By Kylie Madry

MEXICO CITY Mexico's move of cargo flights from the capital's main airport to a more distant location is likely behind the pause in a planned joint venture between U.S. carrier Allegiant and Mexican airline VivaAerobus, a Mexican official said on Thursday.

U.S. regulators suspended the review of the tie-up on Monday, citing "outstanding questions" regarding air transportation between the two neighbors.

Announced in 2021, the Allegiant-Viva deal is awaiting the U.S. Department of Transportation's (DOT) approval to map out up to 250 new U.S.-Mexico routes and would include a $50 million equity investment from Allegiant in Viva.

In a letter addressed to Mexico Deputy Transportation Minister Rogelio Jimenez, the DOT cited "recent actions the government of Mexico has taken affecting U.S. carrier operations" at Mexico City's decades-old hub, the Benito Juarez International Airport, Latin America's busiest airport.

The letter, made public by the U.S. government, did not specify the actions. But the director of the Benito Juarez airport said in an interview that U.S. officials "had to be referring" to switching cargo flights to the newly built Felipe Angeles International Airport some 28 miles (45 km) away.

"I imagine it has to do with the cargo move, that (the United States) wasn't satisfied with the agreement reached," said airport head Carlos Velazquez.

The Benito Juarez facility is located about 5 miles (8 km) east of downtown Mexico City.

Mexico first announced the cargo move in February, though it extended the deadline to September after U.S. Transportation Secretary Pete Buttigieg visited the country.

During the visit, President Andres Manuel Lopez Obrador agreed with U.S. transport officials to push the deadline back another two months, added Velazquez.

Lopez Obrador argues the move will alleviate congested skies over the older hub, though cargo flights make up only a small percentage of its air traffic.

The Felipe Angeles airport, a top priority of the president which opened last year, lags far behind Benito Juarez in flights.

Mexico's transportation ministry and the U.S. DOT did not immediately respond to requests for comment. Both VivaAerobus and Allegiance said they hoped the two countries could resolve the issue quickly.

(Reporting by Kylie Madry in Mexico City; Additional reporting by David Shepardson in Washington; Editing by David Alire Garcia and Matthew Lewis)