Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 77

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4
Chunk 77
---
iciencies, concentration of operations in higher
cost airports, and multiple classes of services. Other examples of legacy carriers in the Latin American market include Avianca, Copa,
and LATAM.

  52  

  Table of Contents  

Low-cost carriers typically fly direct, point-to-point flights,
which tends to improve aircraft and crew scheduling efficiency. In addition, low-cost carriers often serve major markets through secondary,
lower cost airports in the same regions as major population centers. Many low-cost carriers only provide a single-class of service, thereby
increasing the number of seats on each flight and avoiding the significant and incremental cost of offering premium-class services. Finally,
low-cost carriers tend to operate fleets with only one or two aircraft families at most, in order to maximize the utilization of flight
crews across the fleet, improve aircraft scheduling flexibility and minimize inventory and aircraft maintenance costs. The Mexican market,
which has a large population of VFR and leisure travelers, has seen demand for these low-cost carriers expand in recent years.

In recent years, many traditional legacy network carriers
globally have undergone significant financial restructuring, including ceasing operations or merging and consolidating with one another.
These restructurings have allowed legacy carriers to reduce high labor costs, restructure debt, modify or terminate pension plans and
generally reduce their cost structure. This has resulted in improved workforce flexibility and reduced costs while simultaneously improving
product offerings similar to those of other low-cost carriers. Furthermore, many of the legacy carriers have made these improvements while
still maintaining their expansive route networks, alliances and frequent flier programs. One result of the restructuring of the network
carriers is that the difference in the cost structures, and the competitive advantage previously enjoyed by low-cost airlines, has somewhat
diminished. The ULCC business model involves, among other things, intense focus on low cost, efficient asset utilization, unbundled revenue
sources aside from the basic fare with multiple products and services offered for additional fees. Globally, ULCCs business models include
Allegiant and Frontier in the United States, Ryanair and Wizz in Europe, and AirAsia in Asia.

ULCCs are able to achieve low-cost operations due to highly
efficient and uniform fleets with high density seating and single aisle configurations. Additionally, ULCCs provide extremely low fares
to customers in order to stimulate market demand and generate high aircraft utilization rates. With high aircraft utilization rates, ULCCs
are able to generate substantial ancillary revenues through the offering of additional products and services