Aeroméxico on the path to modernization

Today AeroMexico is the market leader in Latin America’s second largest economy. Like the country itself, since its privatization in 2007 Mexico’s only full-service carrier has been making great strides on the path to modernization.

05.2017 | Text: Dr. Philipp Bruhns

Text:
Dr. Philipp Bruhns has been working in corporate communications for over 15 years, and has been self-employed since 2008. Based in Denmark, Bruhns has a doctoral degree in psycholinguistics and as an author specializes in maintenance topics and health and social issues.

Champagne corks may have popped a little louder last New Year’s Eve in Mexico City and Atlanta. Just before Christmas, AeroMexico and Delta Air Lines agreed to the final competition law requirements for their proposed merger as part of a “joint cooperation agreement.” This paves the way for the joint venture, which from April 2017 onwards sees both partners combine their strengths through closer collaboration. During the course of the year, Delta will increase its stake in Mexico’s leading airline to as much as 49 percent. For AeroMexico’s CEO Andrés Conesa, who spent the past few years working tirelessly with his team on the alliance between the longtime code-sharing partners, reaching this agreement before year-end marks “the beginning of a new era in North American aviation.” Shared networks will provide customers of both airlines more options for connectivity, products and services in the future. This is not the first joint venture between Delta and AeroMexico; since 2014 the two partners have jointly operated a maintenance facility in Querétaro, North-Central Mexico.

Mexico – facts and figures

Official name:
United Mexican States (Estados Unidos Mexicanos)

Official language:
Spanish, in addition to 68 indigenous languages

Capital:
Mexico City, originally Mexico-Tenochtitlan, founded in 1325. Over 8.8 million inhabitants, or about 20 million including the metropolitan region, making it the third most populous city in the world.

Fifth largest country in the Americas.

Around 2 million km2 of surface area, more than 3,000 km long und 200 to 2,000 km wide.

120 million inhabitants, population density of 62 inhabitants per square kilometer.

Gross domestic product (GDP): roughly 1.082 trillion U.S. dollars (2015); 8,698.59 U.S. dollars per head.

On the rise globally

This merger with Delta also shows how far the airline with the “Cuauhtli” or Aztec eagle warrior logo has come in its quest to be a world leader in quality and performance. Established in 1934 and run by the state for over 50 years before being privatized again in 2007, today the airline will likely disappoint anyone looking for typical Mexican clichés. Of course, that’s not counting the two-hour journey to reach the airport in the 20 million strong metropolitan region of Mexico City.

A modern fleet, punctual and friendly service, internet access and plenty of onboard entertainment are the definition of modern “corporate Mexico” and clearly follow North American standards. Quality, comfort and good connections are key factors for business travelers, with whom AeroMexico achieves almost 80 percent of its profits. The high proportion of business flights is hardly surprising given how long Mexico—the second largest and, with a population of around 230 million, the second most populous country in Latin America—has been a global player. The G20 nation’s economy continues to grow, albeit not at the impressive rate of years gone by. Further economic reforms will ensure that the country depends less on automotive and oil production in the future. AeroMexico is the country’s only airline operating long-haul flights to trading partners in Asia, Europe and South America. It is now switching its widebody fleet from the Boeing 767 and 777 to the 787-8 and 787-9 Dreamliner versions. This will not only increase efficiency and comfort; the aircraft’s greater range also creates the potential to expand the airline’s intercontinental route network. For similar reasons, the medium-haul fleet serving the important U.S. and Central American business will be fully upgraded with 737-MAX jetliners from 2018. These investments are also interesting with regards to another future decision: the building of a new airport for Mexico City is set to propel this megacity, with its convenient location between the northern and southern hemisphere and the Atlantic and Pacific Oceans, to the position of leading global hub in Latin America. In 2020, the first phase with three runways and a terminal building designed by star architect Norman Foster will enter into service.

Inside MTU MRO cooperation

Since 2011, the AeroMexico Group has been MTU Maintenance’s biggest exclusive customer for the maintenance, repair and overhaul of the engines for the bestselling Brazilian E190/195 regional jet. MTU Maintenance Berlin-Brandenburg currently manages a total of 64 CF34-10E engines manu­factured by GE Aviation for AeroMexico Connect and will continue to do so until at least 2022.

The regional subsidiary of the Mexican market leader is one of the largest operators of this engine type in Latin America. For MTU, which is the world’s first independent maintenance company to manage this fairly new engine, the partnership with AeroMexico has played an important role in opening doors for MTU in the region, as Thomas Needham, MTU’s Programs & Sales Director in Berlin, explains: “The Embraer jets are a bestseller worldwide, but they have a particularly high market share in Latin America where they are manu­factured. It makes us very proud that one of the region’s leading airlines boasting such a large fleet has placed its trust in us.”

Strong regional presence

In the past few years, Mexico’s domestic market has also come to life. Continuous economic development has seen a rise in the Mexican middle class, with disposable incomes rising steadily. More and more Mexicans are now opting to use aircraft for private journeys, too. The low-cost market in particular is thriving, with fierce competition on busy routes between the capital and metropolises such as Tijuana, Monterrey and Guadalajara or the tourism hotspot of Cancún. AeroMexico, which flies to all Mexican cities with a population of 500,000 or more, also operates on these routes. However, last summer, AeroMexico’s CEO Conesa confirmed that the company will not launch its own low-cost airline for the time being, as its regular business is already beginning to benefit from these new target groups. The airline holds another trump card in the domestic market and for flights to neighboring countries: even routes with lower passenger volumes are profitable thanks to its regional subsidiary airline Aerolitoral, whose fleet of 65 smaller Embraer regional jets serves domestic and neighboring destinations under the “AeroMexico Connect” brand. Already young, this fleet will be further modernized when its 50-seater ERJ145 aircraft are being replaced by the bigger and newer E190 that comes with a business-class configuration. MTU Maintenance is also on board as it is exclusively in charge of the maintenance, repair and overhaul of the E190’s CF34-10E engines (see Inside MTU).

Video: Aeroméxico: A look back at 2016 Article with video

Aeroméxico: A look back at 2016

The year 2016 was one of AeroMéxico’s most turbulent years to date. In this summary, we take a look back at the most significant moments. To the video ...

Exciting prospects

AeroMexico’s future seems to be heading in the right direction. However, a comparison with two neighboring countries reveals that Mexico is still a dormant air traffic giant. For example, per capita economic power is now slightly higher than in Brazil, long the Latin American leader. However, on average, middle-income Mexicans still fly 25 percent less often. That said, catching up with the United States would require a threefold increase in flight frequency. Silvan Brandt, who keenly observes the market’s development as MTU’s Director of Sales for the region, confirms that the fundamental data is correct. “Even though these days all eyes are on Washington and the new U.S. government, not much has changed when it comes to the major fundamentals.” For Brandt, Mexico remains a market with enormous potential. It also holds true for other countries in the region where MTU Maintenance has a strong presence.

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