Every year, my mother-in-law stays with us for a month or two when the weather in her home state of Connecticut is at its coldest and wildest. During this last visit she decided to go to Mexico City. Devout bargain hunter that she is, Madre (as my mother-in-law likes to be called) started searching for cheap flights. The best she could come up with was an inconvenient flight on Continental that cost $385 plus fees. The rest of the flights — on US Airways, American, Mexicana, Aeroméxico, Alaska, United, and Northwest — were between $400 and $725. All had at least one stop in Phoenix, Houston, Los Angeles, or Los Cabos. Some featured turboprop connector flights. Madre hates turboprops. On a whim, she researched flights from Tijuana. She found nonstop, round-trip flights from between $102 and $250 on Mexican airlines.
Madre had stumbled into an ongoing price war fueled by the relatively new low-cost Mexican airlines Volaris, Avolar, and Alma de México. The price war has Mexico’s “Big Three” airlines — Mexicana, Aeroméxico, and Aviacsa — reeling and is pushing travel agencies in Tijuana further down the road to extinction.
On a cool day in March, Guillermo Gallegos, bundled up and sniffling due to a late-winter cold, walks into his Zona Rio travel agency and sits behind a sleek metal desk. He’s full faced with drooping eyelids and shoulders. A Vandyke beard conceals his double chin. He’s decked out in black slacks and a purple dress shirt. His two-toned gold watch and Italian loafers indicate affluence. But, like other tourism-based businesses in Tijuana, affluence for travel agencies is a thing of the past. “In the last month,” Gallegos says, “eight travel agencies have closed in Tijuana.”
Those closings were not isolated incidents, Gallegos says, but part of a trend that started four years ago, when “there were 135 travel agencies in Tijuana. Now there are about 70.”
Gallegos, who has worked as a travel agent for three decades, continues, “Travel in Mexico has changed, and the change has been prompted by the new low-cost airlines, Volaris, Avolar, and Alma. The changes benefit the consumer and negatively affect the other airlines in Mexico, which have a different format. For example, Aviacsa, out of 20 flights a day that it used to have from Tijuana, only 4 are left because they’ve lost so much of the market. With the costs so low in other airlines, Aviacsa can’t compete. Aeroméxico and Mexicana have cut flights too.”
Volaris began operations in February 2006. It has 30 daily departures from Tijuana. Alma, which specializes in short-hop flights, started four months later and has 10 departures from Tijuana per day. Tijuana-based Avolar first flew in September 2005 and sends 17 flights out of Tijuana every day. How much cheaper are these low-cost airlines? “For example,” Gallegos says, “during the week you can get [one-way] flights from Tijuana to Guadalajara for 1300 pesos on the low-cost airlines. Mexicana and Aeroméxico will cost you about 1000 pesos more, which is about $90 to $100 more each way.”
Gallegos says it’s “the structure of the low-cost airlines” that allows them to fly the same routes as Mexico’s Big Three at a much lower rate. “For example, Aeroméxico, Aviacsa, and Mexicana have their own maintenance facilities. They maintain their own planes. The traditional full-service airlines have a much larger personnel structure: reservations staff, services at the airport, maintenance. The low-cost airlines contract everything outside. So there’s no union they have to deal with. The full-service airlines give flight miles and things like that. The low-cost airlines don’t do that.”
Food-and-beverage service is also severely reduced, sometimes nonexistent, on the low-cost airlines. Their low prices have created many first-time flyers from the classes of Mexicans who have traditionally ridden the bus around the country. But because of deep cuts in the number of flights that Aeroméxico, Aviacsa, and Mexicana offer from Tijuana, Gallego says, “When you look at total passengers, it hasn’t been a huge increase. The major companies have cut back on flights in and out of Tijuana. The low-cost airlines have taken over. But passenger-wise, it really isn’t a huge increase, maybe 7 or 8 percent more.”
That 7 or 8 percent doesn’t amount to a 7 or 8 percent increase in business for Gallegos and his fellow travel agents. For one thing, the ticket prices, upon which their commissions are based, are lower. For another, “The low-cost airlines won’t give you the commission that Aeroméxico, Aviacsa, and Mexicana give.”
Depending on volume of tickets an agent sells and a few other factors, the Big Three airlines pay commissions of up to 12 percent. “The low-cost airlines,” Gallegos says, “pay no more than 6 percent.”
Carlos Cruz’s Turibaja travel agency sits in a strip mall in the Otay Mesa area of Tijuana, directly under the flight path east of Tijuana International Airport. The office is about half the size of an average 7-Eleven. Four desks, each bearing a computer at which a busy agent works, stand cleverly arranged in the tight office. The 38-year-old Cruz sits at the one farthest from the door. He’s dressed in a pressed gray dress shirt covered with a maroon V-neck sweater. He says my mother-in-law was smart to look to Tijuana to get a good flight deal to Mexico City. “Let me show you.” He taps away on his computer keyboard for a minute or two. “From San Diego to Mexico City, the cheapest price I’m getting is $500 round trip on Aeroméxico or Delta Airlines. And from Tijuana to Mexico City, it’s around $250 to $260 — basically 50 percent off — on Volaris and Avolar. Of course, Volaris is actually to Toluca [about an hour outside of Mexico City]. But they give you a free shuttle from Toluca to Mexico City.
“And there are other destinations that used to be very expensive that are now a lot cheaper. From Tijuana to Tapachula, Chiapas — all the way down near Guatemala — the price was around $300 one way. Now it’s $150 each way, 50 percent less.”
Despite the low prices causing what he estimates to be a 20 percent increase in passengers on intra-Mexico flights, Cruz says, “The travel-agency industry has been badly affected, because even though there has been a big increase in passengers, the customers themselves have more resources to buy tickets on their own, particularly the Internet. And the fares are low, so my commission is low.”
Asked how he survives while half the travel agencies in Tijuana have closed in the last four years, Cruz laughs. “I can’t give away my secrets,” he says, and adds, when the last chuckle subsides, “Travel agencies must modernize themselves. The ones that haven’t updated themselves and added all of the modern technology and Internet connections are going to fail.”