Volaris: diverting passengers from buses to air travel reaps rewards

Premium Analysis

No other Latin American ultra low cost airline has zeroed in more robustly on a bus passenger switching strategy than Mexico's Volaris.

The airline is now the country's largest domestic airline measured by passengers carried and it remains bullish on the future prospects of enticing bus customers to air travel. Indeed, Mexico's domestic trips per capita figure of 0.36 in 2018 remains well below the levels of more mature aviation markets.

Volaris has one of the best cost performances of any airline worldwide, and the company sustained that momentum in the metric during 2019. The airline does not benchmark itself against other airlines in evaluating its cost performance but instead, uses bus companies as a barometer.

Overall, Volaris has a positive outlook for the beginning of 2020 as the MXP is gaining some traction against the USD and Mexico's economy remains stable. The airline's current capacity growth projections for the year are lower in 2019, but are still increasing in the double digits.

The company is bracing for some delays in Airbus deliveries in 2021, and has factored the possibility of a shift in deliveries into its 2020 guidance.

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