The air market between Mexico and the USA has been remarkably stagnant over the last 10 years. While the Mexican economy was growing through most of that period, the number of seats offered in the market grew a little between 2005 and 2007 and then declined slightly in the wake of the global financial crisis. The market has expanded modestly in recent years and has now recovered to 2005-2006 levels.
Analysis of Innovata schedules' data reveals that the share of Mexican carriers in the cross-border market has declined over the years from 35% in 2005 to 23% in 2013, primarily due to the grounding of Oneworld member Mexicana in 2011. Mexicana was the largest airline in this market from 2006 until its demise. However, Mexican low-cost airlines, led by Volaris, have expanded aggressively. The Mexican budget airline is now the largest cross-border low-cost player and is twice the size of its nearest rival, US carrier AirTran Airways, which has expanded after its takeover by Southwest Airlines. The Dallas-based carrier’s international services are still flown under the AirTran brand.
American Airlines and Continental Airlines (and now United Airlines, following the merger with Continental) have been the dominant US airlines, although United has pulled away a little since the merger. Should the US Airways-American merger happen, the combined airline will be the largest in this market. However, with a 27% market share, it could hardly be called dominant, especially as the low-cost brigade’s share of market has increased from 6% in 2005 to 20% in 2013.
By far, the two biggest destinations are Mexico City and Cancun, which between them account for 55% of seats. Tourism from the USA drives traffic to the Yucatan peninsula, and 99% of the traffic is carried by US-based airlines.
For Mexico City, the largest metropolis in Latin America with over 23 million inhabitants, the situation is different. The country’s capital generates originating traffic as well as attracting destination traffic from the USA. It also serves as the hub for Aeromexico. Until Mexicana was grounded, the country’s two mainline carriers accounted for just over half of the capacity. While Volaris and fellow budget operator Interjet have started services from Mexico City, some of the former Mexicana traffic has been captured by the US carriers, and the Mexican airlines’ market share out of Mexico City has declined from a peak of 59% in 2009 to 47% in 2013.
Guadalajara, San Jose Cabos, Puerto Vallarta and Monterrey are a group of secondary Mexican cities with more than a million seats both ways to the USA. They follow the same pattern as Mexico City and Cancun. The Guadalajara and Monterrey markets are more about business and “Visiting Friends and Relatives” (VFR) traffic with a strong presence of Mexican airlines. San Jose Cabos and Puerto Vallarta are more tourist-focused destinations and US airlines dominate.
The key hubs from the US for traffic to Mexico are Houston and Dallas, but they only account for 27% between them. Los Angeles, with its large Mexican-American population in southern California, was the biggest destination to and from Mexico 10 years ago. It has steadily dropped as the Mexican-American population spread out more through the USA, and the importance of hubs increased. Houston International and Dallas/Fort Worth are now complemented by Atlanta, Miami, Phoenix, San Francisco and Chicago as hubs for their respective airlines. New York JFK is more about local originating traffic, as shown by the fact that Aeromexico and JetBlue between them hold almost two thirds of the market.
Two cities in southwestern USA that have been active in attracting services from Mexico are San Antonio and Las Vegas. Both have mainline airlines and low-cost operators providing direct connections to several Mexican cities, bypassing the traditional hubs.
The single biggest city pair in terms of seat capacity is Mexico-Miami, propelled by the recent entry of Interjet. The routes between Mexico and Houston and Los Angeles have also been the largest at times over the past 10 years.
It appears that many of the city pairs that Mexicana flew have been taken over by new Mexican start-ups such as Volaris, VivaAerobus and Interjet. The exception are flights to the key hubs of its erstwhile Oneworld partner American Airlines. As usual, low-cost carriers try to avoid these congested hubs, and Volaris now serves Chicago Midway rather than O’Hare.
As the market has not really grown, so the number of routes between Mexico and the USA has not changed, hovering just above 200. However, with the Mexican low-cost sector maturing and strengthening, and some of their US rivals attracted by the opportunities in the cross-border market, one could expect this to rise as hub-bypassing becomes more common.