Background and Relevance of Viva and Volaris
Viva and Volaris, two leading low-cost airlines in Mexico, have announced plans to merge and form the new entity, Grupo Más Vuelos. This strategic move aims to strengthen their positions in the face of industry turbulence, enhance their low-cost business model, democratize air travel, stimulate tourism, and create economies of scale. The merger seeks to elevate Mexico’s air travel penetration, which currently stands at a mere 0.5 annual passenger trips per capita relative to the country’s income, falling short of Turkey (1.3), Malaysia (1.3), Chile (1), and Colombia (1) – countries with comparable income levels.
Operational Strengths and Expansion Plans
The combined strength of Viva and Volaris lies in their ability to serve 86 domestic and international destinations with 324 routes using Airbus aircraft. This will result in approximately 990 daily operations, including takeoffs and landings, with further growth planned for the Felipe Ángeles International Airport as a central hub.
Regulatory Process and Fleet
The merger process is expected to take 12 months, involving both national and international authorizations. As of October last year, the airlines operated a combined fleet of 211 aircraft (Volaris had 161), with additional orders for around 200 planes in the coming years, according to Volaris’ director Enrique Beltranena.
Historical Context and Previous Efforts
Following the COVID-19 pandemic, which led Group Aeromexico through a complex financial restructuring, Viva and Volaris sought to bolster their positions amidst a growing domestic and international market. In December 2021, Viva (VivaAerobus) signed a commercial partnership agreement with the US-based Allegiant, based in Las Vegas. The deal included a $50 million investment, the first of its kind between two ultra-low-cost airlines, targeting underserved destinations without direct flights between the two countries.
Although the Mexican Federal Economic Competition Commission (Cofece) approved the partnership without conditions a year later, the US Department of Transportation (DOT) has since put the process on hold. Nevertheless, the investment continues, and Grupo Más Vuelos requires approval from Mexico’s National Antitrust Commission, the National Foreign Investment Commission, the US Hart-Scott-Rodino Antitrust Act (HSR), and Colombia’s antitrust agency.
Volaris’ Recent Developments
In May 2023, Volaris received its first aircraft directly from Airbus’ Mobile, Alabama facility, becoming the first foreign company to do so. This A320neo aircraft (N549VL) joined Volaris’ fleet as its 122nd plane, part of an order for over 9,000 million dollars’ worth of A320neo family aircraft signed in 2017 with Indigo Partners, one of its strategic partners and also present in the US low-cost airline Frontier, which has a codeshare agreement with Volaris.
Volaris has faced challenges, including the review of Pratt & Whitney engines on its aircraft, grounding several planes for over a year and a half. In response, Volaris announced a measure similar to Viva’s in 2024: leasing foreign equipment with crew, a move criticized by pilots for violating Mexican law.
The New Airline Group
According to Viva and Volaris’ plans, Grupo Más Vuelos will trade on the Mexican (BMV) and US (NYSE) stock exchanges, leveraging Volaris’ current public company financial structure.
Regulatory Approvals Needed
Following the announcement, the parties are working to secure approval from Mexico’s National Antitrust Commission, the National Foreign Investment Commission, the US Hart-Scott-Rodino Antitrust Act (HSR), and Colombia’s antitrust agency.
Key Benefits of the Merger
The merger’s significant advantages include cost savings from the controlling firm’s operations, a robust presence in the growing North American transborder market, and disciplined cost management through economies of scale, joint purchases, and modern fleet optimization.
Key Aspects of the Operation
- Creation of Grupo Más Vuelos: Post-merger, the controlling entity of Volaris will change its name to Grupo Más Vuelos, S.A.B. de C.V., which will trade on the NYSE and BMV.
- 50/50 Equal Merger: Shareholders of both companies will combine their stakes, with each party owning 50% of the new holding company.
- Independent Brand Maintenance: Volaris and Viva will continue operating as separate airlines.
- Cost Savings and Efficiencies: The merger aims for a more robust financial foundation, leading to lower capital costs, better leasing terms, and joint purchasing savings.
- Route Network Expansion: The group will offer broader connectivity with 86 destinations and 324 routes (as of Q3 2025).
- Anticipated Closure by 2026: The transaction is subject to standard closing conditions, including shareholder and regulatory approvals.
