The Entrepreneurial Journey of Carlos Muñoz: From Vueling to Volotea
Few figures in the airline industry can rival the entrepreneurial journey of Carlos Muñoz. In less than a decade, Muñoz has successfully launched two of Europe’s most prominent airlines. After selling his first venture, Vueling, to Iberia—now part of the International Airlines Group—he founded Volotea in 2012, a low-cost carrier designed to connect Europe’s smaller cities. Muñoz’s journey is not just about numbers; it’s a story of vision, resilience, and a keen understanding of market dynamics.
From Oranges to Aircraft
Remarkably, Muñoz’s foray into aviation came later in life. Born into an agribusiness family in southeastern Spain, he initially believed his career would follow in the family tradition. However, a transformative two-year MBA program at Harvard Business School shifted his trajectory. “There have been several generations of entrepreneurs in my family, so I guess I’ve got a bit of this in my DNA as well,” Muñoz reflected. It was during his time in Boston and later in California, working for McKinsey, that he caught the entrepreneurial bug, inspired by friends who had already launched their own companies.
While at McKinsey, Muñoz encountered the low-cost airline model for the first time during a consulting project. “I was struck by its simplicity, clarity, and transformational power,” he recalled. This initial exposure laid the groundwork for his future endeavors in the airline industry.
Launching Vueling
The pivotal moment came in late 2002 when a group of airline pilots approached Muñoz with a proposal to start a new airline operating between Spain and the UK. Although skeptical about certain aspects of the project, Muñoz was intrigued. After a period of contemplation, he gathered the pilots in early 2003 and urged them to invest in what would eventually become Vueling. However, when it came time to act, the pilots hesitated, leaving Muñoz to pursue the venture alone.
Recognizing the need for industry expertise, Muñoz partnered with Lázaro Ros and secured backing from various investors, including Apax Partners and JetBlue. Vueling launched in the summer of 2004 and quickly gained traction, preparing for an IPO within two and a half years. However, the competitive landscape shifted when Iberia launched Clickair, a direct competitor. The ensuing price war led to the merger of Vueling and Clickair, a move Muñoz initially opposed but later acknowledged as beneficial for Vueling’s growth.
Exit Vueling, Enter Volotea
After Iberia acquired Vueling, Muñoz didn’t remain idle for long. He began conceptualizing Volotea, though securing funding proved challenging. Unlike Vueling, which attracted investors in six months, Muñoz spent two years raising capital for Volotea. Eventually, he secured backing from CCMP, a US private equity fund, and Volotea took to the skies in April 2012.
Volotea’s unique proposition was to connect small and medium-sized cities in Europe, bypassing major hub airports. Muñoz is careful to avoid labeling Volotea as a “regional airline,” emphasizing that it operates on a different model than traditional feeder airlines. “We are neither a feeder, nor do we serve the large point-to-point markets as the large low-cost carriers do,” he explained.
An Opportunistic Fleet Choice
One of the most surprising aspects of Volotea’s strategy was its choice of aircraft: the Boeing 717. This legacy model, designed by McDonnell Douglas, was nearing obsolescence by the time Volotea launched. However, this presented an opportunity for Muñoz to acquire the aircraft at favorable prices. “Southwest Airlines had just acquired AirTran and found itself with a bunch of B717s that it had no use for,” Muñoz explained. This quick negotiation allowed Volotea to start operations with a suitable fleet.
As Volotea expanded, the limitations of the B717 became apparent, leading to a transition to the Airbus A319 and later the A320. This shift was accelerated by the COVID-19 pandemic, which prompted a reevaluation of fleet strategy.
Choosing Your Niche Wisely
Muñoz’s decision to up-gauge the fleet raised questions about whether the A320 was too large for Volotea’s markets. However, he pointed out that the average seat capacity of competitors like Ryanair and easyJet had also increased, reducing the differential. “We have become the specialists,” he asserted, highlighting Volotea’s focus on underserved routes.
Volotea has successfully reduced its seasonal concentration, moving from a peak summer revenue share of 57% in its first year to just 33% today. This strategic shift has allowed the airline to operate routes year-round, catering to leisure and visiting friends and relatives (VFR) traffic, which now constitutes a significant portion of its business.
On the European Competitive Landscape
Muñoz shared insights into the competitive landscape of the European airline industry, noting the ongoing consolidation among larger carriers. He expressed surprise at the lack of consolidation in the low-cost segment, despite speculation about potential mergers. “We prefer to be the head of the mouse rather than the tail of a lion,” he stated, emphasizing Volotea’s focus on niche markets rather than competing directly with larger airlines.
Strategic partnerships have also played a role in Volotea’s growth. Collaborations with airlines like Eurowings and Aegean Airlines have allowed Volotea to enhance its network and expand its reach without directly competing with legacy carriers.
What’s Next for Volotea?
Looking ahead, Muñoz is optimistic about Volotea’s future. While he acknowledged the potential for opportunistic expansion into new markets, he emphasized that the airline would primarily focus on its core markets: Spain, France, Italy, Greece, and Germany. The long-discussed IPO remains on the table, with Muñoz stating that the airline is “IPO-ready” but waiting for the right market conditions.
As Volotea continues to grow, Muñoz confirmed plans for fleet up-gauging, with the A320 gradually replacing the remaining A319s. He also highlighted the airline’s commitment to sustainability, including investments in electric aviation and a focus on Sustainable Aviation Fuel (SAF) as a key component for decarbonizing aviation in the near term.
Carlos Muñoz’s journey from agribusiness to aviation entrepreneur exemplifies the power of vision, adaptability, and strategic thinking in navigating the complexities of the airline industry. His story is a testament to the potential for innovation and growth in a rapidly evolving market.
