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 Business News | April 2007 
Mexican Discount Airlines Lead '06 Traffic Growth
 Reuters
Mexico City - Mexico's domestic air passenger traffic grew 12 percent in 2006, while new discount airlines took business from stagnating flagship carriers and the government grounded several mid-sized operators.
The number of air travelers increased by more than 2.3 million to 22.2 million passengers last year, but expansion was uneven, according to statistics released by the country's transportation ministry.
Growth was mostly enjoyed by five new low-cost airlines. After carrying fewer than 62,000 passengers in 2005, they flew nearly 3 million customers in 2006. By December, they held a 21 percent market share.
Traditional giants Mexicana and Aeromexico, whose main businesses claimed 60 percent of the market as late as May, transported only 44 percent of December's domestic flyers.
Despite rapid expansion in the broad market, Mexicana and Aeromexico together flew 36,564 fewer passengers in 2006 than in the previous year.
The first bargain airline, Avolar, began flying only in September 2005. The discounters have quickly reshaped Mexico's air industry, forcing rivals to cut ticket prices and labor costs in the face of fierce competition on their most profitable routes.
Mexicana has responded by negotiating $70 million in labor savings with its pilot and ground crew units and is fighting for an additional $25 million in cuts from flight crews.
Aeromexico and Mexicana were both brought under government control after going bankrupt in the mid-1990s. The government sold off Mexicana in 2005 but maintains a 60 percent stake in Aeromexico's parent company, Consorcio Aeromexico.
Aeromexico is expected to raise funds for investment through a primary offering when the government sells its stake on the stock market within the next few months. The airline and other assets were put up for sale in 2005, but the government rejected bids as too low.
Regulators predict that demand will continue to grow by more than 10 percent annually for the next three years.
Airlines will probably compete for these additional passengers as well as for those of grounded Lineas Aereas Azteca. The airline, which carried over 1 million passengers in 2006, was suspended last month by authorities who cited safety concerns.
It follows Aerocalifornia, which temporarily stopped flying last year due to safety issues.
Azteca has until late June to right itself, but local media reported it has already been sold. The company was not available for comment. |
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