Mexico's domestic aviation market: time for "consolidation"?

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Mexico's domestic passenger growth has slowed from its low -teen, double digit increases recorded in the middle of the last decade, but it still continues to climb steadily. There is also room for continued growth as Mexico's trips per capita remain far below more mature markets.

But Mexico's economic growth has been tenuous the last couple of years, and the country's only full service airline - Aeromexico - believes domestic capacity growth by low cost airlines has been too aggressive, which will continue to pressure pricing.

As a result, Aeromexico believes that consolidation may be necessary in Mexico's domestic market to create some pricing traction in the market. M&A is not likely to happen anytime soon, but there are definitive lines being drawn between Mexico's stronger and weaker airlines.

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