In the last couple of years, the Mexican aviation market has changed quite a lot, and it is now heavily dominated by low-cost carriers. Volaris is in full growth mode, distancing itself from Aeromexico, which, prior to the COVID pandemic, was much closer in terms of passengers and flights. Let’s investigate further.
How was the Mexican airline industry two years ago?
Prior to the pandemic, Mexico had eight domestic carriers. In terms of passengers carried these were Volaris, Aeromexico, Interjet, Viva Aerobus, Aeromar, Magnicharters, Transportes Aéreos Regionales, and Aéreo Calafia.
The first four airlines dominated the market, with more than 90% of the passengers. In 2019, all the Mexican carriers had 69.9 million passengers, led by Volaris, with 20.3 million travelers.
According to data provided by the Mexican government, the airlines operated over 600,000 flights throughout that year.
Internationally, there were 52 operators, including newcomers like Emirates with its controversial Dubai-Barcelona-Mexico City route and Turkish Airlines connecting Istanbul and Mexico City via Cancun. The international airlines carried 31.4 million passengers in 2019.
2020 was supposed to be the biggest year for the Mexican airline industry ever, but the COVID pandemic crippled the travel demand in the country and worldwide.
Changes led to a boom in the low-cost segment
In Mexico, the COVID-19 pandemic impacted the regional, hybrid, and legacy carriers primarily. Nearly two years after the start of the pandemic, the Mexican airline industry has changed dramatically. Two years ago, Volaris and Viva Aerobus held a 45.2% market share among the Mexican-registered airlines (both domestic and internationally). As of November 2021, the two airlines had increased their market share to 67.2%.
Several reasons explain this boom by low-cost carriers in Mexico. Let’s define these reasons.
A low-cost quick recovery
Worldwide, low-cost carriers operating domestic and regional routes are recovering faster than traditional legacy airlines. That is particularly true in Mexico, where Volaris and Viva Aerobus closed last year, serving more passengers than in 2019, increasing their market shares.
Volaris carried 24.4 million passengers, growing 11.1% compared to 2019 levels. The airline has a domestic market share of up to 40%. Meanwhile, Viva Aerobus had 15.2 million passengers last year, a 27% increase.
Both airlines were number one and number three in terms of carried passengers in the country, respectively.
Aeromexico’s problems
Grupo Aeromexico used to be Mexico’s largest airline in the past, and, in terms of fleet, it still is. The carrier has 128 aircraft, surpassing Volaris and Viva Aerobus. Nonetheless, Aeromexico had 16.5 million passengers in 2021, a 20% decrease compared to 2019 when it handled 20.6 million.
The Mexican flag carrier has faced several challenges through the last few years. It has been unable to effectively compete against the low-costs so far. Moreover, the COVID-19 pandemic forced the airline into a Chapter 11 bankruptcy process a year and a half ago. Fortunately for Aeromexico, it is close to exiting the proceedings, although not without controversy.
Aeromexico expects to regain profitability in 2022 and recover its pre-pandemic traffic levels this year.
The disappearance of an airline
To fully understand why Volaris and Viva Aerobus increased their collective low-cost market share from 45% to 67%, we must remember that the Mexican airline industry lost a player in the crisis. Interjet ceased operations in 2020.
Formerly, Interjet had a fleet of Airbus A320 and Sukhoi SSJ100 aircraft. In 2019, it carried 15.3 million passengers. But the airline had an insurmountable debt that, exacerbated by the COVID crisis, led to a cease of operations. While there are talks regarding the possibility of relaunching Interjet, most likely, the airline is out for good.
Other reasons?
The COVID-19 pandemic also offered the low-cost carriers a unique opportunity to attract new travelers. Volaris and Viva Aerobus began a conscious campaign to attract Mexicans that formerly traveled throughout the country via bus. Instead, they offered a quicker means of transportation, just as cheap and maybe cleaner.
Are you surprised the Mexican airline industry is so heavily dominated by low-cost carriers? Let us know in the comments below.
Source: https://simpleflying.com/mexico-low-cost-carrier-dominance/
