Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 9

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 9
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 business. Our growth and the success of our ULCC business model could
stimulate competition in our markets through our competitors’ development of their own ULCC strategies or new market entrants. Any
such competitor may have greater financial resources and access to cheaper sources of capital than we do, which could enable them to operate
their business with a lower cost structure than we can. If these competitors adopt and successfully execute a ULCC business model, we
could be materially adversely affected, including our business, results of operations and financial condition.

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We also face competition from air travel substitutes. On our
domestic routes, we face competition from other transportation alternatives, such as bus or automobile. In addition, technology advancements
may limit the desire for air travel. For example, video teleconferencing and other methods of electronic communication may reduce the
need for in-person communication and add a new dimension of competition to the industry as travelers seek lower cost substitutes for air
travel.

The New Mexicana de Aviación was created on June 15,
2023, as a state-owned company and started operations on December 26, 2023, further increasing our competition. If we are unable to adjust
rapidly in the event the basis of competition in our markets changes, it could have a material adverse effect on our business, results
of operations and financial condition.

The airline industry is heavily impacted by the price and availability
of fuel. Continued volatility in fuel costs or significant disruptions in the supply of fuel could have a material adverse effect on our
business, results of operations and financial condition.

Fuel is a major cost component for airlines and is our largest
operating expense. The cost of fuel accounted for 46%, 38%, and 33% of our total operating costs in 2022, 2023, and 2024, respectively.
As such, our operating results are significantly affected by changes in the cost and availability of fuel. Both the cost and the availability
of fuel are subject to economic, social and political factors and other events occurring throughout the world, which we can neither control
nor accurately predict. Fuel prices have been subject to high volatility, fluctuating substantially over the past several years.

We expect global developments relating to Russia’s
invasion of Ukraine, and resulting export restrictions, as Russia is one of the world’s largest oil exporters, will likely lead
to decreased global supply and increased fuel prices, which effects could be more acute if the participants of