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Aviation History
1982
1982 - 1700.PDF
Unbroken lines represent services currently operated and dotted lines international routes to be served in the near future dramatically, and the airline naturally began looking up. In 1968, the first year of the Ballesteros-Sosa de la Vega part nership, the airline made a small but significant profit. The 1970s brought expansion on a grand scale. The Mexican economy blossomed under the influence of ever- increasing oil revenues, so that a greater fraction of the population became able to afford air travel. Business travel to and from the USA increased because of the growing Mexican economy. At the same time, tourist traffic from the USA flourished during the world boom of the mid-1970s, and Mexico's decision to devalue the peso in 1976 increased the flow of tourists. Mexicana took a firm grip on the US tourist market when, in the mid-70s, it introduced services linking Mexico City and destinations in the USA with new resort centres specially developed by the Mexican Government at Cancun, Ixtapa, and San Jose del Cabo and La Paz on the Baja California peninsula. Boutes to the resorts have proved moneyspinners for the airline, but initially they were risky because Mexicana had to develop traffic on them as it went along. To be sure of getting the route rights, it had to start operating services when there was no proven demand. Despite its growing economy, Mexico has just been forced to devalue the peso again because of its artificial value against the dollar. Potentially this could pose enormous problems for both Mexicana and state carrier Aeromexico. Aircraft purchase repayments are made in dollars, so effectively purchase prices shoot up. International loans could be come hard to service, and the cost of any fuel bought in the USA or abroad could rise dramatically. But Mexicana has an excellent cushion against de valuation of the peso, because 48 per cent of its revenue is taken, in dollars. This high proportion is due to the tremendous amount of traffic Mexicana carries between Mexico and the USA. It competes with 12 US carriers as well as Aeromexico on routes to the USA, but holds a 30 per cent market share and expects to increase it this year. Sosa de la Vega remarks: "Devaluation is a bad thing—but not too bad". Devaluation problem solved? The devaluation of the peso could solve another problem that worries Mexicana and the Mexican Government. Cheap North Atlantic fares and fare wars among US carriers have hurt tourism to Mexico by giving American citizens the opportunity to travel further afield very cheaply. But with the peso worth less against the dollar, the US tourist is encouraged to visit Mexico, and Mexicana's dollar revenues in crease. A major factor in Mexicana's rapid expansion was a 6-8 per cent average annual growth rate in the Mexican economy during tine 1970s, caused pri marily by the massive revenues gene rated by oil exports. This economic growth has enabled Mexicana to expand at a rate of 15-20 per cent a year for the last decade, as more and more people in Mexico have become able to afford air travel. World recession has now slowed the annual growth of the Mexican economy down to about 3-5 per cent; accordingly, Mexicana's growth fell to about 8 per cent last year. The airline's growth rate may have slowed, but Mexicana systems planning manager Jorge Quintana believes that the surface of the potential market has barely been scratched. Only a very small proportion of the total population of Mexico now flies, he says, and the gradual development of the market can sustain Mexioana's growth for at least the next 15-20 years: "It has a very long way to go yet." The Mexican Bureau of Civil Aeronautics recently stated that the republic's air transport industry is now the world's 12th biggest in terms of passengers carried, and it expects Mexico's standing in the league table to improve. According to Mexicana president Sosa de la Vega, the main limits to the air line's growth in the next few years will be imposed by the size of existing air port facilities in Mexico, particularly at Mexico City Airport. Passenger-hand ling facilities at the airport are now saturated, he says (Mexicana and Aer- mexico each operate about 150 depar tures a day from Mexico City), so Mexi cana is decentralising its operation from next year. A substantial upgrading of Mexico City Airport cannot be expected for at least four years, says Sosa de la Vega, and will require the expenditure of 1,000 million pesos, but a Government 1620 FLIGHT International, 19 June 1982
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