S\u00e3o Paulo \u2013 One of the targets of global aviation is to cut costs and increase profitability. That is also taking place in Brazil, but with one difference. Whereas airlines in Europe, Japan and the United States are struggling to survive, Brazilian ones are seeing their demand and revenues rise. According to figures disclosed on Thursday (21) by the National Civil Aviation Agency (Anac), the demand for flights on the domestic market rose 19.54% in June this year as against June 2010. The sector is becoming more and more dominated by airlines TAM and Gol. Each dominating 40% of the domestic market. <\/p>\n
A professor at the Business Administration, Economics and Accountancy College (FEA) of the University of S\u00e3o Paulo (USP), economist Gilson Gar\u00f3falo, however, stated that if concentration is good for the companies, it is not for customers. \u201cTo survive, we can see companies merging. That is also taking place here. Mergers generate economy of scale for companies. When they merge, instead of having two maintenance centres, they keep just one. For passengers, concentration is very bad,\u201d she said.<\/p>\n
Consumers have few price, time and even quality options. If companies do not have power to determine their fuel costs, for example, they cut where they can: reducing on-board services, quality of cabin staff, reduce space between seats and, in some cases, even charge for the on-board meal.<\/p>\n
Gar\u00f3falo sees no change in this low cost strategy in coming years, but observes that there are companies that explore opportunities that have not yet attracted TAM and Gol. \u201cSmaller companies may arise, offering better services, and that has been taking place in Brazil with Trip, Avianca and Azul. It (Azul) operated in a very intelligent way by concentrating its flights in Viracopos (Campinas) and supplying the entire country from there. It also acted in an intelligent manner as it also understood the difficult access to the capital,\u201d he said. The airport is 96 kilometres away from the city of S\u00e3o Paulo so the company offers free transport there.<\/p>\n
Both Gar\u00f3falo and the technical director at the National Union of Air Companies (Snea), captain Ronaldo Jenkins, stated that market concentration in the aviation sector is a global tendency. But the air transport professor at the Federal University of Rio de Janeiro (UFRJ), Respicio Espirito Santo, stated that it is not just the tendency that influences market concentration. \u201cBrazil needs entrepreneurship and intelligence to explore the regional market well. With the amateur behaviour and folly of many businessmen and the chronic lack of resources, regional aviation is collecting many more bankruptcies than it should,\u201d he said.<\/p>\n
Specialists recall that apart from aerial concentration, those who fly in Brazil face another problem, which is not a global tendency: lack of infrastructure. The same Anac study that shows growth of 19.54% in demand for domestic flights shows that average occupancy rate of aircraft was 68.1%. In June 2010, the average occupancy of aircraft was 64.09%. \u201cAnac figures show growth of approximately 20% in the domestic market. The world did not grow at that rate. But aircraft occupancy rates are approximately 68%. It could be 80%. You cannot make use of the market potential. There is no planning,\u201d said Jenkins.<\/p>\n
Espirito Santo stated that the Brazilian market is not yet consolidated and should grow more. He observes that the country has tourist potential and greater buying power in the middle and upper classes. \u201cBrazil still can (and should) grow much in domestic and international air travel. However, there are barriers and they are not small. I would stress two: the low capacity, service quality and chronic inefficiency of Brazilian airport infrastructure; and the resistance and slow modernisation of concepts and practices for optimisation of air traffic control in Brazil,\u201d he observed.<\/p>\n
Gar\u00f3falo stated that the growing market opens opportunities for other airports to be explored, apart from Congonhas, Cumbica, Santos Dumont and Gale\u00e3o, the two former in S\u00e3o Paulo and the two latter in Rio de Janeiro, the two main metropolises in Brazil.<\/p>\n
\u201cIn the interior there is market, but companies do not find it rational [to use it]. A flight that leaves Manaus (in Amazonas) and heads to Asuncion (the Paraguayan capital) with a stop in S\u00e3o Paulo is not rational. The interior of S\u00e3o Paulo has great potential, [cities] like Ribeir\u00e3o Preto and Presidente Prudente. Does anyone doubt that? They could be hubs for air traffic,\u201d he said. He recalls that Portuguese airline TAP successfully operates flights to Lisbon from capitals like Fortaleza, in Cear\u00e1, and Belo Horizonte, in Minas Gerais.<\/p>\n
To Jenkins, the demand is very great and offer does not grow at the same rate. \u201cThe country does not grow due to limitations,\u201d he said. The executive added that if schedules are complied with up to 2013 and 2014, Brazilian airport infrastructure will be \u201ca little less saturated than today,\u201d though it would not be ideal. Gar\u00f3falo does not believe that queues and hardship to board will reduce in the near future. \u201cThe glamour that used to be involved in flying has now become tiresome,\u201d he explained.<\/p>\n
*Translated by Mark Ament<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
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