Capacity between the USA and Mexico has continued to grow in the past year, a bright spot compared to economic sluggishness elsewhere in Latin America.
ASKs between Mexico and the USA were up 15% year-on-year in 2015, data from Capstats shows.
Among Mexican airlines, both Aeromexico and Volaris have added a significant number of routes in the past year. Aeromexico welcomed Boston into its network in June with nonstop service to Mexico City. It also added new connections to two secondary US cities in its network: Ontario and Sacramento, both in California. In addition, the SkyTeam carrier began nonstop service from Monterrey to both New York JFK and Miami.
Aeromexico is awaiting approval of a proposed joint venture with its partner Delta Air Lines, which the two airlines hope to implement in early 2016. The tie-up will allow the two carriers to co-ordinate on their networks and sales and marketing activities. They also plan to co-locate airport facilities together.
Mexican low-cost carrier Volaris has focused its new US routes in the past year on Guadalajara. It launched nonstop service from the western Mexican city to Reno, Dallas/Fort Worth, New York JFK, Fort Lauderdale and Houston Intercontinental. Reno, Dallas/Fort Worth, Houston and Fort Lauderdale are all new points in Volaris’ network.
Volaris executives have continued to reiterate the importance of US flights to its overall strategy.
“We’re continuing to expand internationally, especially in the US, that continues to be our main driver of growth as we build our US dollar revenues,” says Volaris chief commercial officer Holger Blankenstein.
US dollar-denominated revenue represented about 35% of the airline’s revenues in the third quarter, says the carrier’s chief financial officer Fernando Suarez.
Volaris’ growth in the USA has been rapid in the recent years. It now serves over 20 US destinations, more than double the number it had back in 2013. The airline’s chief executive Enrique Beltranena believes it has plenty of runway to grow in the USA, with the carrier estimating it could add as many as 140 new international routes.
These will mostly be concentrated in the leisure segment, he told Flightglobal in August. Most of Volaris’ US routes are focused on the visiting friends and relatives market.
US CARRIERS LOOK SOUTH
Mexican carriers are not the only airlines expanding across the border to their northern neighbour. US airlines have also returned the favour, adding several new routes in the past year.
American Airlines, which has a substantial presence in Latin America, began Los Angeles-Mexico City service in September, taking over Alaska Airlines’ route authority. In November, it started flights from Los Angeles to Mazatlan, a resort town along Mexico’s Pacific coast.
Earlier this year, American began service between Los Angeles and Guadalajara as well as between Miami and Monterrey.
Dallas-based Southwest Airlines added international service to its portfolio in July 2014 when it took over subsidiary AirTran Airways’ flights, and has emphasised that Mexico will feature prominently in its international expansion.
“Mexico is one of the best opportunities we have,” Southwest chief executive Gary Kelly said back in December 2014. “Mexico is right at the top” in terms of new markets, he added.
The airline serves Mexico City, Cancun, Los Cabos and Puerto Vallarta. Cancun - a favourite leisure destination among US travellers - is Southwest’s top Mexican destination, with service to eight US cities.
Mexico dominates Southwest’s new international network out of Houston Hobby, which launched on 15 October. The airline began service to all four of its Mexican destinations from Hobby airport, which benefited from a new five-gate international concourse that Southwest had paid for.
Southwest has said that further international expansion out of Hobby is possible in the future. The airline’s vice-president of airport affairs Bob Montgomery says the airline could add another 10 gates to the concourse if there is a need to.
JetBlue Airways has also grown its presence in Mexico, beginning service to the Mexican capital in recent months. The airline had previously operated to only Cancun. JetBlue has said it would like to boost flights to Mexico City, but has repeatedly cited difficulties in obtaining commercially viable slots at Mexico City International airport.
FUTURE GROWTH
In the coming years, service between the USA and Mexico is likely to grow further.
Airlines on both sides of the border are eagerly awaiting the ratification of an expanded US-Mexico bilateral air services deal, which was agreed in late 2014. The expanded agreement will lift existing limits on the number of airlines that can serve on some popular city pairs.
Both US and Mexican airlines have lamented that the restrictions forbid them from adding service even when demand calls for it. The limits have often resulted in battles between airlines for route authorities to serve on restrained city pairs.
For example, Southwest and United Airlines earlier this year tussled over the right to operate from Houston to Mexico City and Los Cabos. US authorities eventually came to an agreement with their Mexican counterparts to allow Southwest to fly on the routes on an extra-bilateral basis, taking into account the upcoming liberalisation to the bilateral agreement.
While US and Mexican officials have said the liberalised agreement will take effect on 1 January 2016, Mexican airlines have indicated that Mexico’s senate has yet to sign off on it.
Volaris’ Beltranena says the airline expects US carriers to add capacity to popular Mexican destinations once the liberalised deal is in place.
Another Mexican airline, Interjet, has made it clear that it plans to expand its US network once the limits are lifted. It serves only five US points, but has applied to begin service to both Los Angeles and Dallas/Fort Worth.
Chief executive Jose Luis Garza told Flightglobal in August that the airline could add four or five new US destinations with the expanded bilateral agreement. Potential destinations include cities in the San Francisco Bay area.
See news and analysis from ALTA 2015.
Source: Cirium Dashboard
