Focus on Domestic Tourism and Preparation for Mega-Events
Rosarito, Baja California – Volaris, Mexico’s low-cost airline, has revised its growth projections for 2025, reducing them from 13-15% to 7-9%. The company’s CEO, Enrique Beltranena, explained that this decision is a response to a slowing economic environment in both Mexico and the United States, along with operational challenges and shifts in market demand.
Economic Slowdown and Its Impact
Beltranena highlighted a desaceleración económica in both countries, though not yet classified as a recession. This phenomenon has affected travel demand, particularly on international routes between Mexico and the US. The reduction in traffic is compounded by the Trump administration’s migration and tariff policies, leading to an adjustment in operational capacity. Volaris will reallocate resources from transborder routes to domestic trunk routes within Mexico, focusing on resilient markets such as the visiting friends and family (VFR) segment, which has historically been less volatile.
Financial Implications
Regarding financial impact, Beltranena clarified that while the first quarter of 2025 showed losses—a common occurrence in the market—the plunge in stock prices reflects broader sector trends in the US rather than Volaris’s specific performance. “Our first quarter is always the lowest,” he explained, noting that stock market performance does not necessarily reflect a company’s value.
Volaris anticipates a rebound during the summer season, supported by increased bookings. Beltranena pointed out that VFR traffic typically recovers quickly, as seen after previous events like the pandemic or the Category 2 crisis in aviation.
Among operational challenges, the issue of Pratt & Whitney engines stands out. Thirty-two aircraft remain grounded for maintenance, a problem expected to last between 2 and 3 years. However, Volaris has a compensation agreement with the manufacturer, mitigating the financial impact.
New Route in Mexicali
During the 49th Tianguis Turistico, Volaris announced the launch of three new routes from Mexicali, Baja California’s capital, to Morelia. Services are set to begin in July, complementing Volaris’s existing network in Mexicali and forming part of a plan to reinsert operational capacity in the city. This growth is backed by over $400 million in infrastructure investments, primarily for the maintenance hangar in Baja California.
Key Questions and Answers
- Q: Why did Volaris adjust its growth projections? A: The company responded to a slowing economic environment in Mexico and the US, operational challenges, and shifts in market demand.
- Q: How has the economic slowdown affected travel demand? A: The slowdown has reduced demand for international travel, particularly between Mexico and the US, exacerbated by Trump’s migration and tariff policies.
- Q: What changes will Volaris implement in its operational capacity? A: Volaris will shift resources from transborder routes to domestic trunk routes, focusing on the resilient VFR market.
- Q: What financial implications does Volaris face? A: While the first quarter of 2025 showed losses, the stock price plunge reflects broader sector trends in the US rather than Volaris’s specific performance.
- Q: What new routes will Volaris launch in Mexicali? A: Volaris will introduce three new routes from Mexicali to Morelia, complementing its existing network and boosting operational capacity in the city.
