Ready for takeoff: the low-cost model comes to Mexico as the government prepares to get out of the airline business

Latin Trade,  Sept, 2005  by Marisol Rueda

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"There has been a monopoly for a long time, which is why the Mexican aviation sector has not grown," Casanova says. "With Cintra's anticipated opening, the market is going to offer better service and better prices." As Cintra prepares to shed control of its assets, low-cost airlines have jumped on the chance to fly Mexico's skies, including A Volar, ABC, Vuela and Aerolineas Mesoamericanas, all of whom will put downward pressure on tickets should they become actual airlines instead of business proposals. A recent accord between Brazilian low-cost carrier Col and Mexican investors also will create a discount carrier to compete with Click.

Homeward bound. The United States remains the No. 1 overseas destination for Mexican airlines, but most of that traffic is confined to 10 routes. Mexican labor unions have suggested increasing the number of destinations abroad to bring in more tourists, since Mexicana de Aviacion and Aeromexico mainly carry people to and from different cities to visit their families. "We have to make companies more efficient. When we can get companies to be flatter, structurally, it will show up in the ticket price. That's not the case with the top-heavy structures so common among big Mexican corporations," says Casanova.

Click Mexicana executives, meanwhile, say that their company's potential market share is enormous. They say that there are plenty of people in Mexico traveling by bus who have the money to buy airplane tickets. "If we can get the higher-end, luxury-bus travelers, then we can grow marvelously. We estimate that we can double the number of people flying in the future," says Adolfo Crespo, public relations director at Mexicana de Aviacion. Click Mexicana is not out to reinvent the wheel but tweak the existing low-cost model that succeeded in the United States and Brazil to fit the Mexican market, Crespo says.

"We've studied this model. We didn't invent it. We researched at length the structure of airlines such as JetBlue, EasyJet and Col, but we had to adapt their traits to our market," he says. In the medium-term, the new airline hopes to capture 10% of domestic flyers.

MARISOL RUEDA * MEXICO CITY

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