The aviation industry in Mexico has been as affected by Covid-19 as the rest of the world even without travel restrictions or strict quarantines. The reduction shown by Mexico will be smaller than the impact on published seats in Brazil, the European Union and even the United States, and considering that Mexican airlines have not had financial aid from the government. During 2020 Mexico will have a reduction of 33% (see exhibit 1) in the number of published seats compared to 2019.
Exhibit 1. Comparison Published Seats 2019-2020 in the Mexico, China, United States, Brazil, and Western Europe Aviation Markets
Source: SRS Published Schedules
According to the ICF analysis for Mexico, comparing seats published during 2019 and 2020, which include future published schedules for the months of October through December 2020, the total offer of seats in the Mexican market has shown a reduction of 33%. The domestic market and the United States-Mexico market are the regions with the smallest difference in seats offered compared to 2019 as shown in exhibit 2, which can be attributed to the fact that, unlike other regions, there have not been strict travel bans, or the lack of air service due to the vetoes of different countries.
Exhibit 2. Comparison Published Seats in the Mexico Aviation Market by Region (2019-2020)
Source: SRS Published Schedules
The most affected airports in the number of seats offered are the two largest airports in capacity in 2019: Mexico City, Aeromexico's hub, and the Cancun International Airport, both with more than 35% fewer seats offered than in 2019. The Tijuana airport stands out with a 2% reduction in seats offered compared to 2019.
Exhibit 3. Comparison Published Seats in Mexico by Airport and Region (2019-2020)
Source: SRS Published Schedules
The business model of Volaris based on a point-to-point model and focused on the visiting, friends and relatives (VFR) and leisure segments is recovering, while Aeromexico, which is in the process of restructuring under Chapter 11, and which depends mainly on connecting traffic and a large proportion of business market will take longer to recover.
In exhibit 4, Volaris and Viva Aerobus, two ultra-low cost companies, stand out with an increase in the percentage of seats offered in the top 10 airports in Mexico. Grupo Aeromexico remains constant in most airports in percentage of seats offered including Mexico City and Cancun compared to 2019, however the number of seats offered is lower than in 2019. Interjet has been the most affected airline considering that its current fleet has decreased by 90%, currently operating only 7 aircraft and 22 routes, mainly from Mexico City.
Exhibit 4. Comparison Published Seats in Mexico by Airport and Airline (2019-2020)
Source: SRS Published Schedules
Volaris is precisely the airline that has shown the greatest recovery from the Covid-19 crisis. As many experts have commented, the Visiting Friends and Relatives and leisure air traffic segments are expected to recover first, with the business segment taking the longest to recover due to the adaptability of working from home. In fact, Volaris presented a load factor in September 2020 of 74.4%, while Viva Aerobus showed 80%.
While Volaris and Viva Aerobus plan to operate in 2020 with 11% and 13% fewer seats than in 2019 respectively, the rest of the airlines including Interjet, Aeromexico and even the large US airlines have had to significantly reduce their capacity to 2020 in the Mexican market.
Exhibit 5. Comparison Published Seats in Mexico by Carrier (2019-2020)
Source: SRS Published Schedules
Exhibit 6 shows very clearly how the ultra-low-cost airlines Volaris and Viva Aerobus have been able to adapt quickly to the new market conditions caused by Covid-19, and in the same way present a much more appropriate recovery profile than Aeromexico and other Latin American airlines.
Exhibit 6. Evolution in Published Seats Kilometer and Load Factor (2019-2020)
Source: SRS Published Schedules
Despite the impact of Covid-19 on aviation in Mexico and worldwide, the main aviation markets for Mexico that include domestic Mexico and the Mexico-United States show the smallest differences in the published capacity, and are being capitalized by ultra-low-cost airlines, so the Mexican market presents a significant opportunity for recovery.
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