Low Cost Carriers in Mexico: Growth Prospects and Concerns



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Code : COM0088

Year :
2005

Industry : Transportation

Region : Mexico

Teaching Note:Not Available

Structured Assignment :Not Available

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Mexican Aviation Market - Background Mexico is famous for its mountains and volcanoes. Until the 1950s, Mexico's topography blocked the development of its surface transportation. Since then, significant improvements were made, both on the ground and in the air. Due to the topographical nature of Mexico, there was no train network. Buses were themost commonmode of public transport. Bus routes were extensive and journeys were long and arduous. Though long-distance buses were fairly comfortable, highway robbery was a real risk in Mexico...

Low Cost Airlines in Mexico Analysts felt that prior to early 2000s, traveling to winter vacation destinations likeMexicomeant paying high prices on major airlines. Traditionally, Aeromexico and Mexicana charged relatively high prices for flight swithin Mexico. For example, a 615-mile flight from Mexico City to Monterrey was charged the same as or only slightly less than the 2,090-mile flight from Mexico City to NewYork. Analysts felt that this restricted the choice for airline customers. Due to this difference in fares, many lowcost airlines started entering Mexico...

Growth Prospects and Concerns Analysts opined that the lowcost carriers would have significant growth prospects as the air passenger traffic in Mexico was on the rise. By 1953, over amillion passengers were being carried on Mexican airlines each year, 75% of them were Mexican nationals and 25% of them were international tourists. By 1990s, the volume of passenger traffic increased by more than twenty-fold, and in the early 1990s about 27 million passengers were flying annually withinMexico, and one-third of them were foreign tourists...

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