Overview - Volaris

"With six aircraft operating a domestic network out of Mexico City’s second airport, Volaris may seem like a small operator in a sector filled with them. But examination of the carrier’s ownership roster strongly hints that it will not remain a small carrier for long.

The four companies and individuals that each put forward USD25 million to get the airline operational are famous local billionaires Emilio Azcarraga Jean (of Grupo Televiso) and Carlos Slim, investment fund Discovery Americas I (led by the former Mexican Minster of Finance) and Salvadoran flag carrier Grupo Taca. As further endorsement of its potential, the World Bank-affiliated International Finance Corporation extended a USD40 million loan to fund aircraft acquisition.

The carrier, which took its first flight in Mar-06, has ordered 16 A319s to go along with options for a further 40 A319s and 40 A320s. Its decision to operate at distant, but lower-cost and less congested, Toluca Airport shows that the Volaris will not be throwing its well-heeled owners’ money around indiscriminately, but will be adhering to traditional LCC principals.

Outlook promising for well-funded Mexican LCC

The importance of having sound ownership – from a financial and strategic viewpoint – was proved by JetBlue, whose deep pockets provided a steady rudder in the turbulent, post-9/11 seas into which it came of age. Volaris, while not battle tested, enjoys much the same benefit. That will be a critical advantage as the Mexican aviation sector, becomes more competitive and volatile under its unprecedented period of liberalisation.

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