Mexican discount airlines lead '06 traffic growth
Domestic passenger air traffic has been on the rise in Mexico. In 2006 it grew by 12 percent. This exciting new development is due to five newly introduced airlines. These companies are low cost. They have expanded exponentially. In 2005 they carried 62,000 passengers compared to the almost 3 million passengers in 2006.
The airline businesses that once transported 60 percent of the market, such as Mexican and Aeromexico, now fly 44 percent. While the low-cost new airlines have basked in their expansion, these original tycoons are suffering. As more choices enter the market Mexicana and Aeromexico have flown almost 40,00 less people in 2006.
These discount airlines began in fall of 2005 with Avolar. These lower priced airlines force ticket prices and labor costs down. The competition in the Mexican domestic flight niche has increased, luckily enough for the customer.
The market is expected to keep expanding as well. Regulators have predicted as much as 10 percent. This could continue into the next three years.
1 comment:
This article goes along with what we've been talking about in terms of monopolies. The top two airlines held a large portion of the market and are beginning to lose some of their power. Though they are probably not considered actual monopolies, they did exhibit some control. Thus, consumer surplus is increasing and the market is heading toward perfect competition as the new airlines are able to enter the market(though it still has a ways to go). In this instance, I would venture to say that the market control exhibited by the two major airlines had a negative impact on consumers. Now that more airlines are entering the market, prices will be driven down and everyone (except for the top two airlines) will be much happier!
Post a Comment