Volaris Talks About Expansion, Profitability, and yes, Southwest (Across the Aisle)

Last week, I had the chance to sit down with three of the guys behind Volaris, the successful Mexican low cost carrier that is now likely to be Southwest’s first codeshare partner. Holger Blankenstein (Chief Commercial Officer), José Luís Suárez (Director of Sales), and Manuel Ambriz López (Manager of Commercial Strategy and Schedule Planning) sat with me before meeting with some folks from the LA Business Travel Association, part of the airline’s efforts to attract more of the business community.

We talked about a wide variety of things from the airline’s decision to start serving Mexico City’s main airport and yes, the Southwest partnership. Let’s get started.

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Cranky: Thanks for sitting down with me today. I’d like to start with thisAcross the Aisle From Volaris move into Mexico City’s Benito Juarez airport instead of just flying into Toluca as has been the case so far. Can you talk more about that?

Volaris: We actually have 3 segments. We have the leisure, corporate, and small enterprise segments. Part of leisure is the visiting friends and relatives (VFR) community. Mexico City is actually for that group. We started flying from Tijuana and it gives those friends and family another option in Mexico City.

Cranky: So Mexico City is more of a spoke and not an operational base like Toluca?
Volaris: That’s right.

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Cranky: Talking about Tijuana, how much traffic do you see coming across the border from the US to fly on those Tijuana flights?
Volaris: It’s about 30%. This is a non-scientific number, it’s just from our observations at the airport, but we think it’s about 30%. Of those, 80% are from Mexican ancestry, so they’re coming to visit friends and family.

Cranky: Are you helping people get across the border?
Volaris: Yes, absolutely. We have an alliance with Greyhound and with a Mexican bus company. You can depart from the Greyhound station in downtown San Diego and go straight to the airport in Tijuana.

Cranky: I imagine people do this because of the lower fares and taxes?
Volaris: Oh yes. It’s about a $100 difference in taxes.

Cranky: I know you were at least planning Oakland to Tijuana. Are you looking to turn Tijuana into a connecting point for American flying to Mexico?
Volaris: Probably not. That’s mostly origin and destination traffic. For connections, we’ll use Los Angeles, Oakland, and San Jose to connect with Southwest for now. We are developing Guadalajara and Toluca into connecting points within Mexico. Having said that, we’ll remain a low cost airline so we won’t have a huge hub. We will create key cities with great connections, but we will still remain a low cost carrier.

Cranky: That’s a similar model to what Southwest has grown up with.
Volaris: Yes, but there is a big difference. We don’t have the ability to support those large volumes with frequent flights in Mexico. Our biggest market is Guadalajara-Tijuana with up to 8 flights a day during the peak season, but there aren’t many markets that big. We can’t have that kind of frequency elsewhere. The biggest market is Monterrey-Mexico City but there’s too much competition for us there.

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Cranky: You’re based in Mexico City, right? In Santa Fe?
[Note: Santa Fe is a business district on the west side of town]
Volaris: Yeah, we actually have a virtual airport in Santa Fe. You can check your bags, get your boarding pass and then board the shuttle right there. We’ll have you on the airplane within 100 minutes.

Cranky: Is it the same on the return?
Volaris: Yes, you have to pick up your bag and then hand it right there to the shuttle driver, but that’s it. The shuttle goes every 5 minutes. Benito Juarez may be closer to Santa Fe, but sometimes the drive to Toluca can be shorter because of all the traffic. Toluca is sort of like Newark for Manhattan 20 years ago.

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Cranky: Let’s talk Southwest. They’ve been in the news with this WestJet deal falling apart lately. Do you have any updates on timing?
Volaris: On WestJet? No.
Cranky: Hah, no, on your timing.
Volaris: We’re going full force ahead. We started by joining websites last year and we’ve been looking at additional areas like cargo, for example. We’re going to do something very similar to codesharing by the end of this year.

Cranky: How does that work?
Volaris: It will be seamless for the customer, but it’s not a traditional codeshare.

Cranky: Is this going to actually happen on time?
Volaris: Well, there are always unforeseen problems, but we are switching to Sabre on August 21 and Southwest still has a couple of technical issues as well.

