Aeromexico and Volaris continue to face weak yields in a sluggish Mexican economy

Mexican carriers Aeromexico and Volaris managed to turn profits during FY2013 despite the country's sagging economic conditions that produced GDP growth of just over 1% in 2013.

Mexico's dour economic conditions resulted in each carrier facing yield weakness during 4Q2013, which triggered a quarterly loss at Volaris. No improvements in pricing traction are expected until 2H2014 at the earliest, which means in the short term Aeromexico and Volaris will continue to trade yield for load factors while preparing for double-digit capacity growth during FY2014.

Given the expected slow recovery in Mexico's domestic market, each carrier has opted to steer a larger portion of their planned capacity increases into international markets, where presumably the two airlines can price fares at levels to offset continued pricing weakness on domestic routes.