What about Allegiant Air’s joint venture with Viva?
While the Allegiant Air and Sun Country Airlines merger is undoubtedly huge news for the industry, Allegiant Air still has another partnership case pending.
In a surprise announcement on a Sunday, Allegiant Air and Sun Country Airlines jointly said that the former would acquire the latter in a stock-and-cash transaction valued at $1.5 billion, combining two leisure-focused airlines into a single entity.
However, Allegiant Air still has another pending competition case, namely its joint venture (JV) with Viva. While the Mexican side approved the JV in October 2022, Allegiant Air and Viva’s request for antitrust immunity (ATI) for their partnership, despite a request to renew the procedures, is seemingly dead in the water. Or is it?
Especially since Viva has its own merger agreement with Volaris, which would create a holding company for the two Mexican low-cost carriers. Getting approval for all three partnerships and/or mergers sounds messy.
Nevertheless, the latest twist in the United States airline industry’s story is the proposed tie-up between Allegiant Air and Sun Country Airlines, announced on January 11, 2026. According to the pair’s estimates, the transaction should close in H2 2026, yet could get delayed if regulatory approval lags.
A specially dedicated website, with the domain name www.soaringforleisure.com, outlined four main benefits of the merger: more destinations for customers, expanded international service, greater scheduling agility, and enhanced loyalty rewards.
In addition, the two airlines noted that they have complementary networks, and with Sun Country Airlines’ Amazon Air operation, Allegiant Air will tap into a steady revenue stream that is crucial when the lower end of the market, namely leisure-focused low-cost carriers, has struggled in the US.
“Sun Country remains a major US narrowbody freighter operator, with its multi-year Amazon Prime Air agreement and charter contracts with casinos, Major League Soccer, collegiate sports teams, and the Department of Defense. Adding Allegiant’s charter business, the combined airline gains a more diversified model that balances demand cycles, provides stable revenue, and maximizes aircraft and crew utilization.”
The proposed Allegiant Air and Sun Country Airlines merger valued the latter at $1.5 billion. In comparison, Alaska Airlines valued Hawaiian Airlines at $1.9 billion. Both valuations included the respective carriers' debt, which was $400 million (Sun Country Airlines) and $900 million (Hawaiian Airlines) at the time of the announcement of the mergers.
For context, Allegiant Air ended Q3 2025 with revenues of $561.9 million, with nine-month revenues climbing to $1.9 billion. Sun Country Airlines’ Q3 2025 and first nine-month revenues in 2025 were $255.5 million and $845.8 million.
At the end of the first nine months of 2025, only Sun Country Airlines was profitable, with a net profit of $51.3 million. Allegiant Air’s nine-month net loss was $76.6 million, with the company’s airline-only operating loss being $20.2 million.
During Allegiant Air’s Q3 and Q2 2025 earnings calls, the proposed JV was not mentioned once, even though during the latter quarter, the US carrier and Viva filed a request with the Department of Transportation (DOT) on April 4, 2025, to “expeditiously reinstitute the procedural schedule” for the DOT's review of the JV.
“[…] nearly three and a half years ago, Allegiant and Viva filed their joint application for approval of and [ATI] for their metal-neutral [JV]. The joint venture promises a massive injection of competition and new service for U.S citizens and other residents seeking to vacation in Mexico.”
The two argued that during the Biden administration, their JV application “languished in red tape, longer than any other ATI application processed by Republican and Democratic administrations alike.”
Still, during an Airline Confidential Podcast episode in late April 2025, John Pepper, the Vice President of Corporate Development and Government Affairs at Allegiant Air, detailed that he remembers “trying to put that application together with the hope that it would be shortly approved.”
Pepper added that Allegiant Air has sought ATI because if the two carriers are going to “coordinate on capacity and coordinate on price,” you must have ATI.
According to the Allegiant Air executive, the holdup has been due to, first, Mexico losing the Federal Aviation Administration’s (FAA) International Aviation Safety Assessment (IASA) Category 1, which it has since regained. The second reason was the congestion at MEX.
“It has been congested. It has been at capacity for 20 plus years. The administration, starting with Fox [Vincente Fox, the former President of Mexico – ed. note], had tried to solve this. This last administration actually got serious about it and opened up a second facility at Santa Lucia. The code is NLU.”
