ULCC Volaris, like all Mexican airlines, is not allowed to launch new routes to the US because of the US FAA’s safety downgrade, a situation the carrier does not expect to change until mid-2023.
As a result, Volaris continues to navigate the downgrade as the timeline for resuming growth to the US remains uncertain.
The FAA downgraded Mexico’s safety rating from Category 1 to Category 2 in May 2021. Mexican airlines cannot add new routes and frequencies to the US. The decision also prevents equipment changes, such as swapping in larger aircraft. US carriers are also prohibited from placing their codes on flights operated by their Mexican airline partners.
At one point, Volaris was hopeful the US would restore Mexico’s safety rating by the end of this year. But during an Oct. 25 earnings discussion, Volaris executives said the company is envisioning a return to Category 1 around the middle of next year.
Volaris has worked to minimize disruption triggered by the downgrade. Executive VP of airline and commercial operations Holger Blankenstein said the airline was able to grow available seat miles (ASM) during the third quarter on routes between Mexico and the US by back-filling all of its pre-COVID 19 capacity in the US market.
“We added the equivalent of two additional aircraft to existing Mexico to US routes during the quarter,” Blankenstein said.
Until Mexico regains its Category 1 status, Volaris will focus on domestic growth in its core markets, and from Central America to the US, leveraging its air operator’s certificates in Costa Rica and El Salvador, Blankenstein added.
He explained the recovery from the COVID-19 pandemic in Central and South America has occurred roughly 6-12 months behind Mexico, so Volaris slowed its growth in Central America during 2021.
But lately “we’re seeing very good uptick in demand and recovery in the region,” Blankenstein said, adding: “We feel quite bullish on the return of Central American traffic.”
Presently, Volaris has three aircraft operating from Costa Rica and two from El Salvador. Blakenstein said the company was still determining the final number of aircraft that will be placed into operation in Central America during 2023, but Volaris could add at least two aircraft in the region next year.
Volaris’ capacity grew by 22% year-over-year during the three months ending Sept. 30, and was 48% higher than the same period in 2019. For the full year, the airline expects capacity growth of 25% compared with 2021.
Despite fuel-cost headwinds, Blankenstein said fourth-quarter booking curves remain healthy.
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