Mexico City Juarez International Airport

Aeromexico plans more capacity growth in 2013 as delayed 787s are deployed to Europe and New York

Aeromexico saw its profits drop for the second consecutive year in 2012 as it was only able to grow passenger traffic by 3% despite double-digit growth for the overall Mexican market. But Mexico’s only surviving legacy airline group remains in the black and its outlook remains relatively bright given its strong position in the Mexican market and the resurgence of the country’s economy.

Grupo Aeromexico is planning to grow capacity (ASKs) by a further 6% in 2013, matching the 6% capacity increase from 2012. But the group is targeting higher RPK growth and load factors, which it hopes will allow it to regain the share of the domestic market it lost in 2012.

Internationally, Aeromexico is planning to grow capacity by up-gauging routes, including replacing 767-200s with new 787-8s to London and Paris. Aeromexico also plans to deploy its first batch of 787s to New York, which it currently only serves with 737s. Aeromexico now expects it will receive three 787-8s in 4Q2013, representing a delay of about three months due to the current grounding of the global 787 fleet.

Mexico returns to double-digit domestic growth in 2012, boosting outlook for Aeromexico and LCCs

Mexico’s domestic market recorded double-digit growth in 2012 for the first time in five years and only the second time this century. The Mexican aviation industry has reached its healthiest point since deregulation led to the launch of five low-cost carriers seven years ago. The market now features a strong legacy airline group and three LCCs which are seeking to cash in on their relatively strong positions by holding initial public offerings.

Mexican carriers flew 28.1 million domestic and 5.9 million international passengers in 2012, according to newly released statistics from Mexico’s DGAC. Domestically the market grew by 10% while the much smaller international market grew by 23%. Foreign carriers serving Mexico recorded much more modest growth of 3%, but still dominate Mexico’s international market with 21.2 million passengers carried in 2012.

VivaAerobus and VivaColombia focus on domestic expansion as Irelandia ponders third Viva franchise

VivaAerobus and VivaColombia are planning further expansion in the Mexican and Colombian domestic markets in 2013 while they remain separate entities without any network or operating synergies. But the two low-cost carriers could start exploring a closer partnership in 2014 as VivaAerobus looks to potentially join VivaColombia as an A320 operator and launch services to other Latin American countries.

Meanwhile, Irish investment firm Irelandia Aviation, which owns stakes in VivaAerobus and VivaColombia, continues to study establishing a third Viva affiliate in a new Latin American market. With the Viva brand already established in Colombia and Mexico, and as the Brazilian market is currently over-saturated, smaller Latin American markets that lack any local LCCs are being studied. The Viva group could ultimately consist of several LCCs, with most of the carriers being small in size but enjoying economies of scale by being part of a pan-Latin American group.

Mexico’s LCC Volaris plans more rapid domestic expansion in 2013

Mexico’s Volaris is planning another year of rapid expansion as the low-cost carrier sees further opportunities in the Mexican domestic market. The airline also expects to further expand during 2013 in the US, where it now has a network of 10 destinations, but for the second consecutive year faster capacity growth will be pursued domestically.

Volaris, which serves 27 destinations in Mexico, is now the third largest carrier in Mexico’s domestic market on a seat capacity basis but the largest on an ASK basis. Volaris expanded its fleet by seven aircraft in 2012, ending the year with 41 A320 family aircraft.

The airline expects to end 2013 with at least 44 aircraft but could end up with up to 48 aircraft if it decides to postpone the phase out of A319s.

Allegiant makes push from Phoenix-Mesa as ultra-LCC rivals Frontier and Spririt move in

Allegiant Air is planning rapid expansion from one of its largest bases during the final weeks of 2012 and into early 2013 as it introduces flights from Phoenix-Mesa Gateway Airport in Arizona to four new markets. The push is occurring as two of Allegiant’s closest rivals – Frontier Airlines and Spirit Airlines – are enlarging the airport’s scheduled service footprint. As it looks to maintain its leading position at Phoenix-Mesa, Allegiant is also looking at potentially launching services to Mexico in 2013, using its recently acquired fleet of A319s.

Five years ago, in Oct-2007, Allegiant introduced scheduled service at Phoenix-Mesa, and selected the airport as its third base, joining Las Vegas and Orlando. At that time it launched service to 13 markets from Phoenix-Mesa. Allegiant has since steadily expanded its operation at Phoenix-Mesa and by Feb-2013 the carrier will offer flights to 35 destinations, including Honolulu. In the Phoenix-Honolulu market, Allegiant will compete against US Airways and Hawaiian Airlines, which operate from nearby Phoenix Sky Harbor International Airport.

Mexico's Interjet continues transborder push as its domestic market share shrinks

A subtle shift is occurring in the Mexican domestic market as market leader Interjet is opting to cede some domestic traffic to other airlines, most notably to fellow low-cost carrier Volaris. Interjet has been focusing on building up international traffic while Volaris has concentrated a significant portion of its growth in 2012 domestically, largely through a push from Guadalajara.

Interjet’s international push has centred mainly in US markets and has resulted in Volaris and Aeromexico ceding their international market share as Interjet moves to balance its network. Interjet now has an almost 10% share of Mexico's international market (excluding foreign carriers), compared to only a 1% share a year ago. Interjet now serves six international gateways, all of which have been launched over the last 15 months. A seventh international destination will be added in Oct-2012 when Orange County in California will become the carrier's four destination in the US after Miami, New York and San Antonio.