Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 81

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4
Chunk 81
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, code-sharing relationships, frequent flier programs and
redemption opportunities. The airline industry is particularly susceptible to price discounting because once a flight is scheduled, airlines
incur only nominal incremental costs to provide service to passengers occupying otherwise unsold seats. The expenses of a scheduled aircraft
flight do not vary significantly with the number of passengers carried, and, as a result, a relatively small change in the number of passengers
or in pricing can have a disproportionate effect on an airline’s operating and financial results. Price competition occurs on a
market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and frequent flier initiatives.
Airlines typically use discount fares and other promotions to stimulate traffic during normally slower travel periods
to generate cash flow and to maximize revenue per ASM. The prevalence of discount fares can be particularly acute when an airline has
excess capacity and/ or is under financial pressure to sell tickets.

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  Table of Contents  

In Mexico, the United States and the Central and South American
countries in which we operate, the scheduled passenger service market consists of three principal groups of travelers: business travelers,
leisure travelers, and VFR travelers. Leisure travelers and VFR travelers typically place most of their emphasis on lower fares, whereas
business travelers, in addition to lower fares, typically also place a high emphasis on flight frequency, scheduling flexibility, breadth
of network and service enhancements, including loyalty programs and airport lounges.

VFR and leisure passengers travel for a number of reasons,
including social visits and vacation travel. We believe that VFR and leisure traffic are the most important components of the traffic
in the markets we target and serve and are important contributors to our non-passenger revenue production. We estimate that VFR and leisure
passengers represent a significant percentage of our total passenger volume. As part of our route development strategy, we target markets
that will likely appeal to VFR and leisure travelers at price points that were previously not available. This approach allows us to stimulate
demand in new markets by catering to VFR and leisure travelers’ preferences.

Domestic passenger traffic in Mexico has shown consistent
growth, with a CAGR of 6.3% from 2009 to 2024, based on data from the AFAC. Similarly, international passenger volumes have increased
at a CAGR of 6.0% over the same period. The following table sets forth the historical passenger volumes on international and domestic
routes in Mexico from 2009 to