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“Mexico will be different in two years and it’s time to invest”

Interview - March 11, 2013
Miguel Alemán Velasco, founder of the Mexican airline Interjet, former Governor of the State of Veracruz and organiser of the prestigious Mexico Business Summit, offers Upper Reach his analysis on current events in the Aztec country. He recommends taking positions in Mexico given the improvement the country will experience in the short term
MIGUEL ALEMÁN VELASCO, FOUNDER OF THE MEXICAN AIRLINE INTERJET
MIGUEL ALEMÁN VELASCO | FOUNDER OF THE MEXICAN AIRLINE INTERJET
Both national and foreign media have given Mexico a bad image regarding the insecurity in the country. What is your opinion on this?
 
Indeed, in recent years, the news from Mexico has not been flattering. The media, especially national ones, have tried to sell their news stories by exaggerating the situation in this matter and perhaps they have not been aware that it considerably affects the development of the country. Thus, Mexico’s image has been tarnished by the deplorable acts of violence that touch some parts of the country affected by major international criminal interests. It is Mexico’s turn to be the battlefield for a growing worldwide problem. The strategy of the new government has enabled tranquillity to be gradually restored.
 
What deserves attention is the fact that, regardless of the violent acts in very targeted regions, the rest of the country has positive conditions for commerce, tourism and investment. Proof of this is that, despite this security crisis, macroeconomic stability has been maintained and the growth rate of the national GDP is at 3.0% annually, which is higher than what is recorded in several OECD countries.
 
Could you tell us what your start in the aviation industry was like?
 
I studied law at the UNAM (National Autonomous University of Mexico). In July 1957 I became a lawyer but I didn’t like civil or administrative law that much. What I was interested in was criminal, international and corporate law. I was enjoying the latter more, which led me to specialise in international air law. One of the situations which I recall and which prompted my interest in this career was that in those times, international postal services could send a letter from the UK to China without a hitch, whereas people encountered many difficulties if they wanted to make the same journey. There were a lot of requirements: visas, immigration restrictions due to conflicts in the political relations between countries, vaccines, as well as having to make several stopovers for some time before reaching the final destination. One thought that motivated me to choose international air law was the annoyance I had knowing that letters sent by airmail had more rights and facilities than people. 
 
I studied international law at the UNAM and then did postgraduate studies in Europe, especially in Italy where they were quite advanced on the subject. 
 
Interjet was created precisely in the years when the financial crisis was affecting Mexico. They began by offering low-cost flights despite the difficult situation. Can you tell us about the evolution of the aviation industry; how were you able to gain a foothold and grow despite the unfavourable situation?
 
In Mexico today as well as throughout Latin America there has been a huge growth in aviation. Mexico in particular boasts the most extensive network of airports of all Latin America with nearly 100 airports, 60 of which are international. Mexico is eight times larger than the UK, with nearly 2 million square kilometres and the geography of the country sets important challenges for road and rail transport, hence the great potential there is to boost the domestic market of aviation. 
 
Due to the growth in this sector, there will be more interconnectivity and this will be reflected in greater strength to compete in the industry at a global level. At Interjet we offer low cost flights with a friendly service and unparalleled comfort. And as a strategy in this matter, we decided to remove three rows of seats from our Airbus fleet and provide passengers with more space between seats in comparison to other airlines. 
 
We also had the foresight to choose the new aircrafts that fulfilled our needs using less fuel and boasting the most suitable engines to take off from the cities located at high altitudes like Mexico or Toluca. All this helped us to stay at low cost without sacrificing quality.      
 
As President of one of the main airlines in the country and with extensive experience in the sector, what do you see as the challenges facing the industry right now?
 
The challenges that Mexico faces are also being faced by Brazil, Colombia and Panama, which are the countries of Latin America that have had the greatest development in the sector. The secret is to have the ability to partner and to offer the most competitive service and so, give full coverage. Also there are other problems that we face and whereby some airlines have gone out of business: it’s that they invested in things that had nothing to do with aviation. At Interjet we are committed to the mission of being an airline with a high technological quality and offer services at competitive prices. 
 
Interjet has been on the market for seven years and has situated itself as a leader in the sector. Moreover, it has always maintained itself in constant technological innovation. In fact, Interjet was the first airline in Latin America to conduct a biofuel flight. Can you expand your vision further with regards to this project?
 
In meetings with senior executives of several companies from different countries we discussed that if we decided to ally ourselves commercially, we could be more productive than China. Since 1995, Mexico has become more competitive by signing the free trade agreement with the US and Canada, which increased exports towards the two countries. But this new administration of President Enrique Peña Nieto is keen on diversifying and consolidating the markets in Europe and Asia, as well as expanding in Central and South America. 
 
The GDP growth predicted for 2013 is 3.5%. Moreover, public finances have been restructured and have a low fiscal deficit and a small debt. Growth and sustainable stability are backed up by the large number of people who decided to invest in the country. In this sense, our stakes were high because people didn’t have access to low cost flights previously and would sometimes decide to travel on long journeys by bus, on routes that can now be covered in less than two hours. As the first airline to offer this service, we managed to position ourselves as leaders in this sector. 
 