Cranky: What are you on now?
Volaris: Navitaire.
Cranky: You might want to talk to JetBlue about that and probably not WestJet

Cranky: Are you looking at other partners?
Volaris: Sure. One of our shareholders is TACA and they just merged with AVIANCA so that’s a natural fit, but we’re really focused on the US right now. We haven’t talked about anything with TACA yet.

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Cranky: Let’s talk more about the US. You recently announced service to San Jose while many other airilnes are either reducing or ending service because of how expensive the airport has become with its construction projects. Why did you go in there?
Volaris: If you look at the Bay Area, look at where the Mexican population is. There is a big chunk near Oakland, east of Oakland and a whole population south of San Jose. Places like Watsonville, Salinas, and Gilroy. So we took away one Guadalajara-Oakland flight and moved it to San Jose to have more access to communities in the south.

Our core customers are of Mexican heritage visiting friends and relatives, so this is a good place. We also hope that we can attract more business travel as well being near Silicon Valley.

Cranky: How about LAX? How have things been going?
Volaris: We’re pretty happy so far. Guadalajara is really strong and Toluca is . . . good. We’re happy.

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Cranky: Do you get most of your VFR traffic from travel agents?
Volaris: No, most is online in the US and it’s growing in Mexico as well. It’s all word of mouth and targeted community involvement. We’re often at parties, fiestas, in the community but we don’t do widespread marketing.

Cranky: Do you consider Aeromexico and Mexicana to be competition? I know you look to take people off of buses.
Volaris: Well, we’re in the same industry so we do compete, but we also do our own thing. We’re a young company, we’re doing good independent things. We used to compete more with them face to face but they have changed the way they structure their network a little.

Cranky: What kind of performance information do you release publicly?
Volaris: Well, we’re private and keep things close to the vest, but we can confidently say that we’re the only Mexican airline, except possibly for one small one, that was profitable last year.


10 Responses to Volaris Talks About Expansion, Profitability, and yes, Southwest (Across the Aisle)

  1. Nimitz says:

    good interview!

  2. Toluca is a spoke but “We are developing Guadalajara and Toluca into connecting points within Mexico. ” So much for it being a spoke.

    Being in the bay area it’s good to see them serving two of the three airports here. They are correct about the large Latin population around and between OAK and SJC. Could Modesto(MOD), Fresno(FAT), and Bakersfield(BFL) be next in California for them?

    • CF says:

      No, Mexico City is a spoke. Toluca is an operational base.

      MOD/FAT/BFL probably have a ways to go before they can fill an Airbus, though Aeromexico and Mexicana have tried from time to time with some smaller cities.

  3. scott says:

    Wasn’t ATA Southwest’s first code-share partner?

    • CF says:

      Actually, I think it was Icelandair back in the 90s – or was that just an interline deal? Whatever it was, this is sort of the first in the modern era.

  4. Axelsarki says:

    Great interview, enjoyed it… What are the possibilities of the “small” [maybe] profitable airline in Mexico? Anyone care to speculate? Let’s hope this codeshare between WN and Y4 will work out well, gives us WN customers more possibilities of travel.

  5. Dr. Stan says:

    Living as I do here in Mexico City…the story is not so cheery. At the MEX airport, the counter agents cannot even tell you where (what routes) they fly…they tell you to go to the internet.

    Secondly, low prices? Mexicana and Aeromexico hardly classify as low-cost carriers, but their fares are rarely much, if any, above Volaris (on the routes I have checked). Volaris frequently has good fares, but even months out they are usually not available (sold out, available but at a much higher fare).

    Thirdly, the corporate business is probably key, because those passengers are likely to have secretaries who do all the work of obtaining the tickets. Leisure people (like me) might not find it passenger-friendly enough. I am not alone (judging by the number of passengers) in generally taking the great bus system in México, even for trips of 12 hours. I’m only one…but these are my thoughts.

  6. Pingback: Volaris and Southwest Start Their “Almost A Codeshare But Not Quite” Partnership - >> The Cranky Flier

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