EconomyFinancialAmerican Airlines takes off in Mexico thanks to new...

American Airlines takes off in Mexico thanks to new travel trends and Category 2

US airlines have been one of the main protagonists of the recovery of the air sector in Mexico. Although affected like the entire industry by the COVID-19 lockdown, their rebound was fueled by rapid growth in travel demand from the United States, fueled by leisure travel and later combined with business – a trend dubbed bleisure. –, but also due to effects such as the downgrading of Mexico to Category 2 .

American Airlines has not been oblivious to this. On the one hand, the bleisure trend had one of its greatest exponents in Mexico. Since the first months of the pandemic, the few travel restrictions -practically zero- made the country an attractive destination for US tourists, who quickly returned and saturated beaches in Cancun and Los Cabos , to name a few examples. American Airlines took advantage of this trend as soon as possible, and even for Christmas 2020 it placed 20% more flights in Cancun compared to 2019.

To this has been added the downgrading of Mexico to Category 2 , which since May 2021 has prevented Mexican airlines from placing additional capacity to the United States, with which they have been left with what they had before the pandemic in terms of routes and frequencies. According to estimates by the National Tourism Business Council (CNET), the measure of the Federal Aviation Administration (FAA) has cost national airlines around 9,200 million pesos .

For José Freig, vice president of international operations for American Airlines, the effect of the change in travelers’ behavior is one of the main reasons for the growth of the airline in Mexico, which in the first seven months of the year transported 41% more passengers than in the same period of 2019.

Within the framework of his 80th anniversary in Mexico, the manager talks with Expansión about current challenges, such as the shortage of planes and crews, as well as others that could be yet to come, such as a reduction in operations in one of his biggest strongholds in Mexico : Mexico City International Airport (AICM).

Expansion (E): For US airlines it has been a very exceptional time due to the pandemic, but at this point in the year, where are they in terms of passenger recovery and capacity allocation?

José Freig (JF): For us, Mexico has been a very strong market. If we compare 2019 with 2022, we are seeing that we are 17% higher in flights and 40% higher in occupancy.

In many markets we have seen a very large growth, especially due to the change in the type of aircraft. In the regional markets where we used to fly the E175, many of which have 70-passenger seats, we have changed them to 124-passenger seats with the A319, which has helped us a lot.

Mexico never closed, but we had our low points, like everyone in the pandemic. So being 40% higher in seats in September 2022 is something very important.

(E): Something that the entire industry has had as a challenge is the reception of aircraft, which right now have had a shortage, have you been hit when it comes to replacing capacity?

(JF): It hit us, but for the wide-body aircraft, specifically for us in the 787. We just received three in the last month and a half, but they are aircraft that should have arrived 10 or 12 months ago, we were long time waiting. We are still missing, there are 15 more that are on the way.

On the single-aisle plane, which is the one we use mostly in Mexico, we had a few orders, but nothing affected us in what we were going to fly. Rather it was the wide bodies, which affected us on routes specifically from Europe and other destinations that we could not add.

(E): At this point in the year, when the winter season is coming, including 2023, what plans do you have to increase frequencies, including new routes?

(JF): Specifically for Mexico we have two new routes that start on November 3: New York-Monterrey and New York-Mexico City, they are routes that we do not operate today, but of which we are very proud to be able to add. In the Latin American region there are five routes to destinations such as Cuba, in November, and we return to Nicaragua, which is the last country we needed to return to after the pandemic, we will return at the end of November.

We have more than 90 destinations; clearly Latin America and the Caribbean is the largest international region for us, by far.

(E): Around the world there has been a lot of talk about the lack of crews, which has also affected the lack of planes. How have they handled it?

(JF): In the regional aspect, it has affected us, of course it has affected us, all the airlines.

We have regional routes, specifically in the United States, where our strategy has been not to abandon destinations, but to cut frequencies. An example of this could be a small destination, where we had operations from Dallas, Chicago, Phoenix, Los Angeles, and today we only operate from Dallas and Chicago. But we continue to operate in those destinations.

In Mexico it has not affected us, even the opposite happened to us: we saw the demand and we changed the regional planes to large planes, so in this region it has not affected us.

(E): Speaking of more local challenges, there is talk of this 15% reduction in operations at the AICM. How does this affect you? Are they also part of this 15% reduction in capacity?

(JF): We assume so, but the truth is that we continue to work very closely with the authorities and AFAC to understand exactly the reduction. Today we do not know, but we will continue to work with them to understand if it really is 15%. What we are waiting for from them is an order, a proposal for the flights that will be affected, which has not reached us today.

(E): So, it’s not confirmed right now? Because the programming of the slots for the winter comes out these days, but I understand that on your side there will be no adjustment at the moment.

(JF): At the moment, no. Until we see it, we have the proposal and we see the information, we pass the information.

(E): Speaking of structural changes, we have seen many things: a variation of destinations, changes in passenger behavior, how has this been reflected in the demand they have with Mexico?

(JF): We’ve all seen it: the hybrid of the passenger who goes on business and sees the opportunity to stay for pleasure, either at the beginning or at the end.

We see the same with our passengers. A passenger that we previously considered a business in itself, the profile was that he left on Monday afternoon, returned on Thursday afternoon. Now that profile is already very mixed: you have a profile that that same passenger can leave on Monday, who previously did not check a suitcase, and now he does not return on Thursday but on Sunday with three more people in the reservation and two checked luggage. That’s where you see the profile has changed significantly.

(E): How much of this growth and additional capacity is here to stay? Because there is the pandemic as a changing factor, but also Category 2, and the data shows it: as soon as Mexico is downgraded, the airlines –particularly the American ones– have a boom in that sense.

(JF): Right now we see in the next three, four, five months, the same growth, the same demand, so at least in the short term we will continue to wait for it. There are other factors that can change that in the future, but specifically for Mexico we have not seen a change in that aspect.

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