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US threatens Mexican flights over cargo, competition issues

U.S. Escalates Tensions with Mexico Over Cargo Flight Competition, Threatens to Ground Airlines

WASHINGTON/MEXICO CITY - In a move that could significantly disrupt cross-border air cargo operations and strain bilateral relations, the United States has issued a stark warning to Mexico, threatening to prohibit Mexican airlines from operating cargo flights into American airspace unless longstanding competition concerns are addressed. The ultimatum, delivered by the U.S. Department of Transportation (DOT), underscores growing frustrations over what U.S. officials describe as unfair practices in Mexico's aviation sector that disadvantage American carriers. This development, announced on July 19, 2025, comes amid broader trade and economic frictions between the two North American neighbors, potentially impacting everything from e-commerce shipments to manufacturing supply chains.

The core of the dispute revolves around allegations that Mexico has failed to uphold fair competition standards in its cargo aviation market. According to U.S. authorities, Mexican policies have allowed state-supported or subsidized carriers to dominate routes, undercutting U.S. airlines and violating the spirit of existing bilateral aviation agreements. The DOT's statement specifically highlights issues such as unequal access to airport slots, discriminatory fees, and regulatory barriers that prevent American cargo operators from expanding their presence in Mexico. "We have repeatedly raised these concerns with our Mexican counterparts," a DOT spokesperson said in the announcement. "Without meaningful progress, we will have no choice but to take protective measures to ensure a level playing field for U.S. carriers."

This threat is not merely rhetorical; it carries the weight of enforceable action. Under the proposed restrictions, Mexican airlines could be barred from landing cargo flights at U.S. airports starting as early as the fall of 2025, pending a final decision. Such a ban would affect major Mexican cargo haulers, including those affiliated with Aeroméxico and smaller regional operators, which rely heavily on U.S. routes for revenue. The U.S. has invoked provisions from the U.S.-Mexico-Canada Agreement (USMCA), the successor to NAFTA, which includes chapters on fair trade practices in transportation and services. Analysts suggest this could lead to retaliatory measures from Mexico, potentially escalating into a broader aviation standoff.

To understand the roots of this conflict, it's essential to delve into the history of U.S.-Mexico aviation relations. The two countries have long operated under an "open skies" agreement, formalized in 2016, which liberalized passenger and cargo flights between them. This pact was intended to foster competition, reduce fares, and boost economic ties by allowing airlines from both nations to fly freely without restrictive quotas. However, tensions have simmered for years, particularly in the cargo sector, where the rise of e-commerce giants like Amazon and the demands of just-in-time manufacturing have amplified the stakes. U.S. carriers, such as FedEx and UPS, have complained that Mexican regulations favor domestic players, including government-backed entities, by granting them preferential treatment in licensing and infrastructure access.

For instance, critics point to Mexico's recent aviation reforms under President Andrés Manuel López Obrador's administration, which aimed to revitalize the state-owned Mexicana de Aviación as a competitive force. While intended to provide affordable air travel to underserved regions, these efforts have been accused of distorting the market through subsidies and protectionist policies. A 2024 report by the U.S. International Trade Commission highlighted how such measures have led to a 15-20% market share erosion for American cargo firms in key routes like Mexico City to Los Angeles. "This isn't about protectionism on our end," argued a senior U.S. trade official, speaking on condition of anonymity. "It's about reciprocity. If Mexican airlines can freely operate in the U.S., American ones should have the same opportunities south of the border."

The potential fallout from these threats is multifaceted and far-reaching. Economically, the air cargo industry between the U.S. and Mexico handles billions of dollars in goods annually, from electronics and automotive parts to perishable foods. A disruption could exacerbate supply chain vulnerabilities already strained by global events like the COVID-19 pandemic and geopolitical conflicts. For Mexico, which exports heavily to the U.S., restricted cargo flights could delay shipments, increase costs, and harm industries reliant on timely deliveries. Mexican officials have downplayed the severity, with the Secretariat of Communications and Transportation (SCT) issuing a response that emphasizes ongoing dialogues. "We are committed to fair competition and are working to resolve any discrepancies," an SCT statement read. However, industry insiders fear this could lead to higher shipping rates and a shift toward less efficient ground or sea transport options.

Reactions from stakeholders have been swift and varied. U.S. airline associations, including Airlines for America (A4A), have applauded the DOT's stance, viewing it as a necessary defense against predatory practices. "Our members have invested billions in the Mexican market, only to face barriers that tilt the scales unfairly," said A4A President Nicholas Calio. On the Mexican side, business groups like the Mexican Association of Cargo Agents have expressed alarm, warning that a ban could result in job losses and reduced foreign investment. Labor unions in both countries are also monitoring the situation closely, as pilots, ground crews, and logistics workers stand to be affected.

Broader implications extend to the political arena. With the USMCA up for review in 2026, this aviation spat could influence negotiations on other trade issues, such as energy, agriculture, and digital services. The Biden administration, or its successor depending on the 2024 election outcomes, has prioritized enforcing trade deals to protect American workers, a theme echoed in recent actions against China and Europe. Mexico, under its current leadership, has pushed back against what it sees as U.S. overreach, advocating for sovereignty in domestic policy-making. Diplomatic channels remain open, with bilateral talks scheduled for August 2025 in Washington, where aviation experts from both sides will attempt to hammer out a resolution.

Experts believe a compromise is possible but will require concessions. Mexico might need to liberalize airport access and reduce subsidies, while the U.S. could offer technical assistance or phased implementation of any restrictions. "This is a classic case of trade brinkmanship," noted aviation analyst Maria Gonzalez of the Brookings Institution. "Both sides have leverage, but escalation benefits no one in the long run." As the deadline approaches, businesses on both sides of the border are preparing contingency plans, from rerouting shipments via Canada to investing in alternative logistics networks.

In the meantime, the threat has already sent ripples through financial markets. Shares of Mexican airlines dipped slightly following the announcement, while U.S. cargo giants saw modest gains. Consumers, too, may feel the pinch if costs rise for imported goods. This episode serves as a reminder of the delicate balance in international trade, where competition and cooperation must coexist to sustain economic growth.

As negotiations unfold, the world watches to see if cooler heads prevail or if this becomes another flashpoint in U.S.-Mexico relations. For now, the skies between the two nations remain open—but under a gathering cloud of uncertainty. (Word count: 1,028)

Read the Full reuters.com Article at:
[ https://www.reuters.com/world/us/us-threatens-mexican-flights-over-cargo-competition-issues-2025-07-19/ ]