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Looking forward to US recovery but failing to reform

Close ties with the US have helped protect Mexico from the problems faced by other countries in the region. However, its future prosperity depends on its being able to learn to stand on its own two feet. President Vicente Fox faces a tough struggle to push through tax reforms.

On a winter evening at the Ciudad Juárez golf club on the US-Mexican border, the champagne corks are popping. At a gathering of travel agents and business executives Mexican airline start-up Lineas Aereas Azteca is celebrating the opening of its route to the northern Mexican city and the unveiling of its fourth aircraft, a Boeing 737-700.


The scene is so lavish you would not know the Mexican airline industry is facing its worst crisis in years or that the Mexican economy is in recession. In the face of plummeting demand, Mexico's airlines have been kept flying largely thanks to a $100 million government aid package. But in a sign of Mexico's economic resilience, Azteca is embarking on a highly ambitious expansion drive, even if at the outset that means half-empty flights.


By as early as the end of next year Azteca aims to increase its share of the 18 million-strong domestic market from 3.6% to 15%, despite passenger loads of just 30% last November. The company plans to be running 40 aircraft by the end of 2006. Azteca says it could become Mexico's number one carrier by the end of the decade, challenging Aeroméxico and Mexicana, which today control 80% of the market.



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