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Volaris to add US destinations amid optimistic outlook

Mexico's Volaris plans to add new US destinations this year as it sees transborder demand recover with recent strengthening of the Mexican peso, even as the airline expects to turn in an operating loss for 2018.

Volaris chief executive Enrique Beltranena declines to name specific US cities that will join the airline's route map, citing ongoing negotiations, but tells FlightGlobal that further details should be unveiled in about a month or so.

The ultra low-cost airline expects to grow systemwide capacity by 9-12% in 2019, with transborder service seeing higher growth than domestic, says Beltranena. However, he notes that domestic capacity growth will be off a larger base since Volaris increased domestic capacity by 14% in 2018. International capacity rose only 6% year-on-year in 2018.

"We continue to see possibilities," says Beltranena of growth across the border. "About 10% of our customers are first-timers on Volaris… Our business model and the potential demand in traffic justify us continuing to grow."

Volaris is Mexico's largest domestic carrier in terms of capacity and the second largest Mexican airline in the US-Mexico market after Aeromexico, FlightGlobal schedules data shows. Like other Mexican carriers, the airline encountered difficulties in 2018 ranging from rising fuel prices to depreciation of the Mexican peso, which makes it more expensive for Mexicans to travel abroad.

While Volaris saw a stronger second half of 2018, preliminary results indicate that the airline will report an operating loss for 2018, says Beltranena. The carrier had reported operating and net losses in both the first and second quarters, and an operating profit but net loss in the third quarter. Volaris is expected to announce its full-year financial results in February.

Beltranena indicates that he expects some of the recovery in the second half of 2018 to continue into 2019. The Mexican peso recovered to an exchange rate of over Ps19 per US dollar in recent weeks, data from currency exchange tracker XE shows.

Volaris and its Costa Rican subsidiary grew US-bound capacity by about 4% in 2018, according to FlightGlobal schedules data. The two airlines added only two new US destinations in 2018: Albuquerque and Washington Dulles.

Despite recent concerns over the state of the US economy amid growing trade tensions with its biggest trading partner China, Beltranena is optimistic that the economy of Mexico's northern neighbour will continue to remain in good health in 2019.

The airline had cited a strong flow of remittances from Mexicans living and working in the USA as a driver of the strong demand it saw for its domestic Mexican service in the second half of 2018, and Beltranena says this is likely to continue.

"I don't see any major issues that could [sidetrack the US economy]", he says.

In addition to adding more US destinations in 2019, Volaris continues to make progress on a new El Salvador subsidiary, with plans to begin flights in the summer. The airline will initially base two Airbus A320s in El Salvador, and hopes to attain aircraft certifications from local authorities in the first quarter, says Beltranena.

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