VivaAerobus

Mexican LCCs Interjet, Volaris and VivaAerobus plan more rapid growth for 2012

Mexico’s three low-cost carriers are planning another year of rapid growth as they continue to benefit from the 2010 collapse of Grupo Mexicana. Interjet, Volaris and VivaAerobus saw their combined domestic passenger traffic grow by 41% in 2011 to 13.8 million passengers. Their international operations expanded even faster last year albeit on a very small base, recording 91% growth to 1.2 million passengers. More rapid growth is expected across both the domestic and international networks as the Mexico’s LCC trio plans to take delivery of 17 additional aircraft in 2012, representing 20% growth and resulting in a combined LCC fleet of 101 aircraft.

The LCC penetration rate in Mexico’s dynamic domestic market reached 54% in 2011, compared to 50% in 2010. The total domestic market grew by 4% in 2011 to 25.455 million passengers, which is still 8% below the peak of 2008 when Mexican carriers transported 27.649 million domestic passengers. But the fact Mexico has been able to grow at all the last two years (in 2010 growth was under 1%) is quite an achievement given the sudden collapse in Aug-2010 of Mexicana, which had about a 28% share of the domestic market.

VivaColombia prepares for 2Q2012 launch as Irelandia ponders pan-Latin American LCC network

Low-cost carrier start-up VivaColombia has adjusted its business plan ahead of its planned May-2012 launch and will focus primarily on stimulating demand on thin domestic routes. VivaColombia has selected Medellin as its base and is in the process of leasing an initial fleet of five A320s, having decided against pursuing fleet synergies with Mexican sister carrier and B737 operator VivaAerobus.

The Colombian carrier, which was provisionally known as La Nueva Aerolinea (LNA) until early this year when investment from VivaAerobus owners Irelandia and IAMSA was secured, had an initial business plan that envisioned sticking to trunk routes from a Bogota base. LNA was initially established over two years ago by four Colombian entrepreneurs, led by former Avianca CEO Juan Emilio Posada. It was initially awarded traffic rights last year for six domestic trunk routes. The cross-ownership in Mexican and Colombian carriers could be the early stages of a Viva-branded pan-Latin American LCC.

A year after Mexicana's exit, Aeromexico, Mexican LCCs and US carriers are main beneficiaries

One year after the suspension of services at Grupo Mexicana, which became the largest airline casualty since the onset of the global financial crisis, it appears the Mexican market has fully recovered. Mexico’s remaining carriers have been able to quickly absorb Mexicana’s approximately 27% of the domestic market. US carriers have so far been the largest beneficiaries of Mexicana’s demise in the international market but Mexico’s remaining carriers are eager to start narrowing the very wide gap with their foreign competitors.

More record profits for Aeromexico in 2Q2011 as Mexican market recovers

For the second consecutive quarter Aeromexico has recorded its highest level of profitability in at least 15 years. Mexico’s largest airline group has now made about USD300 million in net profits since the collapse of archrival Mexicana in Aug-2010, reversing several years of unprofitability. Group Aeromexico is now aiming to further improve its profitability and market share, particularly in the international market where it still has a relatively small presence.