In technology, we sought the best in the world: in Europe, Russia, the United States and even in India. One of my strategies is to have the vision of finding talented professionals in any part of the world and offering them work in my company. Also, if I find a company with growth possibilities, I would take the initiative to invest in it. One of the most important matters for me is fuel and it is one of the products we put all our efforts in to innovate. It may be difficult for planes to have electric engines one day, but what is prudent is to lay more emphasis on biofuel. It’s important to have biofuel refineries worldwide, and enough production in different places so that costs would be profitable due to the offer and demand it would generate. Moreover, increases and decreases in the price of oil would cease to affect the sector. 
 
You have considerable experience in this sector. How do you face the challenges that airlines normally have as the increase in the price of fuel or the decrease in the number of commercial flights in the months with less demand?
 
We complement the low demand of January or February with commercial strategies giving our clients greater ease of mobility and schedules. In any case, we offer an excellent and low cost service that is complemented with unsurpassed safety, making us the preferred choice for customers.   
 
On the issue of fuel costs, there is increased spending in different seasons, above all in winter, as more fuel has to be burnt when it’s colder. We take precautionary measures in this matter and as I said we have the aircrafts that meet our requirements. Additionally most aircrafts are new and this means spending less on fuel. 
 
You are the promoter of the Mexico Business Summit. What benefits does this congress bring to the country?    
              
Mexico Business Summit offers very important benefits for all the participants and for Mexico. In some places as in Davos the big issues that Mexico can offer to the global market are blurred by other more dominant issues of conjuncture affecting the markets or the international system. This is the reason why I have been promoting the Mexico Business Summit for the past 10 years, ever since I was governor of the State of Veracruz. 
 
Economic, political, intellectual and opinion leaders from Mexico and other countries attend this congress. We pose real problems and we try to solve them together. In fact, in the 10 years this forum has been taking place, there has been an important contribution towards creating a vision of a country with growth, stability and distribution of opportunities. In this forum we encourage the issue of Free Trade and we also discuss in a multidisciplinary way the future scenarios that will be decisive for the country’s progress. 
 
From the first year, I brought personalities like former president Clinton as well as business leaders, thinkers and innovators from around the world. Furthermore, it’s worth mentioning that many companies and educational institutions have benefited from building partnerships and establishing links to improve their competitiveness in their different sectors.
 
The Alemán family has contributed to the social development of Mexico. Your father, President Miguel Alemán, helped to create some of the most important social and educational projects in the country like the University City. Can you tell us about the social commitments you have with the country? 

First of all I’m focused on the health sector or environment, granting sponsorships and scholarships. As Governor of Veracruz I eradicated malaria and dengue 100% despite the State having had severe flooding during the year. I also carried out a big promotion for organ donation and promoted organ transplantation campaigns. 
 
On the other hand, in the State of Querétaro I worked with big investors in aeronautics to create a cluster of plants manufacturing aircraft components. These plants range from the assembly passing through the engines to technology and building of helicopters in Mexico. 
 
Mexico and the UK have proposed doubling their bilateral relations for 2015 with an agreement signed during the G-20. Moreover, it is worth noting that President Enrique Peña Nieto chose the UK as one of the first official visits he will make. Can you give us your view of the benefits that this cooperation between the two nations will bring?               
 
The UK is one of the major foreign investors in Mexico. The bilateral relations in commerce, tourism, education and investment is of great interest for both countries. It is obvious that one of the causes of the current problems in Europe is the lack of diversification in external markets as Mexico. Our two nations have a huge potential for mutual benefit and this issue was somewhat forgotten in both countries. 
 
We know that the UK is an important competitor in the pharmaceutical, the metal-mechanic, mining and industrial sectors which may benefit Mexico. We also know the important air traffic of people between the two countries and the big opportunity to strengthen the tourist market between the two nations. 
 
We know that the UK has a very elaborate structure of social services. It also has models of urban development and public transport systems that could be useful implementing to preserve the optimal size of the urban zones of Mexico.
 
”Being the richest man in the cemetery doesn’t matter to me… Going to bed at night saying we’ve done something wonderful… that’s what matters to me”: this statement by Steve Jobs reminded me of your philosophy of work. What can you comment on it?
 
That Steve Jobs was absolutely right. The most important thing is what one does, invents and produces for the benefit of people. There is nothing more rewarding than knowing that I helped people and also that I knew how to share. That enables me to see that I have not wasted my time. Thinking and keeping oneself busy is something that I like, as well as conveying my support for the improvement of people. Initiating the impossible and closing the circle is quite important. Some people believe that leaving money to the family is leaving problems, but leaving a good example instilled with care is something that all my family will be grateful for. 
 
Could you give some advice to those readers of The Times who are considering investing in Mexico?
 
According to my principles I don’t like giving advice. Generally intelligent people don’t need them and dumb people don’t understand them. Business and investment opportunities are all over the country. Nevertheless I may suggest looking more towards Mexico and seeing the efforts made until now and the results obtained preventing organised crime and drugs. There has been a governmental and social effort to prevent and stop it.  
 
Our economy grows and we progress in the implementation of reforms that will further boost our growth. Jobs and schools for youth that didn’t have future or hope previously are being created. All the entrepreneurs of this country we are determined to reinvest in Mexico as much as we can and further boost the growth of Mexico with the valuable projects and serious reforms that the new government has proposed to the Mexicans. If they come to Mexico they will already see the change, but if they come in two years, this country will be a completely different one: this is the time to invest. I live here, my family lives here and we are all sure of this change. Check out this new project in Mexico. Thank you.           
 
 
 
 
       
     

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