A soaring de­mand for cross-bor­der air travel

Air­lines add flights amid deep­en­ing U.S.-Mex­ico ties

Los Angeles Times - - BUSINESS - By Hugo Martin

The cushy busi­ness-class seats that Rosario Marín books on her reg­u­lar flights be­tween Los An­ge­les and Mex­ico are a far cry from those on the two-day bus jour­neys she took as a teenager to visit rel­a­tives in Mex­ico City.

A con­sul­tant for com­pa­nies that want to do cross-bor­der com­merce, Marín says the bus trips of her youth were mostly crammed with fam­i­lies re­ly­ing on the least ex­pen­sive trans­porta­tion within Mex­ico. To­day, she shares air­line cab­ins with busi­ness ex­ec­u­tives and tourists — and the ac­com­mo­da­tions are a dis­tinct up­grade.

“There is no lux­ury when you are sit­ting in a small seat for two days,” quipped Marín, a former U.S. trea­surer who was born in Mex­ico.

Marín is con­tribut­ing to an in­creas­ing de­mand for air travel be­tween the United States and Mex­ico at­trib­uted partly to grow­ing busi­ness ties be­tween the two coun­tries and ris­ing in­ter­na­tional tourism by Mex­ico’s surg­ing mid­dle class. Then, there’s the never-end­ing de­sire to visit fam­ily, which points to chang­ing de­mo­graph­ics in the U.S.

To serve the swelling mar­ket on both sides of the bor­der, air­lines in­clud­ing Amer­i­can, Alaska and South­west re­cently added dozens of new routes or in­creased flight fre­quency to con­nect ma­jor busi­ness hubs and tourist hot spots in both coun­tries.

In De­cem­ber, Delta Air Lines will launch its first daily Los An­ge­les-to-Mex­ico City f lights since 2005. That is on top of the five new non­stop U.S.-to-Mex­ico flights the At­lanta-based car­rier an­nounced in May, as part of a co­op­er­a­tion agree­ment with Aeromex­ico.

Be­yond the pre­dictable des­ti­na­tions, air­lines are adding less-ex­pected routes be­tween the U.S. and

Mex­ico in­clud­ing Los An­ge­les to León and At­lanta to Quere­taro.

Aeromex­ico this year ex­panded its daily non­stop ser­vice be­tween in­dus­trial hub Mon­ter­rey, Mex­ico, and Detroit, de­scribed by the Mex­ico City-based air­line in its an­nounce­ment as “a U.S. city known for its de­vel­op­ment and pro­mo­tion of the au­to­mo­tive in­dus­try.”

The in­crease in flights seems to defy travel in­dus­try pre­dic­tions that Pres­i­dent Trump’s anti-im­mi­grant rhetoric and plans to build a bor­der wall would hurt travel and tourism be­tween the U.S. and Mex­ico. Sim­i­larly, the Trump ad­min­is­tra­tion’s push to undo the North Amer­i­can Free Trade Agree­ment raised con­cerns about a damp­en­ing of en­thu­si­asm for cross-bor­der com­merce.

Dis­cover Los An­ge­les, the tourism board for the re­gion, was so wor­ried that it launched an ad­ver­tis­ing cam­paign in April with the mes­sage “Ev­ery­one is welcome.”

The fears have yet to be borne out.

“More and more peo­ple are will­ing and able to spend their pe­sos and con­vert them into dol­lars,” Marín said.

Vo­laris, an ul­tra-low-cost car­rier based in Mex­ico City, has added nine routes be­tween Mex­ico and the U.S. this year. José Luis Suárez Durán, chief oper­at­ing of­fi­cer for Vo­laris, at­tributes the new routes to a growth in the mid­dle class in Mex­ico and the af­ford­abil­ity of air­line travel. He added that 8% of Vo­laris pas­sen­gers are first­time fliers.

“Once some­body flies, they be­come mid­dle class,” Suárez said.

The mid­dle class has be­come the fastest-grow­ing seg­ment of Mex­ico’s pop­u­la­tion, to­tal­ing 14.6 mil­lion house­holds, or 47% of the na­tion, as of 2015, ac­cord­ing to Euromon­i­tor In­ter­na­tional, the Lon­don-based mar­ket re­search com­pany.

Mex­ico’s mid­dle class, de­fined as a house­hold that earns $15,000 to $45,000 a year, will con­tinue to grow, adding 3.8 mil­lion more house­holds by 2030, Euromon­i­tor pre­dicts.

What’s more, busi­ness ties be­tween Mex­ico and the U.S. have con­tin­ued to grow, 23 years af­ter the North Amer­i­can Free Trade Agree­ment took ef­fect.

That means ex­ec­u­tives and their work­ers need to book flights to in­spect fac­to­ries, meet with busi­ness part­ners and visit fam­i­lies across the bor­der.

Grupo Bimbo, the Mex­ico-based bread pro­ducer, an­nounced last month that it had agreed to buy East Balt Bak­eries in Chicago for $650 mil­lion.

Last year, Mex­i­can di­ary gi­ant Grupo Lala launched a U.S. di­vi­sion in Dal­las, only three months af­ter ac­quir­ing U.S. as­sets from Laguna Dairy for $246 mil­lion.

