Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 22

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 22
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 of Contents  

Because the airline industry is characterized by high fixed
costs and relatively elastic revenues, airlines cannot quickly reduce their costs to respond to shortfalls in expected revenue.

The airline industry is characterized by low gross profit
margins, high fixed costs and revenues that generally exhibit substantially greater elasticity than costs. The operating costs of each
flight do not vary significantly with the number of transported passengers and, therefore, a relatively small change in the number of
passengers, fare pricing or traffic mix could have a significant effect on operating and financial results. These fixed costs cannot be
adjusted quickly to respond to changes in revenues and a shortfall from expected revenue levels could have a material adverse effect on
our results of operations and financial condition.

Increases in insurance costs and/or significant reductions in
coverage would harm our business, results of operations and financial condition.

Following the terrorist attacks in the United States on September
11, 2001 (the “ September 11 terrorist attacks”), premiums for insurance against aircraft damage and liability to third parties
increased substantially, and insurers could reduce their coverage or increase their premiums even further in the event of additional terrorist
attacks, hijackings, wars, seizures/confiscations, airline crashes or other events adversely affecting the airline industry. In the future,
certain aviation insurance could become unaffordable, unavailable or available only for reduced amounts of coverage that are insufficient
to comply with the levels of insurance coverage required by aircraft lenders and lessors or applicable government regulations. Events
such as the conflict between Russia and Ukraine, or any future aircraft emergency, accident or similar incident even if it does not involve
our airline, could increase insurance premiums or reduce coverage scope.

Governments in other countries have agreed to indemnify airlines
for liabilities that they might incur from terrorist attacks or provide low-cost insurance for terrorism risks. In that respect, the Mexican
government provided certain loans to help airlines face increases in aircraft insurance right after the September 11 terrorist attacks.
However, the Mexican government has not indicated an intention to provide similar benefits now or at any time in the future.

A general increase in the cost of insurance coverage, may
result in both higher fares and a decreased demand for air travel generally, which could materially and negatively affect our business,
results of operations and financial condition.

Downturns in the airline industry caused by terrorist attacks
or war, which may alter travel behavior or increase costs, may adversely affect our business, results of operations and financial condition.

Demand for air transportation may be adversely affected by