Volaris Highlights Key Differences and Advantages Over US Ultra-Low Cost Carriers

Mexico‘s ultra-low cost carrier, Volaris, has been emphasizing its distinct advantages over its US counterparts in the ultra-low cost carrier (ULCC) sector. In a recent address to analysts and investors, Volaris management underscored the unique market dynamics that have allowed the airline to thrive despite challenges faced by US ULCCs like Frontier Airlines and Spirit Airlines.

A significant factor contributing to Volaris’ success is the vast opportunity to convert bus passengers to air travelers in Mexico. This trend has been a driving force for ULCCs in Mexico for over a decade. Additionally, the restoration of Mexico’s safety rating by the US Federal Aviation Administration (FAA) in September 2023 has enabled Mexican airlines to resume growth on key US routes, further bolstering Volaris’ position.

Volaris has also navigated the challenges posed by issues with the geared turbofan engines powering its Airbus A320neo fleet more effectively than its US peers. Despite a sizeable portion of its fleet being grounded for inspections, Volaris posted a profit of $37 million in the third quarter of 2024, a marked improvement from the $39 million loss in the same period the previous year.

The airline’s competitive advantage is further enhanced by its lower costs, which allow it to offer prices that US competitors cannot match. This is particularly evident in the transborder market, where Volaris has seen growth driven by nearshoring and the conversion of bus passengers to air travelers. For example, its service from Guadalajara to Reno has tapped into the “visiting friends and relatives” (VFR) niche market, where passengers previously traveled by bus but now fly with Volaris.

Volaris is expanding its offerings in the transborder market, having recently launched service from McAllen International Airport in Texas to Cancún and planning to introduce service from Oakland to Cabo in the coming year. This expansion leverages Volaris’ widening cost advantage over North American ULCCs and legacy airlines.

Data from CAPA – Centre for Aviation and OAG indicates that 42% of Volaris Group’s capacity is deployed into international markets, with the bulk of this capacity focused on transborder routes. The airline has maintained its base fares at 2019 levels while increasing its ancillary revenues, reflecting its strategic adaptability and resilience in the face of industry challenges.