From the Austin American-Statesman
http://www.statesman.com/business/co...20aerobus.html
VIVA AEROBUS COMES TO AUSTIN
Discount Mexican airline hopes its no-frills formula flies in Austin
By Jeremy Schwartz
INTERNATIONAL STAFF
Sunday, April 20, 2008
MONTERREY, Nuevo Len, Mexico — Viva Aerobus' Monterrey terminal has a decidedly warehouse feel: Traditional ticket counters are nowhere to be found, exposed piping crawls along the cavernous ceiling, and some passengers in a waiting area short on seating lean against the wall before their flights.
The bare-bones surroundings reflect the airline's no-frills philosophy, which it is bringing to Austin on May 1, along with inexpensive tickets for daily flights to Cancún and Monterrey.
The airline already has made headlines by advertising $9.99 tickets from Austin to Cancún and Monterrey (the seats were quickly snatched up, but with taxes and fees the total round-trip cost was closer to $130).
Along with cheap seats come a number of trade-offs: no 1-800 telephone number, no free pretzels, no jetway bridges and what some might consider extreme luggage restrictions.
The Mexican discounter, which began operating in 2006, modeled itself on Ryanair, the Irish discount airline that has helped transform Europe's travel industry. Viva Aerobus is co-owned by the Ryan family and the Mexican bus company IAMSA.
Austin marks Viva Aerobus' entry into the U.S. market. Airline executives say they were drawn by local officials' willingness to convert an old National Guard warehouse at Austin-Bergstrom International Airport into a terminal similar to the airline's base in Monterrey.
"As in Monterrey, Austin got the concept," said Shane Nolan, a senior consultant for Viva Aerobus. "You don't need a marble palace to go through to get to your flight."
Nolan said Austin, which now has just one regular international flight, an Aeroméxico daily to Mexico City, offered better opportunity than cities such as Houston or San Antonio, which already have several routes to Mexico.
The company likes the potential customer base of Central Texas's growing Hispanic population, but it is also betting that its low fares will entice folks outside the Austin area to make the drive to the airport to catch a flight.
Travelers are already jumping at the opportunity for a cheap flight from Austin to Cancún's powdery white sand beaches. Viva Aerobus will fly 148-seat Boeing 737-300 airliners in and out of Austin.
According to the airline, about half of the seats on summer flights to Cancún have been sold, including all the specially priced $9.99 tickets. A midweek July round-trip ticket cost $262 on a recent Internet fare search.
Demand has been so robust for the flights to Cancún that Viva Aerobus is considering Austin flights to other Mexican resort destinations.
Monterrey flights have been less popular, spurring the airline to offer so-called free flights, in which passengers pay only for taxes and fees ($117 round trip). "We want to encourage people to sample the city," Nolan said.
The airline is also hoping to entice northern Mexicans who like to shop in the United States to use the flight. Viva Aerobus advertising teams have already descended on the outlet malls in San Marcos, hoping to persuade Mexican shoppers to fly instead of drive for their shopping binges.
One of the basic premises behind Viva Aerobus is getting people who normally take the bus to try flying.
First-time fliers make up an important segment of the company's growth, officials said. More than 1.3 million passengers flew the airline in 2007 and the company expects more than 2.4 million in 2008. The airline plans to increase its fleet of six airplanes to 11 by the end of the year.
Despite the airline's rosy outlook, it hasn't had a trouble-free road in Mexico.
Mexico's consumer watchdog agency publicly chastised the company for misleading advertising for "1 peso" flights that actually cost much more with taxes and fees included. Passengers have complained on Internet message boards of last-minute scheduling changes.
Nolan said such changes have become increasingly rare and were the result of servicing the company's small fleet, resulting in the need to adjust schedules when planes weren't ready in time.
But for many Mexican passengers, the airline has offered new opportunities.
Romulo Hernandez Diaz said Viva Aerobus' low fares convinced him to take his family on a vacation to Cancún, the first time the family has flown for holiday.
Hernandez scored round-trip tickets for about $60, including taxes and fees, from Monterrey. The plane tickets, Hernandez said, were cheaper than the bus ride from his native San Luis Potosí to Monterrey, which were about $75 round trip.
"My brother told us about the promotion so we decided to come here on vacation," Hernandez said. "It's not a luxury flight, but it's not too bad."
To offer such low prices, Viva Aerobus takes the low-cost methods of discounters like Southwest Airlines to another level. On a recent Sunday evening in Monterrey, many passengers in line clutched their wallets, preparing to pay for excess luggage. Viva Aerobus allows one checked bag up to 55 pounds. Extra bags cost another $10.
Like Southwest, Viva Aerobus has no assigned seating, but for a little less than $4 passengers can buy priority seating, allowing them to board first. Families with young children also get to board early.
With no jetways, passengers walk onto the tarmac and take stairs up to the plane's door.
Viva Aerobus squeezes the most out of its planes, aiming for turnaround times of about 25 minutes, compared to the 45 minutes or an hour that most airlines spend at the gate. The result is that the carrier's planes can fly eight to 10 routes a day. Another result, some passengers complain, is that the planes aren't as clean as those flown by other airlines.
Once in the air, passengers must pay if they get hungry or thirsty. Sodas and bags of peanuts cost a dollar, prepackaged sandwiches cost $2.50, and a beer is $2.50.
But most passengers are willing to forgo the comparative luxuries of larger airlines in exchange for cheaper tickets.
"Paying for a Coke isn't a big deal, and besides, most airlines have terrible food anyways," said Monica Arsuaga, a Monterrey merchant. "The ticket is much cheaper than anything else out there. Before, the airlines would abuse us; they would charge $400 for a round-trip ticket."
Budget airlines began flying in Mexico in 2005 and have since helped to bring down prices in what was once a closed market dominated by two formerly state-owned airlines, Aeroméxico and Mexicana.
Fueled by discount carriers such as Volaris and Interjet, Mexico's airline industry grew 24 percent in 2007.
But the future of ultra-no-frills airlines may be more tenuous in the United States.
Earlier this month, Skybus, a Columbus, Ohio-based airline that also made headlines for its $10 tickets, folded after just 10 months in operation. The airline blamed rising fuel costs and a slowing economy for its demise.
A more hopeful sign for Viva Aerobus is Las Vegas-based Allegiant Airlines, whose investors include the family behind Ryanair. That discounter reported a first-quarter passenger surge of 57 percent.
Tim Sieber, vice president of the Boyd Group, an aviation consulting firm, said the prospects should be good for a low-fare airline along the U.S.-Mexico border, given the ties between south-central Texas and Mexico. Much as low fare airlines cut into Greyhound's business in the U.S., he said, a low-fare cross-border flight has the potential to tap the market served by buses in the borderlands.
And with the weakening dollar turning many tourists off of Europe, Mexico will continue to be a strong pull for American vacationers.
"I think there will be traffic both ways," Sieber said. "I think it's a market that has potential. It will take the right carrier to execute it."
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