Key Players and Background
Volaris and Viva Aerobús, two leading low-cost airlines in Mexico, have announced the creation of a new Mexican airline group. Both companies will maintain their current operations under independent operating certificates and distinct brands.
Volaris, with a market capitalization of approximately 17,400 million pesos (967 million USD), is primarily owned by the venture capital firm Indigo Partners. Indigo Partners also controls Frontier Airlines in the US and JetSmart in Chile. Volaris operates exclusively with Airbus aircraft and competes mainly with Mexico’s flag carrier, Aeroméxico.
Viva Aerobús, a privately-owned company, is controlled by the IAMSA transportation group led by magnate Roberto Alcántara. Both airlines share similar routes and operate Airbus aircraft.
Objectives and Benefits
The new airline group aims to expand low-cost, high-quality service offerings and stimulate demand. Enrique Beltranena, Volaris’ president and CEO, emphasized that this collaboration will drive growth in Mexico’s aviation sector, aligning with the low-cost, point-to-point model that has transformed the industry over the past two decades.
The partnership is expected to benefit employees, passengers, the general public, suppliers, and shareholders of both Volaris and Viva Aerobús. It will also promote investment, employment, air connectivity, tourism, and economic development across Mexico.
Market Context and Challenges
This announcement comes amid years of turbulence in Mexico’s aviation market, including disputes with US regulators.
- US Department of Transportation Ruling: In October, the US Department of Transportation rejected over a dozen flight routes proposed by Mexican airlines to the US, citing disagreements over flight scheduling management at Mexico City’s primary airport and the decision to relocate cargo operations to a more distant facility.
- Mexican Airport Space Allocation: In November, Mexico’s President Claudia Sheinbaum stated that Mexican airlines would cede some spaces at the capital’s airport to their US competitors.
- Market Share: As of October, US operators controlled more than half of Mexico’s international passenger market share, while Mexican airlines accounted for less than 30%.
Key Questions and Answers
- What is the new airline group about? Volaris and Viva Aerobús have formed a new Mexican airline group to expand low-cost, high-quality service offerings and stimulate demand.
- Who owns Volaris? The primary owner of Volaris is Indigo Partners, a venture capital firm that also controls Frontier Airlines in the US and JetSmart in Chile.
- What challenges does Mexico’s aviation market face? The market has experienced turbulence, including disputes with US regulators over flight scheduling and space allocation at Mexico City’s primary airport.
- What is the current market share of Mexican and US airlines? As of October, US operators controlled more than half of Mexico’s international passenger market share, while Mexican airlines accounted for less than 30%.
