Market Overview
2008 was a difficult year for the aviation industry in both domestic and international markets. The first semester experienced volatility and high oil prices with negative effects on airline operations, flight schedules, end-user costs, and on planned future projects. Previous sector forecasts were not realized and had to be reviewed to show decreased revenues and income losses.
Commercial aviation received a second hit with the global financial crisis, forcing companies to pursue the trend of mergers and bankruptcies. In Mexico, four low-cost carriers suspended activities: Aerocalifornia, Alma de Mexico, Avolar and Lineas Aereas Azteca. One more low-cost carrier, Aviacsa, is facing difficulties as well. During the last quarter of 2008, low-cost carriers operated in a more challenging business environment after experiencing tremendous success during the previous two years (2006-2007).
Nevertheless, Mexico still has the largest aircraft fleet in Latin America, both in commercial and executive aviation. With a network of 85 airports (58 international and 27 domestic) and more than 1,300 airfields, the aviation industry reported 55.3 million passengers (pax) and 635,777 cargo tons transported in 2007. For 2008, the figures are less positive: 54.6 million pax estimated and 532, 514 cargo tons, which represents a decline of 1.3% and 15% respectively.
During the period January-November 2008, the airports with the higher passenger’s traffic were: Mexico City (26.2 million pax), Cancun (11.5 million), Guadalajara (7.1 million) and Monterrey (3.6 million). Nevertheless, the second semester of 2009 might be a better period of time for a recovery in the industry. Financial markets will be impacted by U.S. resources in key industries, as well as by the application of public investment in Mexico through the National Infrastructure Plan.
In 2008, the total estimated market value of airports and ground support equipment was roughly USD$17.9 billion, showing a paltry 5% increase over 2007 figures. In the last three years, U.S. suppliers have lost market share due to new foreign competitors (Brazil, EU, France) and their aggressive export strategies.
The economic outlook for 2009 is conservative with anticipated decreased growth. The Mexican economy will likely witness a slight contraction. It is expected that the aviation sector will reduce its growth until the second half of the year, after the global economic rescue plans (U.S., EU and Japan) are in effect and international markets positively react with more confidence.
Best Prospects/Services
More passengers are flying, a greater number of airlines are operating, and airports are upgrading and expanding both physically and operationally. Subsequently, opportunities are available in every aspect of the aviation industry. When the major contributors to the aviation industry (i.e. airlines, airports, etc.) grow, so do those smaller to mid-sized firms that supply the inputs to these larger industry contributors.
Best prospects for products and services in the aviation /aerospace industry include:
- Airplanes parts and spare parts
- Remodeling services
- MRO and FBO services
- Ground support equipment
- Security systems
- Identification systems
- Access controls
- Luggage checking systems
Market Opportunities
The primary project to increase infrastructure in aviation is to construct three entirely new commercial airports in the Mayan Riviera, Mar de Cortes and Ensenada. Nevertheless, thirty-one existing airports will be substantially expanded, including Toluca, Puebla, Cancun, San Jose del Cabo, Loreto, Nuevo Leon, Monterrey, Guadalajara and Puerto Vallarta. Sixteen of these projects have either started or will start no later than late 2008. An additional two more expansion projects and a new airport plan (in Merida) are currently being studied. Of the USD $5.5B in investment required by the aviation portion of the plan, over 45% is to come from the private sector and the remainder from the Mexican government.
Trade Events in Mexico
Aero Expo 2009: May 18 - 20, 2009 / The Fairmont Acapulco Princess, Mexico
Aero Expo is the most important aviation and aerospace exhibition
in Mexico. In its 2009 edition, it will return to its original
location: Acapulco, State of Guerrero. Aero Expo will take place
in a new convention and exhibit center near the Acapulco airport.
At the same time, a static aircraft exhibition will be offered
for international and domestic visitors.
