Background on Volaris and Its Relevance
Volaris, Mexico’s leading low-cost airline by passenger volume, experienced a significant surge in its stock price on Wednesday following the U.S. government’s decision to revoke antitrust immunity granted to Aeroméxico and Delta airlines.
Volaris’s stock closed at 12.09 pesos, marking a 6.05% increase from the previous close and reaching its highest level since early March.
In recent years, Volaris has undergone operational adjustments due to the installation of Pratt & Whitney engines in its modern Airbus A320 fleet. These changes led to a substantial reduction in the number of flights Volaris could operate, prompting the airline to prioritize more profitable and well-occupied routes.
Impact on Volaris
Some investors view the Monday announcement as a promising opportunity for Volaris, given that Aeroméxico and Delta will no longer be able to coordinate flights starting January 1, 2026. They will also cease sharing revenues from certain flights and coordinating schedules and routes for connections.
Different Business Models
However, Volaris’s business model differs from Aeroméxico and Delta. While the former targets a market seeking more affordable, leaner flights, Volaris’s customers pay separately for each service offered. In contrast, Aeroméxico and Delta operate as traditional airlines.
Aeroméxico’s Perspective
From Aeroméxico’s standpoint, this measure does not affect their customers, as code-share agreements and reciprocity of frequent traveler programs will remain intact.
The U.S. Department of Transportation issued the order for Aeroméxico and Delta to terminate their partnership by January 1, 2026. This decision was anticipated since Secretary Sean P. Duffy announced actions to address alleged abuse of the bilateral aviation agreement and anticompetitive practices by Mexico.
Key Questions and Answers
- What is the main reason for Volaris’s stock surge? The U.S. government’s decision to end Aeroméxico and Delta’s antitrust immunity is seen as a positive development for Volaris, leading to an increase in its stock price.
- How does Volaris’s business model differ from Aeroméxico and Delta? Unlike traditional airlines, Volaris offers separate pricing for each service it provides, catering to a market that seeks more affordable and leaner flights.
- What impact will the termination of Aeroméxico and Delta’s partnership have on their customers? According to Aeroméxico, code-share agreements and reciprocity of frequent traveler programs will continue, ensuring no immediate effect on customers.
