Higher Fares Drop Air Travel to Acapulco by 40%

(Acapulco, AN 24 November) The Acapulco chapter of the Mexican Association of Travel Agents has calculated a 40% drop in air travel to the port, mainly from Mexico City and other national points of origin, due to the massive increases in air fares caused by the exit of Mexicana from the market. The capacity has been partially compensated by more flights by competitor Aero Mexico and other carriers, but the prices have increased substantially. The airlines deny that the pricing comes from monopoly power, but rather reflect the need to operate profitably.

The travel agents are skeptical. They see the turmoil as orchestrated by a rightist government, bent on “privatizing” air carriers. First the private competitors drive public companies like Mexicana out of business with predatory fares, and then they raise rates and add capacity. Eventually businessmen with friends in high places are allowed to buy up the assets of the former state enterprises in private deals at bargain-basement prices. The travel agents point to the privatization of Tel-Mex into the hands of Carlos Slim as the model for such a strategy.

It is hard to judge objectively whether the current air travel turmoil is orchestrated, as the cynics suspect, or whether it is just a reflection of chronic trouble in a capital-intense sector of a capital-scarce economy. The certainty is that fewer tourists arrive in Acapulco by air because the price of an airplane ticket is now several times more expensive than a trip in one of the large passenger buses.