A COMBINED PASSION

Mexico 2013 | TRANSPORT | INTERVIEW

TBY talks to Miguel Alemán V., Chairman of the Board at Interjet, on his entrance into the aviation business, developing a high-quality, low-cost airline, and the need for more infrastructure development.

Miguel Alemán Velasco
BIOGRAPHY
Miguel Alemán Velasco was born in 1932 and has had a long and varied career. After working in the telecommunications sector, he entered politics in 1992 first as Senator and later Governor of his home state of Veracruz. He is currently Chairman of Interjet.

You have had a long and successful career in a number of industries. How did you end up in the aviation business?

I wanted to do something new that had a solid future. There were no local airlines in Mexico with jet engines and wide-bodied airplanes, so I began to study airlines all over the world from Europe to the US. They were all completely different. Some airlines were crowded, had old planes, bad maintenance, served poor quality food if any, and treated people badly. Those kinds of flights are cheap, yet my idea was to offer high quality at a low price. I wanted the best airplanes with the best service and the best pilots. Starting up any business has many challenges, and launching a new airline is an even more difficult process. We began to examine costs, including each airport's individual taxes. If a new airline begins operations at an airport with eight or nine flights, you pay expenses on all of them. These costs are higher if the airport is new or underserved, as the costs then increase. Additional costs are not usually included in the ticket price, but I wanted everything to be included and clear. I told my colleagues I was going to avoid intermediaries and allow the customers greater flexibility to go online by themselves, buy a ticket, and then change the ticket according to their needs at no further expense if necessary. This strategy began to work and all of a sudden we were doing well. The market discovered us and we discovered a new segment of the market that was not into air travel before. We later added a customer loyalty program for miles traveled based on a cash back bonus rather than the traditional model, as we realized that was more appealing to customers. Also, we provided a separate toilet for ladies in the cabin, which has been very successful. Our planes are spacious and provide plenty of legroom. If the passenger in front of you reclines, then you do not get disturbed.

What has been the strategy behind providing a quality product while adopting a low-cost, low-fare business model?

First, we bought new planes to lessen our maintenance costs. However, we developed our own maintenance center in Toluca City, which can service a wide variety of planes from Boeing to small warplanes, too. We are now working to team up with Lufthansa as a partner in this maintenance hub. I admire Lufthansa in the way it maintains its aircraft, and I think this venture would be very interesting for us. The business is doing well, and today we are servicing planes from Argentina, the US, and some Central American countries. We are happy with our progress as the business has grown as large as the airline itself. It is a good fit, and it saves us money in the long run. We have also recently selected a new airplane for short distance flight—the Sukhoi Superjet-100. It is a combination of European technologies that is originally a Russian airplane and a wide body with a capacity for 100 passengers. Its engines are made in France and the US, and all its technical and navigation instruments are from the US and Europe. The interior decoration was designed by Pininfarina in Italy. The performance is fantastic. Its engines consume nearly 15% less fuel and it lowers carbon emissions into the atmosphere by 80%, which is very good news. It creates less noise and can fly into any airport. We are going to use it for short flights from Mexico City to Querétaro, Acapulco, Puebla, and other nearby routes.

How do you intend to expand on the successful introduction of international routes at the end of 2012?

After comparing several routes, we decided to fly to Orange County in the US. Besides local demand, it is only 40 minutes from Los Angeles. It is also 50 minutes to Disneyland and five minutes to Costa Mesa, which has the largest mall in the US and is a place where Mexicans and passengers from other Latin American countries love to shop. I think we will be well received there. Our Las Vegas route is popular on weekends for many people from Mexico. We also run flights to Central America, South America, and the Caribbean. We are not going to go to Europe for a couple of years, but Canada is in our plans.

The year 2011 was described as a break out year for Interjet. What characterized the success?

We have to be very careful with timing, and it requires vision to know when to make the right moves. That is why we chose that year to expand our frontiers and go international. That was before Mexicana had serious problems and collapsed into a legal, labor, and financial impasse. However, in support of the needs of our local market, and with the authorization of our civil aviation authorities, we have been serving passengers on some of its routes. At some point, Mexicana will have to be handed back to private investors to attempt once again to make a successful comeback, but it will take some time recover customer confidence and fly as many passengers as we do. That is why we are trying to consolidate our position in the local market as much as possible. I do not worry about being the biggest. For us, quality is far more important. This has always been the core goal of our strategy.

What is your long-term vision for Interjet? Where would you like to see the company in five years?

It has been a hard job to start up. In less than five years, we could make Interjet one of the best airlines in Mexico. First, we have to make it a reality in our own country before we can compete with others internationally. The main problem has been communications in Mexico because the topography of the country is very complex. Nevertheless, it can be done. Italy succeeded in building tunnels and bridges, and something similar needs to be done here, too. Air travel is free of most security concerns, and the country now needs more airports and much better road and transport infrastructure and services. Through airports you can get where you are going faster and more safely. This is one way aviation has proven to assist in the development of the country.