THE NEWS
Low-cost airlines are more than a significant niche in the Mexican aviation industry — they’re it’s future.
That’s the prognosis of Enrique Beltranena, CEO of Volaris, who proposed Wednesday that for Mexican aviation to flourish in the future, it will need to adopt the low-cost model as dominant.
“The low-cost model represents a great opportunity for the sector,” said Beltanena, noting that low-cost airlines in other nations have generally shown healthy growth.
Eight-year-old Volaris pioneered low-cost flights in Mexico. Its stock value has fallen considerably this year, which in a sense could be a vindication of its approach, since the dip is seen to be the result of competitors adopting the Volaris low-cost model.
Beltranena, speaking Wednesday on the eighth anniversary of his airline, pointed out that ticket prices increased on average by 5 percent each year from 2007 to 2010. Those increases resulted in a corresponding 5 percent decrease in passengers.
That period — 2007-10 — was bleak for Mexican aviation, with 10 airlines ceasing to fly.
Low-cost flights, says Beltranena, are the way to capture the high percentage of Mexicans who don’t fly.
In the United States, for example, the average individual flies 2.5 times a year. In Mexico, that number is 0.27 times a year, one of the lowest averages in all of Latin America.
On the other hand, the number of annual passenger bus trips each year is more than 100 times the number of flights.
The key to improving that percentage, according to Beltranena, is to price flights similar to the corresponding bus fare. Low-cost airlines have already been able to do that for longer flights of more than five hours.
Reducing fairs requires charging for services traditionally included in the ticket price — such as meals. That isn’t always a smooth transition.
“Volaris is still a young airline and there are growing pains,” Beltranena said. “It hurts a little to start charging for onboard meals.
But, he said, it’s necessary in order to adapt to the new market and stay positioned for the future.
Low-cost airlines are more than a significant niche in the Mexican aviation industry — they’re it’s future.
That’s the prognosis of Enrique Beltranena, CEO of Volaris, who proposed Wednesday that for Mexican aviation to flourish in the future, it will need to adopt the low-cost model as dominant.
“The low-cost model represents a great opportunity for the sector,” said Beltanena, noting that low-cost airlines in other nations have generally shown healthy growth.
Eight-year-old Volaris pioneered low-cost flights in Mexico. Its stock value has fallen considerably this year, which in a sense could be a vindication of its approach, since the dip is seen to be the result of competitors adopting the Volaris low-cost model.
Beltranena, speaking Wednesday on the eighth anniversary of his airline, pointed out that ticket prices increased on average by 5 percent each year from 2007 to 2010. Those increases resulted in a corresponding 5 percent decrease in passengers.
That period — 2007-10 — was bleak for Mexican aviation, with 10 airlines ceasing to fly.
Low-cost flights, says Beltranena, are the way to capture the high percentage of Mexicans who don’t fly.
In the United States, for example, the average individual flies 2.5 times a year. In Mexico, that number is 0.27 times a year, one of the lowest averages in all of Latin America.
On the other hand, the number of annual passenger bus trips each year is more than 100 times the number of flights.
The key to improving that percentage, according to Beltranena, is to price flights similar to the corresponding bus fare. Low-cost airlines have already been able to do that for longer flights of more than five hours.
Reducing fairs requires charging for services traditionally included in the ticket price — such as meals. That isn’t always a smooth transition.
“Volaris is still a young airline and there are growing pains,” Beltranena said. “It hurts a little to start charging for onboard meals.
But, he said, it’s necessary in order to adapt to the new market and stay positioned for the future.
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