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Latin America

Viva Aerobus Wants Larger Piece of Mexico’s Boom With New Airbus Order

Edward Russell

July 5th, 2023

Viva Aerobus Airbus A321neo Nose

Mexican discount airline Viva Aerobus has signed a memorandum of understanding with Airbus for 90 Airbus A321neo aircraft that could more than double its fleet in the coming years as the airline eyes significant growth.

The deal brings the Monterrey, Mexico-based carrier’s orderbook to 170 A320neo family aircraft, according to Airbus Wednesday. Viva Aerobus operates 74 A320 family jets currently. The new A321neos, which will be equipped with Pratt & Whitney geared turbofan engines, will begin arriving in 2027.

The aircraft “will allow us to grow and renew our fleet and remain the youngest in Latin America,” Viva Aerobus CEO Juan Carlos Zuazua said. “The technology and operational efficiency of the A321neos will improve our operational reliability, on-time performance, and … we expect to drive further cost-savings.”

The deal comes amid a flurry of global aircraft ordering activity. Air India, IndiGo, Ryanair, and United Airlines have all unveiled 100-plus plane commitments since December. The orders, most of which do not include deliveries until the latter half of the decade, are both about growth and locking in delivery slots that are in short supply at Airbus and Boeing. Both airframers face supply chain challenges that are delaying deliveries of new aircraft.

Mexico has been a wunderkind of the Covid-19 recovery. It was among the first domestic markets to bounce back, and in the first quarter passenger numbers hit 29 million, or 17% larger than during the same period in 2019, according to data from the Latin American airlines trade group ALTA. The Mexican market also surpassed Brazil to take the top spot in the region during the period.

The strong recovery has been good for Mexico’s airlines. Volaris, the country’s largest airline, posted one of its most profitable years in 2021 when most airlines were still struggling under the pandemic’s toll. While its results last year were not as good, it remains bullish on the future. Aeromexico, which restructured under U.S. Chapter 11 bankruptcy protection during the crisis, has come back strong. And the same is true for Viva Aerobus, which sits between Volaris and Aeromexico in terms of size in the Mexican market. Mexico also lost two airlines since 2020: Aeromar and Interjet.

Zuazua said in April that he was “positive” about the discounter’s opportunities, citing growth in the Mexican market and strong travel demand. His concerns were the same as most other airlines: aviation supply chain challenges and, unique to Mexico, the lack of clarity over when the U.S. could restore Mexico’s safety rating to category 1.

The upgrade in the safety rating, which is a measure of Mexico’s aviation regulator and not a statement on the safety of the country’s airlines, is key for Mexican carriers to fully take advantage of the boom in U.S.-Mexico air travel. Since the rating was downgraded to category 2 in 2021, no Mexican airline has been able to register additional aircraft in the U.S. or add new destinations to their maps, capping their growth. In addition, U.S. airlines had to stop codesharing on Mexican carriers’ flights, something that affected Aeromexico the most given its joint venture with Delta Air Lines.

Viva Aerobus’ proposed joint venture with Allegiant Air also hangs in limbo pending a restoration of category 1. While Mexico’s aviation regulator has approved the pact, the U.S. Department of Transportation cannot do the same until the safety rating returns to its highest level.

Aeromexico CEO Andres Conesa said at the end of June that he expected the U.S. to upgrade Mexico’s safety rating “next month,” or in July. That would allow his and other carriers to resume their U.S. growth by the end of the year.

With everyone eager to grow to the U.S., many expect a surge in new flights and routes once the upgrade occurs. Viva Aerobus will undoubtedly participate in that, especially if its joint venture with Allegiant is approved. Under the pact, the airline could add smaller U.S. destinations, like South Bend, Ind., or St. Louis’ Midamerica Airport with flights to Cancun and other beach destinations popular with American travelers.

Edward Russell

July 5th, 2023

Tags: Latin America

Photo credit: A Viva Aerobus Airbus A320neo takes off from Hamburg airport. Flickr / Kevin Hackert

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