United states securities and exchange commission

Source: DGAC

Our international growth strategy has focused on targeting markets in the United States with large Mexican and Mexican-American communities in order to stimulate VFR demand and leisure traffic in those markets. Approximately 68% of international passengers in Mexico fly to the United States, making the United States the largest international destination for air passengers in Mexico. All of the major U.S. legacy carriers fly to and from Mexico, but at a higher cost than low-cost carriers. We have learned that many Mexicans in the United States purchase airline tickets for family members living in Mexico to fly to the United States to visit. For this reason, we focus our international routes on U.S. cities with significant Mexican and Mexican-American communities. These cities include Chicago, Los Angeles, San Antonio and San Francisco-Oakland, with Mexicans and Mexican-Americans in each of them amounting to 1.5 million, 4.6 million, 0.9 million and 0.7 million, respectively, according to PEW Research Hispanic Center based on U.S. Census Bureau data.

In 2016, the Mexican low-cost and ULCCs (Interjet, VivaAerobus and Volaris) together maintained 63.5% of the domestic market, based on passenger flight segments, according to the DGAC. The following table sets forth the historical market shares on domestic routes, based on passenger flight segments, of each major market participant for each of the periods indicated:

 

Market Share (1) Domestic		2006				2007				2008				2009				2010				2011					2012								2013								2014								2015								2016
Volaris (2)			4.04	%			7.94	%			12.16	%			12.82	%			14.79	%			18.05	%					20.48		%						23.15		%						23.31		%						24.76		%						27.50		%
Grupo Aeroméxico			32.91	%			28.58	%			28.01	%			32.28	%			36.20	%			40.10	%					37.73		%						35.74		%						36.08		%						33.81		%						31.19		%
Grupo Mexicana (3)			26.99	%			24.07	%			24.05	%			27.16	%			18.55	%			—						—								—								—								—								—
Interjet (4)			5.65	%			7.04	%			10.83	%			12.71	%			16.35	%			24.90	%					23.92		%						24.46		%						23.75		%						24.61		%						21.69		%
VivaAerobus (5)			0.30	%			4.44	%			4.83	%			5.83	%			8.85	%			11.54	%					12.53		%						12.25		%						11.85		%						11.74		%						14.30		%

Source: DGAC

(1)	Market share is obtained by dividing each airline’s number of passengers by the total number of passengers for all airlines for the period indicated.
(2)	Began operations in March 2006.
(3)	Ceased operations in August 2010.
(4)	Began operations in December 2005.
(5)	Began operations in November 2006.