Pepper reiterated that the JV’s case has become part of “the longest stretch of time any one of these ATIs has sat out there without action from the DOT, and it is also one that is really, compared to the other ones, costing the most direct public benefit because fares would go down and there would be this instant increase in non-stop routes.”
The podcast’s transcript was filed by WilmerHale, one of the legal advisors of Allegiant Air during the JV application process. The filing read that Pepper had “made a number of salient points on why” the DOT should “expeditiously approve” the JV.
While the Trump administration has yet to approve or deny the JV, it did shoot down the ATI renewal application of Delta Air Lines and Aeromexico. In a final order on September 15, 2025, the DOT mandated that the two have to end their price and capacity-setting JV by January 1, 2026.
At the time, the Department argued that the decision was “necessary because of ongoing anticompetitive effects in US-Mexico City markets that provide an unfair advantage to Delta and Aeromexico as two predominant competitors and create unacceptable actual and potential harm for stakeholders, including consumers.”
The DOT’s main concerns were that Mexico has continued to walk along a “path of market intervention and distortion that adversely affects competition,” violating the US-Mexico Air Transport Agreement (ATA).
The Department’s allegations were related to the confiscation of slots at Mexico City International Airport (MEX), prohibiting all-cargo operations at MEX, perpetuating a “slot allocation regime that does not meet international standards and advantages Aeromexico,” and the government’s past actions that have demonstrated that Mexico, at any time, could “upset aviation operations and long-term commercial planning by airlines through arbitrary action.”
“While [Mexico] has arbitrarily removed slots from longstanding slot holders at MEX, access remains opaque, and new operators cannot establish a foothold at this important airport.”
The latest twist in that saga was a court order on November 12, 2025, with the US Court of Appeals for the Eleventh Circuit issuing a stay order on the DOT’s decision to mandate an end to Delta Air Lines and Aeromexico’s price and capacity-setting JV.
The case related to the JV has continued.
Rytis Beresnevicius
Allegiant Air and Viva announced their JV on December 1, 2021, with the partnership being “designed to dramatically expand options for nonstop leisure air travel between the United States and Mexico, while lowering fares to make travel more accessible and affordable for residents of both nations.”
The agreement included Allegiant Air’s potential $50 million investment in Viva. Maurice Gallagher, then Chairman and Chief Executive Officer (CEO) of Allegiant Air, who is now only the Chairman of the airline, was also slated to join Viva’s board of directors.
Summarizing the benefits of the JV, Allegiant Air’s presentation to investors read that its partnership with Viva would stimulate US nationals’ travel to Mexican beaches “by leveraging Viva’s and Allegiant’s low-cost operating structures with Allegiant’s premium distribution arm,” while also spreading the ultra-low-cost carrier savings to more consumers by enabling Allegiant Air to access markets it could otherwise not, including MEX.
That was in 2021, and the world was much different back then. Initially, the two carriers planned that the JV’s flights would begin operating in January 2023. They had made some progress when, in October 2022, the Mexican Federal Economic Competition Commission (Comisión Federal de Competencia Económica, COFECE) “unconditionally authorized” the JV.
However, in yet another twist, on December 18, 2025, Viva and Volaris unveiled their plans to unite under a single holding company, “with the objective of expanding low-fare travel and the connectivity within Mexico and abroad.”
While Viva and Volaris would retain their air operator’s certificates (AOCs) and brands, the pair of Mexican low-cost carriers will try to lower fleet ownership costs, improve access to capital, and strengthen their financial positions.
“This will enable both carriers to expand their offering of low-cost, high-value service that makes air travel more accessible to a broader set of customers, with the goal of improving market reach and encouraging demand.”
While Allegiant Air’s name was nowhere to be seen among the materials related to the Viva-Volaris tie-up, Viva’s Q3 2025 report’s forward-looking statements, based “on information available at the time,” are subject to risks, including “the ability of Viva and Allegiant to obtain regulatory approval from all requisite regulators in order to realize the potential benefits of the alliance.”
Meanwhile, Allegiant Air’s Q3 2025 report stated that its forward-looking statements involve risk factors associated with its business, including “[…] the ability to obtain necessary government approvals to implement the announced alliance with Viva Aerobus […].”
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