Outlook 2024: Mexico and Colombia's aviation sectors could have another eventful year in 2024
Two of Latin America's largest aviation markets - Mexico and Colombia - are closing out an eventful 2023.
Mexico has finally received a safety upgrade from the US, which results in Mexican airlines resuming growth to the country. Additionally, Mexico's government has enlarged its role in the aviation sector throughout 2023, culminating in plans to revive the Mexicana brand.
Colombia has witnessed two of its airlines exit the market in 2023; but incumbent airlines quickly moved to fill in the gaps created by the demise of Viva Air and Ultra Air. The country's airlines also face familiar infrastructure constraints at Colombia's largest airport - Bogotá El Dorado International.
As 2023 draws to an end, it's clear that airlines in Mexico and Colombia face both opportunities and challenges in 2024 - a year that could prove to be just as significant in those markets as was 2023.
- Mexican airlines rush to grow in the US transborder market after Mexico's safety upgrade.
- Volaris and Viva Aerobus navigate Pratt & Whitney engine issues on their Airbus A320neo family narrowbodies.
- Mexico's government takes a pronounced role in the country's aviation sector.
- Colombia's aviation sector has rapidly changed in 2023 as two of its airlines ceased operations.
- Bogotá El Dorado International airport faces challenging infrastructure constraints.
- Will the governments of Mexico and Colombia ensure that their respective aviation industries remain competitive?
Mexico's airlines pivot their growth to the US after a long-awaited safety upgrade
Mexican airlines finally were allowed to resume growth to the US in Sep-2023. The US downgraded Mexico's safety status in May-2021 - this change in safety status, among other things, prohibited Mexican airlines from growing in the key transborder market.
The inability to grow into the US resulted in overcapacity in Mexico's domestic market, which created pricing pressure.
But since the upgrade Mexican airlines have outlined plans for rapid growth to the US, albeit with different approaches in capitalising on the opportunity for expansion.
See related CAPA - Centre for Aviation report: Mexican airlines adopt different approaches to US expansion after safety upgrade
The Mexican ultra-low cost carrier (ULCC) Volaris said its domestic available seat miles (ASMs) fell 11% year-over-year in Nov-2023, whereas international capacity grew by 16.7%.
Data from CAPA - Centre for Aviation and OAG show that Mexico's international available seat kilometres (ASKs) will increase markedly year-over-year at the beginning of 2024 as Mexican airlines continue to ratchet up service to the US, and all airlines operating in the transborder market take advantage of demand to warm weather destinations.
Mexico: weekly international ASKs from 2019 to mid-May-2024
Domestic ASKs are projected to drop below 2023 at the start of 2024, before increasing at the start of Apr-2024.
Mexico: weekly domestic ASKs from 2019 to mid-May-2024
Mexico's two ULCCs grapple with continued fallout from Pratt & Whitney engine issues
Both Volaris and its fellow Mexican ULCC Viva Aerobus face a certain level of operational uncertainty in 2024 due to inspections and availability for the Pratt & Whitney geared turbofan engines that power their Airbus A320neo family aircraft.
At the time of its Oct-2023 third quarter earnings call Volaris' management said that 16 aircraft had been grounded, and told investors that 73 of its aircraft could be temporarily affected.
Volaris Group: fleet summary, as of mid-Dec-2023
In Dec-2023 Volaris reached a compensation agreement with Pratt & Whitney that "contemplates compensation for each GTF engine removed from our fleet", said the airline's CEO Enrique Beltranena.
Volaris is working to negotiate lease extensions on 18 aircraft that were scheduled for redelivery in 2024-2025 to help mitigate the disruption created by the engine issues.
Viva Aerobus recently explained that in 3Q2023 it had an average of 3.5 A320neos aircraft on the ground. The airline also stated that off-wing inspections should begin in early 2024 and persist throughout 2025.
"We seek to partially offset the impact in 2024 through new aircraft arrivals, some lease extensions and short-term leases in a very tight leasing market", the airline said.
