Low-Cost Airlines Boost Mexico Domestic Flights

High growth potential spurs service expansion and industry alliances

By: Dawna L. Robertson

During Tourism Tianguis 2006, the topics were plenty. When it came to low-cost air travel, the travel trade fair brought air conditions front and center. Mexican tourism officials and airline representatives gave great energy to the country’s low-cost airline trend and its impact on the tourism industry.

During the past year, several private and semiprivate airlines such as Avolar (www.avolar.com.mx), ABC Interjet (www.interjet.com.mx) and Volaris (www.volaris.com.mx), as well as Mexicana Airline’s Click Mexicana (www.clickmexicana.com) have launched low-cost flights to different areas within Mexico.

The country’s longest running airline, Mexicana sparked the trend with its July 2005 launch of Click. Avolar followed that September with its fleet of three planes carrying up to 150 passengers. The carrier hopes to service more than 800,000 visitors by the end of the year.

ABC Interjet introduced its new fleet in December 2005. In March, Volaris launched service with 55 planes carrying up to 144 passengers each.

“This new network of air transportation is expected to increase domestic tourism among international visitors,” reported Mexico Tourism Secretary Rodolfo Elizondo. “Our government is confident in the potential growth of this market and is committed to supporting the business objectives of airlines that are offering low-cost services to consumers.”

Mexico received 21.96 million international visitors in 2005, and travel to the country’s less-frequented destinations is becoming increasingly popular. While air travel to areas outside of Mexico’s major airline hubs has traditionally been costly, the competition generated by the increased availability of domestic flights within the country is expected to drive down costs.

Only 6.5 percent of Mexican visitors currently travel via air within the country, leaving much room for growth. The country’s diverse independent companies are taking advantage of this opportunity by focusing on fleet modernization and technology, increasing labor productivity, and improving service and safety standards all while remaining committed to keeping costs low. The result is convenient air travel that at times is less expensive than ground transportation.

According to airline representatives, the promise of increased tourism made possible by inexpensive air transportation is also driving the creation of strategic alliances between the airlines and ground transportation, hotels and entertainment companies.

Forty miles west of Mexico City, Adolfo Lopez Mateos International Airport in Toluca serves as a central hub for the majority of the new low-cost carriers. The location helps to alleviate air traffic of other cities, such as Monterrey, Guadalajara and Mexico City.

The five airlines that spoke at Tourism Tianguis 2006 agreed that the increasing demand on the domestic airline industry creates a need for expansion of Toluca Airport. Plans call for improved infrastructure and ground connectivity to other Mexican destinations, and for an increased number of expanded routes.

Mexico’s domestic service currently caters to approximately 2.5 million passengers annually.