I never thought I’d actually say these words, but… Mexicana is back. The airline is expected to start flying this fall and there may even be a few people who actually fly it. But make no mistake. Mexicana is not really an airline. It’s a jobs program/airport promoter that happens to fly airplanes.
The original Mexicana would have been 102 years old this year. The airline was a full-service carrier that primarily served domestic and US markets with a focus on its hub in Mexico City. The airline failed in 2010, and there have been 384,958 attempts to resurrect the airline ever since — give or take a few thousand. One of the issues in a restart was related to the powerful unions and the money owed.
What was a problem for many trying to bring the airline back was actually an asset for the Mexican government. Mexican president Andrés Manuel López Obrador (AMLO) has received enormous support from the unions, and he is paying them back with the gift of returning Mexicana to the skies.
The government paid 815 million pesos (~$47 million) for the airline to buy Mexicana, and a good chunk of that will go directly to those workers who are owed back pay from more than a decade ago. What did this new airline get in exchange for all that dough? It got three buildings and a flight simulator. This does not seem like the best way to start what is supposed to be a low-cost carrier.
Next up, the government says it will put in another 4 billion pesos (~$235 million) to get the airline off the ground. This includes acquiring 10 Boeing 737-800s and having them flying by year-end with fares that are 18 to 20 percent less than other airlines. Right.
Let’s remember, México has a strong and growing low-cost sector. In fact, it’s the only strong part of the Mexican aviation system. According to Cirium fleet data, Volaris has over 100 aircraft flying today with another 100 on order. Viva Aerobus has more than 50 airplanes flying and 30 more on order. This is where the growth is, and much of that is in pulling people off of buses with low fares.
So why do we need a new Mexicana? As I mentioned, it’s a jobs program, but it’s also an airport promoter. I’ve written multiple times here about how AMLO scrapped the brand new Mexico City airport that was being built and instead opted for a regionalized system that would see growth move to Felipe Ángeles International Airport (AIFA).
Airlines do not want to fly to AIFA. AMLO has forced cargo to move there, and the local airlines have added some flights there because they didn’t want to cross AMLO any more than they already had. In the month of August, there are a little over 30 flights per day from the airport. The main Mexico City airport has more than 450 daily, and it’s only that low because it is at capacity.
So, the new Mexicana will roll into AIFA and use that as its primary base. It will also open a base at the new Tulum airport when that opens. Mexicana will then fly domestic routes throughout the country. Airways reports the initial network will include flights from AIFA to Acapulco, Campeche, Cancún, Chetumal, Ciudad Juarez, Cozumel, Guadalajara, Hermosillo, Huatulco, Ixtapa-Zihuatanejo, La Paz, León, Los Cabos, Mazatlán, Mérida, Monterrey, Oaxaca, Puerto Vallarta, Tijuana, and Villahermosa. The next round will include more airports. Basically, it’s every city in the country with a runway that will see this flying billboard for AMLO’s new toy.
These are markets with a lot of service from the preferred Mexico City airport, and some have service from AIFA already, so what’s the value? Well, the new Mexicana will be cheaper! This isn’t just a kind gesture, and I am SURE it won’t be due to a lower cost structure. No, this is because it has no choice. Demand is going to be lower from AIFA than from Mexico City, and AMLO wants a low-cost carrier. But this will really be a low-fare carrier, not a low-cost one.
In the end, it will be a novelty to see Mexicana flying again — at least, for everyone except Breeze which will now face even more confusion over its MX code — but there’s absolutely no commercial reason for this to happen. That’s never stopped AMLO’s administration before, and there’s no reason for it to change now.
20 comments on “Mexicana is Back with a Bad Business Plan”
OK, that image of the “new” Mexicana aircraft nearly had coffee coming out of my nose this am! One of the many reasons why I love coming here. It’s hilarious because it’s pretty much true. And your analysis is, I think, pretty much 100% correct. The new MX is a jobs program and a way to promote a *new* airport that nobody (aside from AMLO) wanted. Having Volaris fares with “almost” Aeromexico service is indeed a compelling option for anyone in the domestic Mexican market.
We’ll just grab the popcorn and watch how this plays out. Should be entertaining.
Can you write about the new Tulum airport?
Also, tell the story of the MX code for Breeze?
I believe MX came from Breeze’s original name, Moxy Airways, and their callsign is Moxy…but that could also be a complete WAG on my part!
Chris – No, you’re right, it came from Moxy. Breeze should have been named Moxy if not for some trademark issues, as I understand it.
As for the Tulum airport, geez, I know nothing about it. It’s odd.
Moxy being one of Marriott’s hotel brands. The brand’s description on their web site reads like a word salad of trendy marketing gibberish: https://news.marriott.com/brands/moxy-hotels/
Alitalia might lose its cranky-awarded title
Don’t worry, the Italian government will find ways to dump even more money into Alitalia…sorry, “ITA”.
I truly believe that Meloni is up to the challenge. Let the bonfires of cash begin!
I’m interested to see where Brett ranks this in 6months to a year. Can Nuevo Mexicana take the top spot from Alitalia DBA ITA Airways, A Lufthansa Group airline?
Before too long, we’ll have Mexicana, ITA, Aerolineas Argentinas, and Air India all under the same owner… Or not. :-)
The TATA group has its hands full with reinventing Air India while destroying Vistara. They don’t need any more troubles.
I wonder if they can rejoin the oneworld alliance? But what benefits would you get with them as a oneworld elite? haha
Again thank you for the wonderful photo!!!
They could apply. They’d probably just be laughed at there too…
Thanks CF. According to Reuters, (https://www.reuters.com/world/americas/mexico-launches-military-run-airline-with-48-mln-purchase-mexicana-brand-2023-08-10/) the $48M will pay off 7,000 former employees, – which would result in each one getting $6,857 (or $7,000 if you round up). That has a nice ring to it – $7,000 for each of 7,000 employees! But AMLO has even more plans having recently announced that he would build 3 new airports in Costa Alegre (Jalisco state), San Miguel de Allende (Guanajuato) and Ensenada (Baja California) which will be more disastrous!
If anyone has any interest in visiting San Miguel, do it now – before it is swamped with the new “luxury” hotels, and the new airport!
Mexico is a very different country than the US. The rules of US style capitalism are not consistently applicable. This project will be as successful as the money it is given. But what will happen when there is a new president, as mandated by the constitution of Mexico, in 2024?
I’m thinking this airline really should be known as “Mexitalia”.
That’s a good suggestion!
LOL.
Off topic, but last week Brett had an article regarding the low number of flights to China from the US & how airlines & cities are adapting/ benefiting. as it turns out, a level 3 travel advisory has been issued & US citizens are warned not to travel there especially if of Chinese descent. The reason being anti spying laws that that were enacted very recently. Anyone & everyone near you maybe a spy & if so, you need to report it to the CCP.
Its a shame they aren’t bringing back Mexicana’s 717 /s
I’m going into politics with a platform of “I will set money on fire at all costs”.
Its great mexicana is back. Volaris and viva autobús sucks I have not found one person that talk somethin good or have a good experience with this airline they charge for everything so it’s great that they are going to have some competition maybe they can trying to be better if they want are money work for it.