Air Travel in Mexico is More Affordable

Historically, genuine competition has been more concept than actuality in Mexico.   The domestic airline market was an epitome of Mexico’s closed market culture: ‘multiple choices’ but only one price.

At the turn of the century, domestic air travel in Mexico was significantly more expensive in comparison to domestic air travel in the US or Europe; in relative terms, prices were eye-wateringly high.  Back then, the market was dominated by two national carriers (Aeromexico and Mexicana) who controlled, directly or indirectly, over 90% of the country’s domestic air routes.

De-regularization of the market, which began in earnest about three years ago, is today being felt both in terms of choice and prices. The process has been gradual but now, for the first time, Mexico’s domestic airline industry is beginning to sprout shoots of genuine competition.

Low cost airlines began appearing at Mexico’s airports about eighteen months ago.  About a year ago, one of Mexico’s two national airlines, Mexicana, was sold-off to Grupo Posadas, a leisure services group, ending over a decade of government control and a virtual monopoly of Mexican domestic air routes.

In a move that seemed to mark a significant break from past precedence in such matters, Grupo Posadas was blocked from bidding for the airline in a land-mark ruling by the antitrust regulator.  This decision prevented both of the country’s major airlines being owned by one organization.

Last month, a consortium led by CitiBank (CitiBank also owns Banamex, one of Mexico’s biggest banks) successfully bid for Aeromexico promising a commercial shake-up that would trim costs, increase routes and make the airline competitive.

The jury is out on how that sale will shape the market.  Nonetheless, smaller low-cost operators are already making their presence felt and bringing prices down by at least 30% on many popular routes, compared to pre-competition prices.

Two other important events are propelling significant air travel market reforms: the de-centralization of Mexico City as the hub for domestic flights in Mexico and an ‘open skies’ agreement signed between Mexico and the USA.

Because of the way Mexico’s airline industry is currently structured, Mexico City is the hub serving the country’s provincial airports, and point-to-point travel is not always possible: you have to fly to Mexico City and then back out to the provinces.

Low cost airlines are beginning to provide point-to-point connections between important provincial cities in Mexico, thus by-passing the capital.

Mexico’s Airport Authority is also making significant new investments in regional airports.  Toluca airport (about 45 minutes outside of Mexico City) is already handling significantly more flights, including most of the low-cost flights, and plans are afoot to further develop the airports in Queretaro, Puebla and Cuernavaca – important colonial cities within 2-3 hours travel time of the capital by road.

An ‘open skies’ agreement signed between Mexico and the USA recently is also opening up more point-to-point routes between the USA and provincial Mexican cities and tourist regions – further by-passing the capital city’s hitherto ‘grip’ on Mexico’s domestic airline market.  De-regularization, genuine competition, more routes, ‘open skies’ agreements, and multi-billion dollar investments in airports and airline company infrastructure are creating a dynamic and competitive market place for air travel from and within Mexico.

The benefits are already being capitalized upon by smaller towns and cities, like Morelia, now with no less than four non-stop international flights daily from Houston and Los Angeles as well as a flight three times a week between Morelia and Dallas Fort-Worth.  These flights are not only direct, they connect to important airports in the USA which offer onward connections to every major city in the US, Canada and world-wide.

These services are attracting more visitors and new investment.  Local communities like Morelia and nearby Patzcuaro are already benefiting from the improved transport connections.

Affordable flights, brought about by the opening-up of the air transportation market, is helping Mexico break away from its uncompetitive past.  It’s also making more of Mexico more easily accessible to Mexicans, vistors and investors.

For a list of national, international and low-cost airlines, accompanied by links to their respective web sites, visit our Flights page.

Also See: Low Cost Airlines in Mexico, a previous entry on this blog, and the guide Getting Around: Domestic Flights in Mexico.