“The growth of busi­ness com­ing here is go­ing to con­tinue be­cause there re­ally is the po­ten­tial for profit,” said Josie Orosco, ex­ec­u­tive di­rec­tor of the South­west chap­ter of the United States-Mex­ico Cham­ber of Com­merce. “They are mak­ing money. They wouldn’t come here if they weren’t mak­ing money.”

U.S. busi­nesses are also in­vest­ing in Mex­ico.

Gen­eral Mo­tors Co., for in­stance, an­nounced this year that it will move pro­duc­tion of its re­vamped GMC Ter­rain to Mex­ico from Canada.

Tourism has been strong, with vis­its from Mex­ico to the U.S. grow­ing at an av­er­age rate of 5% a year from 2009 to 2016, ac­cord­ing to the U.S. Depart­ment of Com­merce.

Vis­i­tors from Mex­ico ac­counted for nearly 25% of all in­ter­na­tional ar­rivals to the U.S. last year, com­ing close to over­tak­ing Canada as the top source of in­ter­na­tional vis­i­tors.

In Jan­uary, more than 1.5 mil­lion vis­i­tors trav­eled to the U.S. from Mex­ico, a 2.4% in­crease over the same month in 2016, ac­cord­ing to the U.S. Depart­ment of Com­merce’s lat­est travel sta­tis­tics.

Car­los Gar­cia de Alba, the Mex­i­can con­sul gen­eral in Los An­ge­les, said Mex­i­cans are drawn to the U.S. by fam­ily ties.

“The most Mex­i­can place out­side of Mex­ico is Los An­ge­les,” he said dur­ing an event to cel­e­brate Vo­laris’ new routes to Mex­ico. He added that vis­i­tors spend heav­ily on food, trans­porta­tion and ho­tels dur­ing such vis­its.

“The more con­nected Mex­ico is with Los An­ge­les, the bet­ter off we all are.”

Marín, who was ap­pointed trea­surer by Pres­i­dent Ge­orge W. Bush, said the added flights be­tween the U.S. and Mex­ico show that the oc­cu­pant of the White House has lit­tle in­flu­ence on eco­nomic trends in Mex­ico and fam­ily ties be­tween the two coun­tries.

“What is hap­pen­ing in the mar­ket­place has noth­ing to do with who­ever is in power,” she said.

Al­though some travel across the bor­der to shop or visit theme parks in the U.S., many come just to see rel­a­tives. The Latino pop­u­la­tion in the U.S. has sur­passed 56 mil­lion. Cal­i­for­nia and Los An­ge­les County have the largest Latino pop­u­la­tions of any state or county in the na­tion, ac­cord­ing to cen­sus fig­ures.

Air­lines on both sides of the bor­der were given clear­ance to add more flights un­der a bi­lat­eral agree­ment reached last year be­tween the U.S. and Mex­ico to drop re­stric­tions on the num­ber of air­lines that can fly be­tween the two coun­tries.

The deal, which took ef­fect in Au­gust 2016, fol­lowed four years of ne­go­ti­a­tions. It means U.S. and Mex­i­can air­lines are lim­ited only by the num­ber of slots — a sched­uled time to land or take off — avail­able at var­i­ous air­ports.

U.S. and Mex­ico-based car­ri­ers have sched­uled 265,166 flights be­tween the two coun­tries for 2017, a 5% in­crease over the 252,813 flights that were flown last year, ac­cord­ing to Air­port Strat­egy & Mar­ket­ing, an air­line con­sul­tant.

As busi­ness con­nec­tions ex­pand be­tween Mex­ico and the United States, air­lines are likely to add even more routes link­ing Mex­ico and cities in the Mid­west and North­east, said Al­bert Za­panta, chief ex­ec­u­tive of the United States-Mex­ico Cham­ber of Com­merce.

“In the next three years, you will see air­lines fly from Mex­ico to places we never even thought about,” he said.

Za­panta, who flies from Texas to Mex­ico at least once a month, said an­tiMex­i­can rhetoric from the White House won’t kill real money-mak­ing deals.

“At the end of the day,” he said, “you’ll get over it if you want to do busi­ness.”

Scott Olson Getty Images

THIS YEAR, ul­tra-low-cost car­rier Vo­laris, at top, added nine routes be­tween Mex­ico and the U.S. while AeroMex­ico, above, ex­panded its daily non­stop ser­vice be­tween Mon­ter­rey, Mex­ico, and Detroit.

Clau­dio Cruz As­so­ci­ated Press

Vis­i­tors ob­serve a Vo­laris air­plane at the Ci­u­dad de Toluca air­port, Mex­ico, Mon­day, March 13, 2006. To­day the low bud­get air­line ini­ti­ates f lights through­out Mex­ico. (AP Photo/ Clau­dio Cruz)

Glenn Koenig Los An­ge­les Times

VO­LARIS’ op­er­a­tions chief, José Luis Suárez Durán, says 8% of its pa­trons are first-time fliers.

Glenn Koenig Los An­ge­les Times

THE OP­ER­A­TIONS chief at Vo­laris, José Luis Suárez Durán, at­tributes its new routes to growth in Mex­ico’s mid­dle class and the af­ford­abil­ity of air­line travel.

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