Enrique Beltranena Mejicano, president and CEO of Volaris, took the stage as guest speaker at the Wings Club January Luncheon to discuss the development of the ultra-low-cost airline that has changed the way Mexicans fly.
Volaris is Mexico’s fastest-growing airline, operating a fleet of 82 Airbus 320-series aircraft with over 60% of its ownership publicly traded on the New York Stock Exchange and the Mexican Bolsa. Volaris services 188 routes to 65 destinations, as well as more than 100 additional destinations in codeshare with Frontier Airlines and is the second lowest unit cost operator in the world, first in the continent and in the Western Hemisphere.
The Wings Club Foundation is the premier global society of aviation professionals, aimed at fostering educational opportunities, providing and supporting education programs in the field of aviation, and supporting and making grants to charitable organizations that use aircraft to provide medical supplies and personnel and other humanitarian aid and services. The Wings Club holds a monthly luncheon in New York that brings together the most important players in the world from the aviation industry. Beltranena was chosen by his peers because of his remarkable leadership, which has led Volaris to become the Mexican flagship carrier.
Volaris has changed the landscape of the aviation industry in Mexico and the region by designing a business model that has matured along with the developing society. This model successfully addresses its customers specific mobility needs through its bus-switching strategy - a concept of low base fares aimed at competing with buses.
“Volaris operates in a market that witnessed the downfall of 11 different carriers during the past ten years. Nonetheless, last year we grew our number of passengers by 19.5 percent. More impressively, 6 to 8 percent of our customers still claim to be first-time flyers” Beltranena said. About one quarter of Volaris´ customers search bus fares before purchasing tickets with Volaris. “On 41 percent of our routes, Volaris is the only airline competing against buses. So, when we are benchmarking Volaris, we are comparing ourselves not to carriers who have more than double our unit costs, but also to buses. If we can beat the bus industry, we will most definitely outperform all other airlines pricewise”.
48% of the market growth in the airline industry in Mexico is attributed to Volaris. The airline has transported more than 120 million passengers in less than 14 years. In 2019 alone, Volaris carried almost 22 million passengers, becoming the largest ultra-low-cost carrier in Latin America and the largest domestic passenger operator in the Mexican market.
During the last twelve months, Volaris generated revenues of 1.7 billion US Dollars. “From 2012 to 2019 our ASMs grew 2.3 times at a 15 percent CAGR, during which passengers also grew 2.5 times or 16 percent per year, and the revenues grew 1.6 times or 8 percent annually” Beltranena said. Ancillary revenues represent a third of total revenue. Volaris´ cost base – measured by Cost per Available Seats – was 3.9 US dollar cents per ASM-ex fuel at the end of the third quarter of 2019. Fuel represents around 38 percent of Volaris´ total costs.
Volaris’ strategy is aimed not only at improving the performance of the business, but at supporting and protecting the environment. By 2022, 57% of the fleet will be replaced with eco-friendly aircrafts, with sharklets on its wings and NEO engines that burn 19 percent less fuel on average, which further advances Volaris’ low-cost strategy.
Overall, Volaris´ market holds promise and room for growth, while the company “remains resilient and well-positioned to address the challenges it faces” Beltranena said. AirlineRatings.com, the world’s top airline safety and product rating review website, just named Volaris among the top ten safest low-cost airlines in the world.