Aero Expo is a biennial exhibition. In 2007 it was visited by
more than 8,000 people, hosted 190 exhibitors and had a total
surface area of up to 10,000 sq. meters. As a U.S. company, take
the opportunity to join us at our U.S. Pavilion! Only ten
companies can be accommodated! Please contact us to
participate in Aero Expo 2009.
For more information, please contact: Silvia Cardenas, U.S. Commercial Service Mexico
City
Resources
Ministry of Communications and Transportation
The National Infrastructure Plan
Airports of Mexico Informational Website
Aeropuertos y Servicios Auxiliares (ASA)
Aeropuertos del Sureste (ASUR)
Grupo Aeroportuario Centro Norte (OMA)
Market Research
Air Cargo Transportation
Mexican air cargo transport is growing at a rate 8% per year (2007) which makes it the second most important Latin American market in terms of international air cargo traffic and first in terms of domestic air cargo traffic. The Mexican air cargo industry has the potential to position itself as a logistic tool of international importance due to its geographical location of having a northern border with the U.S., a western coast that allows easy access to Asia, an eastern coast with access to Europe/Africa and a southern border with Central and South America.
The current global economic conditions represent a challenge for the aviation industry and air cargo transportation as well. Some long-term growth forecasts have been revised and adjusted downward to reflex the potential for a global recession, which may lead to a temporary reduction of competitive airfares both for passenger and for cargo operations in Mexico and worldwide. Mexico has recently experienced new trends in the aviation industry, such as the presence of private airport groups and regional and low-cost airlines. However, passenger and business trips are not going to be the only ones affected by the increase in air transportation’s operational costs. Air cargo transportation will have to resist increasing costs by developing new market strategies and innovations to overcome the months of difficulties in the near future and to retain the growth trends of the last few years.
Aerospace Sector Activities
Mexico is reaching for the moon in its aerospace industry. With 125 firms and 16,500 workers, the industry is continuing to grow. During the 1990s, Mexico moved on and off the top twenty U.S. aerospace export markets chart. However in the 21st century, Mexico has been increasing their aerospace imports from the United States. In 2006, Mexican businesses have doubled their purchase of U.S. aerospace products from the previous year, which is a jump from 17th to 11th place on the list.
Puebla Airport Expansion Project
As part of the strategy to decentralize the operations of the Mexico City International Airport, the Mexican Federal Government has designed a Metropolitan System of Airports using four peripheral airports: Toluca, Puebla, Cuernavaca and Querétaro. To respond to the high demand expected in the near future, Puebla Airport authorities are undertaking an ambitious expansion project.
Airport and Ground Support Equipment 2007
The Mexican government is developeing a Strategic Plan to decentralize the operations of the Mexico City Airport, through a Metropolitan System of Airports integrated by the peripheral airports inToluca, Puebla, Cuernavaca and Querétaro. Other airports will also receive investment to increase capacity and improve cargo and passenger services. At the same time, most Mexican airlines have programs to renovate or increase their fleets.
Mexico: Aviation Industry Opportunities
Mexico is no new client to American aviation exporters. From 1990 to 2006, Mexico ranked as a top 30 aerospace market for U.S. exporters – a key, ever-advancing sector within aviation. During this period, export sales from the U.S. to Mexico grew by an annual average of 23.87%. Moreover, this relationship has only been strengthened through the years. In 1998, the Mexican government began privatizing operations within the national airport system – a privatization policy that aided in the aviation industry’s remarkable growth. Today, Mexico has the most developed airport infrastructure in Latin America. As well, Mexico City serves as the single most important airport in the region, capable of servicing more than 32 million passengers annually and 900 flights daily. A pattern is noticeable in Mexico: more passengers are flying, a greater number of airlines are operating, and airports are upgrading and expanding both physically and operationally. In short, Mexican aviation offers opportunities to nearly all who comprise this immense industry.
Further Information, Comments or Questions
If you wish to write us regarding these reports, please contact Silvia Cardenas, Trade Specialist of the US Commercial Service Mexico City Office.