Mexican LCC Volaris Cuts Capacity To Weather Demand Crisis

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Mexican ultra-low-cost-carrier, Volaris, will cut capacity by 90% compared to May 2019. This move comes as the pandemic continues to spread across Latin America, and countries continue to issue lockdown orders.

Volaris A320
Volaris is cutting capacity by 90% in May. Photo: Airbus

Routesonline reports that the Mexican carrier is planning a 90% capacity cut next month on the heels of an overall 80% capacity cut in the second quarter of 2020. By the third quarter, Volaris expects a 50-60% capacity reduction. Those numbers are year-upon-year figures. By the fourth quarter, however, Volaris expects capacity to normalize. One of the reasons that the carrier believes this is because of the carrier’s low fares.

Stored aircraft

The airline flies only Airbus A320 aircraft– a total of 82 planes in the fleet. Of those, 63 planes are in long-term storage. For the future, the carrier is also joining other carriers on deferring deliveries. Only a few new aircraft will join the carrier’s fleet this year.

A321 Volaris
All of the aircraft in the airline’s fleet are A320 family aircraft. Photo: Airbus

Beyond that, Volaris is also working with its employees to save costs. Over 80% of its employees are taking leaves of absence. Meanwhile, executives and higher-ups are cutting salaries while remaining in their active roles.

Volaris

Volaris is an ultra-low-cost-carrier in the Mexican market. However, the carrier only flies short- and medium-haul routes to Latin America and the United States. In the US, Volaris codeshares with Frontier– another low-cost carrier. This enables the two to offer a transborder network of low-fare travel between the United States and Mexico. This has also enabled the airline to launch flights to secondary destinations in the United States from its operating bases in Mexico.

Volaris
Volaris is a close partner of Frontier. Photo: Frontier Airlines

The airline has been in operation since 2006. About four years ago, Volaris also launched a subsidiary in Costa Rica, aptly named “Volaris Costa Rica”. The A320 family of aircraft is common across both fleets.

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Will this work out for Volaris?

The volatility of the air travel market has left many carriers struggling to craft an appropriate response. Most have focused on short-term capacity cuts. Volaris, however, has a more concrete strategy. The airline has in place a plan for reduced capacity through the fall, which means fewer refunds in the future in case flights are canceled. It also allows the carrier to maintain more operational integrity.

Volaris
Volaris is relying on its low fares to try and bring passengers back onboard. Photo: Tomas Del Coro via Flickr

Low-fares could be the secret behind getting people back in planes. However, these fares are only part of the story. Volaris will have to carefully watch the reopening of major industries and tourist attractions. But, Volaris cannot really plan for the number of people who may be facing economic hardships as a result of job losses or industry shutdowns.

The results of this strategy remain to be seen. No one can accurately predict how this will turn out for airlines in the Americas. While there is some hope from airlines in China and Vietnam that are seeing a rebound, the situation could play out differently in North America.

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Do you think this strategy will pay off for Volaris? Let us know in the comments!

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