Mexican Aviation on the Rise

Mexican airlines reported stronger results in traffic and revenue from the lows of 2Q20. While the sector continues dealing with the aftermath of COVID-19, local airlines show a positive attitude through more routes and capacity.

The COVID-19 outbreak caused unprecedented trouble to the previously booming aviation industry. During the early months of the outbreak, border closures and shelter-in-place policies paralyzed air traffic almost completely in Mexico and abroad. While the country is still fighting the outbreak, air traffic and capacity have been rising steadily over the past three months. In their 3Q20 reports, Mexican airlines Aeroméxico, Volaris and Viva Aerobus highlighted the improvements made over the previous quarter and their expectations for the sector’s turn around. “We are prepared for a progressive recovery,” said Juan Carlos Zuazua, CEO of Viva Aerobus, in the company’s report.

Low-cost airline Viva Aerobus reported that while its passenger traffic remained low year on year, it did see a significant increase from the previous quarter. During 3Q20, Viva Aerobus reported a 44.7 percent contraction in passenger traffic, up from 2Q20’s 83.6 percent fall. “3Q20 passengers surged about four times (+1.36 million) compared to 2Q20, reaching 1.85 million, in line with the progressive reopening of routes.” Operating revenue for the period amounted to MX$1.83 billion (US$87.6 million), up from the previous quarter’s MX$478 million (US$21.7 million), leaving the low-cost airline with a positive MX$272 million (US$13 million) EBITDAR. Viva Aerobus also reopened numerous routes during this period and launched 20 new ones, 13 domestic and seven international flights.

Volaris also recovered a large part of its capacity during this period thanks to its “ultra-low-cost business model focused on the VFR (Visiting Friends and Relatives) and leisure segments in the domestic and US-transborder markets.” The ultra-low-cost airline transported a total of 3.4 million passengers during 3Q20, more than three times the amount it transported its previous quarter. Volaris’ traffic continues below 2019 levels, showing a 35.2 percent year-on-year contraction in revenue passenger miles for the period but the airline continues reopening routes and adding new ones. Altogether, the airline’s operating revenue amounted to MX$4.72 billion (US$226.2 million).

Mexico’s flagship airline Aeroméxico also saw more revenue and capacity during 3Q20, reporting a 182.1 percent increase in the latter from 2Q20. It continues operating below 2019’s levels, however, with capacity showing a 64.1 percent year-on-year contraction and revenue a 74.5 percent decrease. Grupo Aeroméxico closed 3Q20 with a negative MX$381 million (US$18.1 million) EBITDAR.