Q&A with Juan Carlos Zuazua, CEO of VivaAerobus

Why did VivaAerobus choose to introduce a new aircraft type to its portfolio? Doesn’t it go against traditional ultra low-cost carrier (ULCC) discipline?

After analyzing the market and the A320 Family, the most rational decision for VivaAerobus was to introduce the A321neo to our fleet, for several reasons:

1. A ULCC like VivaAerobus depends on the commitment to cost reduction and efficiency. Adding a 240-seat aircraft enables us to reach this objective.

2. High amounts of congestion at the Mexico City airport, and VivaAerobus’ average of 90 percent plus load factor, leads us to go for the bigger A321neo.

Therefore, acquiring a larger aircraft will allow us to improve upon our growth objectives.

VivaAerobus has grown exponentially and successfully. What has driven that growth, and what sets you apart from the rest of the LCC market in Mexico?

The main reason why VivaAerobus has been able to grow is because it has the lowest cost structure in the Americas. Period. VivaArobus is also one of the lowest cost structures in the world. That is one of the reasons why we are able to offer very low fares. And it is by having low fares that we are able to stimulate demand, thereby reaching new passengers.

The second important function of our success formula is that we have a very high portion of ancillary revenue, which constitutes over 40% of our business. This allows us to keep fares even lower. The ancillary revenue is an elastic part of our revenue strategy, as it allows us to try different products and innovate constantly.

These are the two reasons why VivaAerobus has grown and how it has set us apart from the rest of the LCCs in Mexico.

How do you see the airline in the next five years?

The first objective for the next five years is to continue reducing our costs. The A321 decision was mainly focused on this: reducing costs.

The second objective is to continue growing our ancillary revenue stream and our non-core revenue. We want to improve the products and services related to the travel experience not only during, but also before and after. For example, local transportation to the city, transportation to another city, tours, attractions… everything related to the passenger’s journey. These ancillary initiatives allow us to increase our revenue and keep offering the lowest fares in the market.

Lastly, the third important objective is to continue “simplyflying”—our customer journey. Simplyflying provides attention to the passenger when they buy the ticket, when they are checking-in, boarding, taking the flight, picking up their luggage, etc. There are a lot of opportunities along a passenger’s journey, and this is what we are going to be working on.