Mexican Aviation Takes Steps Towards Recovery

After months of seemingly free-falling demand for air travel, the Mexican aviation industry seems to be recovering as airlines report more traffic and reopen domestic and international routes. A recovery of the aviation industry will be key to the future of the aerospace sector.

The earlier months of 2020 were characterized by a sharp drop in air traffic as shelter-in-place policies took hold. Even countries that decided not to close their borders, such as Mexico, felt this reduction in demand, which was later worsened by a global economic recession that also dragged down tourism and business aviation. However, the latest traffic reports of Mexican airlines show that demand, while still lower than in 2019, is gradually picking up, which will be essential to the recovery of the aviation and aerospace industries. “For the recovery of the aerospace industry, it is essential for individuals to fly again,” said Claire Barnouin, Executive Director of Monterrey Aerocluster.

In its July traffic report, Mexico’s ultra-low-cost airline Volaris highlights “a strong month-to-month ramp-up.” The airline saw in July a 68.2 percent increase in demand measured in revenue passenger miles (RPM), a measure of the distance a paying passenger travelled. The airline also reported a 70.4 percent increase in traffic over the previous month for a total of 996,000 passengers transported in July. While this numbers still represent a year-on-year contraction in demand and passenger traffic, these numbers might point to further recovery in the coming months. “As mentioned in the guidance previously issued, for August 2020 Volaris plans to operate approximately 70 percent of its capacity versus the originally published schedule in response to a gradual recovery of the market,” said Enrique Beltranena, President and CEO of Volaris.

Mexico’s flagship airline Aeroméxico also reported an increase in traffic in July 2020 of 110.7 percent in comparison to the previous month. While traffic for July 2020 is still 73.2 percent lower that the previous year, Aeroméxico plans to continue reopening routes and announced that during August it will increase domestic flights from Mexico City to Chihuahua, Cancun, Culiacan, Mérida, Durango and Los Mochis and to international destinations Miami and Paris. Grupo Aeroméxico, which filed for bankruptcy in June 2020, has been restructuring its debt and looking for new financing as it continues operating. Yesterday, the group announced an agreement with its short-term bond owners for an extension and a pause to referring payments.