Volaris and Copa Airlines represent two very different sides of the airline industry. The Mexican carrier is an ultra-low-cost carrier with a point-to-point strategy, while the Panamanian airline is the definition of a hub-and-spoke operator. Regardless, both companies have gained success in their respective fields. Let’s find out how.
Volaris’ model
Volaris started flying in 2006. The carrier is currently celebrating its 15 anniversary, and while the COVID-19 crisis has worsened the economy worldwide, Volaris is on the right track.
This Mexican low-cost operator has already bounced back. In April, it had more capacity than in 2019. It also carried even more passengers than two years ago, with a 3.3% 2019-vs-2021 comparison. Volaris is doing something good.
During a CAPA interview, Carolyn Prowse, Chief Commercial Officer at Volaris, said,
“There are three different elements to our ultra-low-cost model that have made us successful in terms of the recovery.”
The first one is that Volaris is very focused on leisure and Visiting Friends and Relatives (VFR) traffic; it represents 70% of Volaris’ business.
Additional to that, Volaris’ 100% capacity is either domestic or regional. The airline mainly operates in Mexico and the US, with a few routes to Central America (and soon Colombia). During the pandemic, the Mexican Government never closed its borders nor imposed any kind of travel restrictions, which allowed Volaris to operate freely.
“The US air border never really closed either, and the testing regime was only introduced in January. It’s only really the Central American markets that were closed for a period”, Prowse said. She later added that Volaris doesn’t rely on connectivity either.
The final element is that Volaris’ costs are so low that it has given the airline the ability to stimulate demand with low-base fares. This is combined with a very successful ancillary revenue strategy. Currently, around 50% of Volaris’ revenues come from ancillary products.
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Copa’s model
Copa Airlines is the epitome of the hub and spoke model in Latin America. The Panamanian carrier has always heavily relied on connecting traffic through Tocumen International Airport. This airport, aptly nicknamed The Hub of the Americas, is located right in the middle, between North and South America.
Dennis Cary, senior vice president of Commercial & Planning at Copa Airlines, said,
“The real opportunity for us is rebuilding the breadth and depth of our hub. The core of our business is connecting smaller markets that can’t support much if any, non-stop service. Yes, we carry passengers in some of the biggest hubs in the Americas, but the core of our business is really connecting those secondary and tertiary cities to the rest of the Americas.”
Going forward, in the post-COVID environment, with the pullback in capacity and demand, Copa Airlines has a great opportunity.
The Hub of the Americas is in a great position to be a unique business opportunity in the future, Cary added.
Similarities between both airlines
Despite the differences between both models, Volaris and Copa have similar traits, especially after the COVID-19 crisis.
Now both airlines work under simplified fleets. Copa Airlines has sold all its former Embraer aircraft; meanwhile, Volaris is increasing its Airbus A320 family fleet.
Also, these two carriers are focusing on driving unit costs even lower and investing in customer experience.
Financially, Copa and Volaris are in a solid position. Additionally, both airlines are benefiting from other companies’ issues. In Mexico, both Aeromexico and Interjet are in bankruptcy processes, which has allowed Volaris to seize market share. In Latin America, LATAM and Avianca (two of Copa’s top rivals) are also on Chapter 11 bankruptcies.
Have you flown with Volaris and Copa? How did you find their services? Let us know in the comments.
