U.S. airlines cut flights to Mexico beach areas

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Cancun beach
Photo Credit: Shutterstock

Citing weak demand, some airlines have begun reducing service from the U.S. to Mexico's beach destinations.

In United's earnings call this month, chief commercial officer Andrew Nocella said flights to Mexico were seeing "pretty severe demand weakness due to increased supply and travel warnings" from the U.S. State Department.

Delta president Glen Hauenstein called out Mexico's beach locales specifically in that carrier's recent earnings call. 

"We are reducing capacity to match demand in the impacted markets," Hauenstein said. 

American, too, cited weakness in "Mexico pleasure markets" in its earnings call late last week. 

Data provided by the air travel intelligence company OAG reveals that airlines are offering a combined 4.94 million seats from the U.S. to the beach resort stalwarts Cancun, Puerto Vallarta and Los Cabos this summer, up 2.4% from last year. For the upcoming winter, carriers are thus far scheduled to offer 3.66 million seats from the U.S. to those destinations, down 8.3% from this past winter's total of 3.99 million. 

However, OAG analyst John Grant suggested that airlines might add more capacity over the next month or so as they finalize their February and March schedules. 

Flight searches for Mexican beach destinations by potential U.S. travelers have also diminished, according to an analysis from Hopper, an app that searches for bargain flight fares. Adjusting for seasonality, the share of U.S. flight searches that featured a cross-section of 12 key airports serving Mexican beach destinations dropped 17% through the first and second quarter of this year, said Hopper chief data scientist Patrick Surry. 

Fears about safety, coupled with the long stream of political news coverage relating to the U.S-Mexico border, could be driving the drop, Surry said. The State Department's travel advisory level for Mexico is level two, "Exercise Increased Caution." The worst rating is level 4, "Do Not Travel."

The advisory says that Mexico's overall rating is due to crime and gives several individual Mexican states a level-4 rating, but it also makes a point of stating that there are no restrictions in place for the major tourist markets, including the Cabo region, Puerto Vallarta, Cancun and the Riviera Maya.

"The Caribbean feels a little safer to many Americans," Surry said. "Media coverage about Mexico emphasizes the countries' differences. It's not seen as being as easy as going to the Caribbean."

Moves by airlines to decrease lift to Mexican beach destinations come on the heels of a year in which capacity into those markets from the U.S. increased markedly. That increase was driven in part by the more liberal aviation agreement that the countries finalized in 2016, which did away with limits on the number of airlines that could serve any city pair. 

The number of seats airlines flew from the U.S to Cancun, Puerto Vallarta and Los Cabos was up 14% year-over-year last summer, according to OAG. In Los Cabos, arrivals were up 20%, said Rodrigo Esponda, managing director of the Los Cabos Tourism Board. 

OAG's Grant pointed out that Spirit and Frontier have been adding capacity throughout the Caribbean and Mexico over the past couple of years, driving down the prices the more expensive airlines can charge. Spirit is flying 44% more seats to the three largest Mexico beach destinations this summer than it did two years ago, while Frontier is flying 53% more seats. 

In an email, the Mexico Tourism Board acknowledged that there has been a "slight decrease" in overall visitation from the U.S. this year, but it didn't provide specific information on U.S. tourism to beach destinations. The decline notwithstanding, overall international tourism to Mexico was up 9.6% through May, the agency said. 

"Generally, Mexico's beach destinations are doing well; in addition to this, we're seeing a significant increase in bookings to cities like Mexico City, Guadalajara, Merida and Leon," the tourism board said. 

Tour operators and the Los Cabos Tourism Board also said that the weakness that airlines are reporting in the Mexico resort market isn't being felt universally. Revenue so far this year is up 17% at Journey Mexico, a tour operator that specializes in the luxury market, said Lillian Aviles, the company's director of business development. 

That figure reflects a broad array of Mexico itineraries, both along the coast and in cultural centers such as Mexico City. But Journey Mexico's revenue for the rental of villas, 95% of which are located in beach destinations, are up 201% this year. While that increase is in part a reflection of the company's expanded investment in villas, it also demonstrates continued strong demand, Aviles said. 

Similarly, Pleasant Holidays said luxury market bookings to Mexico beach destinations remain strong, as do its group bookings. 

"Los Cabos in particular is a favorite choice for the luxury travel market," Amy Terada, the company's vice president of marketing, said in an email. 

But Terada said that, like the airlines, Pleasant Holidays has seen changes in Mexico beach vacation booking patterns over the past year, including a double-digit decline in the nonluxury independent travel space. 

Los Cabos Tourism's Esponda said the southern Baja Peninsula destination is not experiencing the same level of growth from the U.S. market that it did in 2017, when the new U.S.-Mexico aviation agreement led to a surge in air service. Still, he said that through June, the number of U.S. passengers arriving at Los Cabos airport was up 3.3% year-over-year. 

"It has been very steady, the performance from the U.S. to Los Cabos," he said. 

For the remainder of the year, Esponda is positively bullish, saying Los Cabos Tourism predicts that for the full year, U.S arrivals will finish up 6% in 2018 compared with 2017. 

New hotels, events such as the Los Cabos Film Festival and the Extreme Sailing Series, coupled with a successful public-private initiative in the region to curb crime will fuel the growth, he said.

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