Interjet: A Series of Unfortunate Events

It is no coincidence that after jumping into a 15% growth in terms of passenger fluency, Mexican budget carrier Interjet, has undergone a series of negative and quite unfortunate events. At the beginning of this year, the airline carried a total of 1,309,147 passengers a month; a huge increase in comparison to last year.

It was then evident that the airline experienced a domino effect of unexpected and surprising events. While on top of the mountain and receiving an overloaded influx of passengers, and clearly in the need of 100% of their employees to satisfy the inflated demand, Interjet was (and continues) to do well. Mexico's flag carrier, AeroMexico, decided to act upon the matter in a quite dirty but well-strategically planned move. The airline persuaded members of the Interjet family to become part of the Mexican flag carrier. The company opened approximately 30 spots for captains and co-pilots and more than 60 for flight attendants in order to join the “Eagle Knight's family”. It was in a matter of days that out of the 710 flight attendants working for Interjet, around 65 of them were gone including more than 55 captains. As a result of excess demand and lack of supply, the company had to either cancel or delay around 4% of their flights which affected more than 5,000 clients. A sincere apology was offered given the inconveniences that the matter may have caused. Apart from apologizing, Interjet managed to hold its well positioned spot by offering a plentiful of alternatives in order to transport the passengers to their final destinations, including offering free tickets to those affected. The delay and cancellation of Interjet flights lead other carriers in the country such as Volaris and VivaAerobus to absorb the 1.53% of the more than 1 million passengers transported by Interjet, thus leading such companies to take a clear benefit out of the situation.

The second domino regards an embargo held accountable by the Treasury Department of Mexico as a corrective measure given a supposedly fiscal debt from 2013 to 2017. 10% of the total revenues were confiscated in order to cover the amount owed. Interjet counterattacked by arguing the unconstitutionality of the action and the danger in which the airline was positioned by the measure taken. A provisional suspension of the corrective measure was granted given that “the percentage to confiscate, risked both the commercial and economic stability of the company because of the irregularity in which the revenues are obtained throughout the year and given the business model which focuses on high seasons to compensate low ones.”

The department isn't the only party Interjet owes money to, however. The action taken by the department may have prompted the parties with which Interjet holds debt, to urge the carrier to take the same measures for them. This is a clear advantage to those airlines who are direct competitors – those who we have touched on in this article. The matter was solved last August, after Interjet was completely exempted to repay any debt to the department.

The third and last domino was caused by the well know financial media company Bloomberg. According to them, Interjet had been declared under a “technical insolvency,” for which the airline quickly communicated the falsity of the asseveration and even mentioned about proceeding legally against this media company given the irresponsible dissemination of information. Legally, a “technical insolvency” cannot be self-declared by a company, instead, a judge is the only one with the capacity to do so and after a long and careful procedure in which it is proved that the company is not in its capacity to comply with the required payments.

As a recovery measure from the evidently unsteady year that the company went through, it has decided to renew its commercial offer by updating its logistical structure and flight itineraries and making sure its fleet operates as efficiently as possible to benefit clients and commercial partners.

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