By Alfred Rinaldi, Contributing Reporter
RIO DE JANEIRO, BRAZIL – After a warning that the government may open domestic flights to foreign airlines during the 2014 World Cup in order to fight price-gouging by Brazilian airlines, the industry has reacted with some doubt. Despite the best intentions, foreign airlines are unlikely to step in according to a senior American Airlines executive.
Speaking exclusively to The Rio Times, Dilson Verçosa, American Airlines‘ Director of Sales and Marketing in Brazil pointed to the obstacles likely to prevent companies like his operating domestic Brazilian flights in June and July:
“This will be very difficult to make happen, as foreign carriers have their own schedule, policies and sometimes Union rules involved.” Instead of counting on foreign competition, Mr. Verçosa suggested that a discussion between national carriers might be the appropriate way forward.
The comment is a reaction to a warning given by Gleisi Hoffmann, Brazil’s Chefe da Casa Civil (Chief of Staff to the Presidency). In an interview with the Folha de S. Paulo, Hoffmann had threatened to open up internal flights to foreign competition during the World Cup should there be “abusive” fare rises.
The move comes amid mounting concerns that flights between match cities could quadruple in cost during the competition. A case study by The Rio Times shows that flights between São Paulo, Manaus, Belo Horizonte, Recife, Salvador, São Paulo and Rio de Janeiro would cost at least R$5,117 (US$2,150) on the cheapest available flights with the Brazilian carrier Gol. This compares to just R$1,580 (US$664) a week after the Cup has ended.
The itinerary is based on the hypothetical scenario of an England supporter following their team all the way to the final at Rio de Janeiro’s Maracanã stadium. Currently, the only way for passengers to minimize the cost of flights is to exploit the price differential between carriers.
A recent check has revealed that fares can vary by up to 176 percent between competing airlines TAM, Gol, Azul and Avianca. Surface travel by coach may also be an option where distances are short.
“There is no decision yet”, Mrs. Hoffmann told the Folha de S. Paulo, “but obviously, if there is abuse […] we will not fail to evaluate all possibilities, including opening the market [to foreign carriers]. This could be done quickly, it is viable, it could be done by means of a provisional measure.”
In their reaction, domestic Brazilian airlines defended themselves against the insinuation of abusive practices. The Associação Brasileira das Empresas Aéreas (Brazilian Association of Airlines) stated that proposals to schedule more flights have been submitted to the Agência Nacional de Aviação Civil (National Civil Aviation Agency), with approval now pending. This, according to the Association, should help to reduce fare rises.
The Association also demanded that the government play its part in resolving the crisis. “This does not only entail an effort on the part of airlines. There also needs to be an improvement in airport infrastructure, as well as a revision of the taxes charged on aviation fuel, which are thirty percent higher than elsewhere.”
In regard to the threat of international competition, the International Air Transport Association (IATA), felt it was unrealistic on such short notice. “The logistics of it are complicated,” says IATA’s president in Brazil, Carlos Ebner. “We’re not talking about buses here. The airlines would need at least three or four months in order to get organized.”