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So Far, So Good For Mexico's Interjet

Thu Sep 14, 2006 4:39 pm

Interjet becoming major force in Mexico with low-fare model
Thursday September 14, 2006

Mexican low-fare startup Interjet has captured 8% of total domestic traffic and 14% of traffic in city-pairs in which it competes in just seven months, according to CEO Jose Luis Graza Alvarez, who spoke at the World Low Cost Airlines Conference in London earlier this week.

Launched last December after a 12-month planning period, Interjet operates a point-to-point network from Toluca Airport, located some 50 km. outside Mexico City, using seven ex-Volare A320s. It has ordered a further 10 A320s from Airbus with 10 options (ATWOnline, Nov. 8, 2005). It will take four next year, four in 2008 and the remaining two in 2009.

Alvarez said the carrier avoided Mexico City International Airport because it is far too congested for the quick-turn, high-utilization operation he wanted to create. As it is, Interjet achieves 25-min. turns and averages 11 hr. of daily aircraft utilization, operating 14 routes to 13 destinations. Monthly boardings have tripled in its first eight months of operation to 150,000 in July, and it achieved "above breakeven" load factors in June and July.

The carrier's aircraft are configured for just 150 seats and the single-class cabin offers a generous 34 in. pitch. Sectors average 1.3 hr. flying time. In a country in which 85% of tickets are sold through travel agents, Interjet distributes via the Internet, a call center and selected airport and city ticket locations. Alvarez described it as a "tropicalized LCC, offering a superior product at a much lower price."

Seats are assigned, which Alvarez called "a must or else the whole female sector will not participate." It serves complimentary snacks and beverages provided free by vendors in exchange for advertising opportunities in the cabin. The carrier is owned by Miguel Aleman, who launched it with a $60 million investment, and it is debt free, Alvarez said.