Companies & Industries

Mexico’s new jet set

Discount air travel takes off down south

Interjet added four U.S. cities to its growing list of destinations last year.  ( Credit Picture ©EFE/ZUMA Press )

Interjet added four U.S. cities to its growing list of destinations last year. (EFE/ZUMA Press )

On March 14, Interjet’s inaugural flight from Monterrey, Mexico, touched down in Las Vegas. The flight marked the birth of the airline’s second route to bring planeloads of Mexicans to America’s entertainment capital. Interjet started flying there from Mexico City in November.

Millions of Mexicans are benefiting from the country’s economic revival and spreading their wings, carried by a new generation of discount airlines. Since the privatization of Mexico’s legacy carriers, Mexicana and Aeromexico, around six years ago and the demise of Mexicana in 2010, a slew of new low-cost carriers have emerged, and they’re changing the way Mexicans get around.

“Mexico had [about] eight airlines that died in a five- or six-year period,” says Brendan Sobie, chief analyst for CAPA Center for Aviation Studies, an international think-tank. That has allowed a trio of deep-pocketed competitors to launch over the past six years: Interjet, Volaris and Viva Aerobus. All three are gaining altitude against Aeromexico, the country’s largest airline, and cheap fares and flexible service are turning a nation of bus travellers into fliers. An estimated 55 million domestic and international passengers flew on Mexican airlines last year, the highest number ever.

Interjet, currently the No. 2 airline, is closing in on Aeromexico’s 35% market share, recently hitting a share of 24%. It features relatively upmarket service with roomy planes, even a dedicated women-only restroom. In 2012, it launched service to U.S. destinations including Miami, New York and Orlando, along with Las Vegas. Interjet was founded by Miguel Aleman Velasco, son of a former president, and is backed by Mexican investors.

Volaris, which operates a shiny new fleet of Airbus A320s, has been the most aggressive of the three internationally, forming a partnership with Southwest Airlines and flying to large Latino markets in the U.S. as well as domestically. On a recent flight from the colonial city of Mérida to Mexico City, all the leather seats were filled. Fares were $79 one way, with passengers paying extra for things like additional baggage allowances or on-time performance guarantees. One of Volaris’s investors at its launch in 2006 was Carlos Slim, the world’s richest man, who sold his 25% stake in 2010. The airline is now closely held by airline investing groups and Mexican private equity funds.

Viva Aerobus, the smallest of the upstarts, is backed by Mexican bus company IAMSA and Irelandia Aviation, the investing arm of the Ryan family of Europe’s Ryanair. It offers basic services on older 737 aircraft and focuses on low-frequency, under-served routes. With last year’s launch of sister airline VivaColombia, the brand focuses on Latin America.

All three airlines have discussed plans for public offerings this year. “They are not desperate for IPOs, so they’ll wait for the right market conditions,” says Sobie, who wouldn’t be surprised if the industry saw another shakeout in due course. But by then, Mexico’s upwardly mobile masses will have grown accustomed to flying. They won’t get back on the bus.