ENRIQUE BELTRANENA

Mexico 2020 | TRANSPORT | INTERVIEW

Given the uniqueness of the local transportation sector, Volaris is competing not against other airlines but in fact buses.

Enrique Beltranena
BIOGRAPHY

Enrique Beltranena is Founder, Executive President, and Board Member of Volaris, a low-cost Mexican airline that operates in Mexico, the US, and Central America. He started his career in the aerospace industry in 1988. He helped the directive team of TACA during their merger that turned them into a single entity as Grupo Taca. In 2001, he headed the group's restructuring process as operational and commercial vice president. He founded Volaris on a minimum amount of capital and brought the company to be double listed on the Mexican and New York stock exchanges.

How did you develop your innovative business plan that sees you competing with a different model of transportation?
When we look at the transportation market in Mexico, air trips per capita were only around 0.3-0.4 in 2019, while 40 years ago it was 0.22. It has not shown much growth. In reality, Mexico is one of the largest bus transportation markets in the world. When we analyzed the market, we concluded that the purchasing capacity of our customers was generally limited because airfares were high in Mexico. We decided to develop a model of aviation under which we could offer extremely low fares so that we could compete against buses. Today, 41% of our routes do not compete with other airlines but instead against buses. We focused on certain niches, and this allowed us to capitalize on these markets. Women are now working far more and incorporating themselves into the equation, and this means we must target women as well as men. Additionally, the vast majority of the people we are targeting are young people, who travel frequently and want certain things. For example, we have to communicate with them through digital channels. Part of what we have done is move into these channels faster than other airlines. We earn only a small percentage of our total revenues through travel agencies, including online travel agencies. Everything else is sold either through our webpage or the mobile application.

How does your business model protect itself from going out of business, which has been the fate of many other Mexican airlines?
It is driven by cost. Volaris has the lowest operating unit cost in the Western hemisphere. Our costs are so low that we can produce far lower prices for customers. Most of the time, our total revenue per available seat mile, which is our unit measure for revenue, is below the cost of the entire global industry.

What kind of strategy does Volaris use to expand both nationally and internationally?
It is important to stick to what we are doing here. In reality, we are a point-to-point operation, and this eliminates the fact that we have to pass through the Mexico City Airport. It is also important to understand that bus transportation is the base of this business. We can expand to wherever we like, though it has to be point-to-point and where we can do bus switching. Further, it has to be somewhere where we have a price advantage over our competitors.