetration in the transborder space still pales in comparison to US airlines operating between the two countries.

The new pact does not take effect until Jan-2016, which means that the lifting of restrictions is some way in the future. But in the meantime Mexico's airlines still have ample opportunity under the existing agreement, and are no doubt evaluating new opportunities created by the new air services arrangement.

Mexico and the US struck the new accord as all of Mexico's airlines are making a transborder push to diversify from the domestic market, which has been weaker the last couple of years due to Mexico's sluggish economy. Key to the execution of the expansion is ensuring demand is robust enough in transborder markets in order to maintain favourable yields on those routes.