Volaris is the low-cost Mexican airline that is bucking the pandemic trend. Whilst most airlines have spent the last year in survival mode, Covid-19 has helped Volaris cement its new position as Mexico’s predominant airline.
The Volaris story
The airline first began operations in 2006, basing its operations out of regional airports. Whilst the airline originally avoided Mexico City, circumventing its expensive and highly sought-after slots, today the airline has a heavy presence there.
Enrique Beltranena, the airline’s CEO, explained that the entire business model of Volaris is based upon the history and geography of Mexico. Speaking at the World Aviation Festival, he explained how the country’s labour market and years of Mexican emigration meant that people often work far from where they and their family grew up.
Due to this, Mexico enjoys a particularly strong ‘visiting friends and family’ travel market. The country’s vast size however means that bus journeys from one side of the country to the other can take over a day. For context, a flight from Tijuana to Mexico City takes just over three and a half hours.
Throughout Volaris’s history it has sought to compete, not just with fellow airlines, but also with the trans-Mexico bus network. Most of Volaris’s domestic routes are priced at $50 or below. At the same time, Mexico’s middle class has grown rapidly, now representing nearly 40% of the population according to Mexico’s National Institute of Statistics.
Covid’s effect: Mexico loses 34% of air capacity
The pandemic and subsequent collapse in air travel hit Mexico’s aviation market as hard as it did the world over. Enrique Beltranena explained how in April and May of 2020, Volaris’s capacity was down 80%. However, whilst Covid hit Mexico as hard as it did the rest of the world, it did not affect all of Mexico’s airlines equally.
Volaris was better prepared for adverse operating conditions than most airlines. Going into the pandemic the airline had a good cash flow and benefitted from low operating costs. The same cannot be said for the airline’s two main competitors.
AeroMexico, the country’s flag carrier, was forced to file for Chapter 11 bankruptcy in the US and has subsequently started to undergo restructuring. The airline has also sought to slash orders for new Boeing aircraft from 56 to 28.
Another competitor, Interjet, fared even worse. Its entire fleet is currently grounded, and it remains unclear whether they will ever fly again under the Interjet brand.
In the first quarter of 2019 these two airlines accounted for 47% of Mexico’s domestic passenger share. The significant reduction in the capacity of both airlines will provide Volaris with plenty of domestic opportunities, which it has indicated it will seize.
Volaris rebounds and is set to grow
Unlike its competitors, Volaris has recovered relatively quickly from the initial Covid slump in passenger numbers. By June 2020, its capacity had recovered to half of its normal level, and by December 2020, the airline had increased capacity compared with 2019 levels.
Visiting friends and relatives (VFR) tourism has rebounded quickly, with consumers taking advantage of the easing of travel restrictions in the US and Mexico. VFR travel has helped Mexico’s passenger numbers bounce back quicker when compared to other major markets, such as Europe’s. Despite this, it has not been all smooth sailing. Volaris’s CEO described the US’s decision, to impose compulsory Covid tests for passengers returning from Mexico in February, as a “very tough” period for the airline. However, Enrique Beltranena praised the flexibility of the airline, explaining how they had quickly managed to move capacity from international routes to the more open domestic routes.
Looking forward, it seems as if Volaris will have strong domestic and international growth prospects. The airline is set to receive nearly 100 new aircraft from 2021-28, these aircraft will boast lower fuel burn, helping the airline minimise its fuel costs and emissions. The airline’s CEO said that preliminary plans would see the airline using around 80% of new aircraft to reinforce and expand capacity on existing routes, with 20% focused on establishing new routes.
The low-cost airline has been extremely successful in its mission to get Mexico’s middle class off buses and onto planes. In 2019 18% of the airline’s passengers were first time travellers. Volaris is not just growing its passenger numbers, the airline is changing the way Mexicans traverse their country.
Volaris has joined the club of successful airlines. As a profitable airline stimulating new demand for air travel, Volaris will have an important role to play in helping make the next generation of air travel the most sustainable yet.
Would you like to see more Volaris news? Let us know in the comments below!