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Jared Harckham's Commentary in AvNews, Latin America & Caribbean Edition SH&E recently pulled and analyzed some marketing data from their significant database that summarize all of the service reductions coming up in Mexico (due to fuel). It clearly identified the gas-guzzlers in the Mexican fleet that should be retired. Jared graciously made this analysis available to AvNews and we are pleased to be able to share it with our readers. The price of fuel is going to have a big impact on air service in Mexico and possibly on the number of aircraft flying. The high price of jet fuel is causing airline service reductions in Mexico, following the widely-reported changes in the United States, Canada and other markets. The Mexican peso is usually closely tied to the U.S. Dollar, which means that Mexican airlines feel the effects of the crippled dollar when buying fuel. Fortunately for Mexican aviation industry, the peso has appreciated 5% against the dollar during the past year – making their fuel purchases a bit less daunting. Even with the recent currency relief, the airlines in Mexico and their foreign counterparts have announced dramatic cuts in service - both domestically and internationally, all within key markets. A review of the airline schedules published for December of this year, compared to the same month last year reveals some drastic pull-downs. In terms of weekly seats, the Mexico City airport is the biggest loser, with 74,984 seats lost. This represents a 10% drop since December 2007. Distant second, third and fourth are Guadalajara, Tijuana and Cancun. The drops in weekly seats in all Mexican airports are 9% domestic and 20% international. The largest drops in percentage terms are in Cozumel, with over 40% of it its capacity disappearing, followed by Ixtapa/Ziuhatanjeo, Tijuana and Zacatecas. The largest international market for Mexico is the United States. Recently, severe drops in capacity to and from Mexico can be seen in major U.S. gateways. Houston will experience the most severe drop in weekly seats 23,098, which represents a whopping 28% of that airport’s Mexico service. Los Angeles, traditionally the largest gateway for Mexico-U.S. service will see at drop of 22,646 weekly seats or 23%. Denver will see a significant drop of 14,796 seats per week, representing half of that airport’s capacity to Mexico. Minneapolis will lose 73% of its Mexico capacity. One of the primary reasons that airlines are reducing service is that they are removing aircraft from their fleets. In the United States, most airlines have announced the immediate or gradual groundings of their least fuel efficient equipment. In Mexico, few announcements have been made concerning specific aircraft removals but an analysis of the carrier’s fleets reveals that a significant percentage of the fleets are not fuel-efficient. A recent review of airline fleet data reveals that 48% of the Mexican jet fleet is considered fuel-inefficient technology. Included in this category are DC-9s, 737- 200/300/400/500s, MD80s. F100s. Should the airlines ground all or most of these fleets, as is being done in the United States market, Mexico would lose a dramatic share of its capacity. By airline – Aeromexico’s fleet is comprised of 53% fuel-guzzler aircraft, Mexicana 31%, Aeromar 38%. Fortunately, the Mexican industry has a significant amount of new aircraft on order, representing 26% of today’s total seats. By 2012 the majority of the new fuel efficient aircrafts will have been delivered to the respective airlines. Should all of the fuel-inefficient aircraft in Mexico be grounded and should all the aircraft on order join the fleets as planned, the Mexican fleet will decrease its seating capacity by 22%. This could be just the fix the industry needs, in order to raise both load factors and fares, and restore profitability to the market. Contact: jharckham@sh-e.com
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