Viva Aerobus: fleet summary, as of mid-Dec-2023
Mexico's president has enlarged government's role in the country's aviation sector
The government of Mexican President Andrés Manuel López Obrador has taken on a broader role in Mexican aviation during 2023.
Mexico's navy recently took control of the Mexico City International airport, along with two other companies - Mexico City Airport Group (GACM) and Mexico City Airport Services (SACM). Mexico's Infrastructure, Communications and Transport Ministry was previously in charge of those entities.
Mexico's government has also imposed new limits on operations to 43 per hour at Mexico City International airport, as of Jan-2024. The move followed a reduction in hourly operations to 52 from 61 in 2022.
The airport is facing significant constraints as the government appears to be pushing airlines to bolster their presence at nearby Felipe Ángeles International Airport, which opened (in part) as a reliever airport to Mexico City International in 2022.
Mr López Obrador's government has also required all dedicated cargo operations to move from Mexico City to Felipe Ángeles.
He also is in the middle of creating a new state-owned airline Mexicana - the airline was originally supposed to launch in Sep-2023 with four Boeing 737-800s, but has now reportedly pushed its start date to late Dec-2023.
The involvement of the Mexican government in the country's aviation sector has expanded consistently since Mr López Obrador became president in 2018, and could continue if his party is successful in winning the next presidential election to be held in 2024.
Colombia's aviation market embarks on 2024 with two fewer airlines
Colombia has also undergone rapid changes in 2023 as two ultra-low cost carriers - Viva Air and Ultra Air - exited the market.
The country's two largest airlines - Avianca and LATAM Airlines Colombia - have largely backfilled the capacity that suddenly left the market.
See related CAPA - Centre for Aviation report: Avianca and LATAM seize opportunities in a changed Colombian market
The country's domestic ASKs in Dec-2023 were projected to match 2022 levels and increase at the beginning of 2024.
Colombia: weekly domestic ASKs from 2019 to mid-May-2024
Statistics from Colombia's Aerocivil show that for the first 10 months of 2023 domestic passenger levels fell 3% year-over-year, to 24 million, but international passenger levels jumped by 28%, to 16 million.
Colombia's largest airport, Bogotá, faces operational challenges as 2023 draws to a close - that needs to change
Colombian regulators recently increased hourly operations at Bogotá International airport to broadly their historical levels, at 74. After the increase occurred there were flight delays, and cancellations at the infrastructure-constrained airport ensued.
IATA has completed a study on industry capacity at the airport with input and participation from airlines, authorities and the airport operators examining ways to maximise operations and reliability.
Results of the study show that capacity at Bogotá El Dorado international could reach 100 operations per hour if a set of 23 recommendations were applied, which would generate a 47% increase in capacity compared with the number of operations in 2019, said IATA Regional VP of the Americas Peter Cerda in an online post,
The recommendations range from short term, medium term to long term, and they could be implemented in a timeframe ranging from approximately four to 15 months.
Bogotá is important both for domestic operations and also as a connecting hub for North-South traffic flows, as well as increasing traffic from Europe.
LATAM Airlines Colombia plans to launch flights from Bogotá to Madrid in Jul-2024. The Swiss airline Edelweiss Air has launched a twice weekly Zurich-Bogotá-Cartagena-Zurich operation. Avianca is also adding service from Bogotá to La Paz, Bolivia, via Cusco, Peru.
Increasing flight throughput is key for Bogotá in 2024 and beyond in order for Colombia to maintain its stature as one of the largest aviation markets in Latin America, and to continue to strengthen its competitive position in South America.
Do governments in Mexico and Colombia need to support airline ambitions in 2024? ... most definitely!
There's been no shortage of fast-moving developments in Mexico and Colombia in 2023; but the ambition of airlines operating in those countries remains firmly intact.
Now perhaps it is time for the governments of each country to ensure that the competitiveness of the aviation sectors in Mexico and Colombia is maximised in 2024 and beyond.
To hear topics like this and more, join us in Calgary for the CAPA Airline Leader Summit Americas 2024. Visit amas24.capaevents.com