Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Brazil's Anac Announces Fare Freedom To Europe/US  
User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Posted (5 years 5 months 1 week 4 days 23 hours ago) and read 2849 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Brazil use to be a country with minimum fares established to all markets.

Since 2008, ANAC begin to easy this procedure, allowing airlines to offer discounts on routes connecting Brazil to South American countries. Thanks in part to this, and to the global economy crise for sure, as well as more flights, it's possible now to get fares like US$ 400 to SCL and US$ 299 to LIM, while in the past, was almost impossible to get a US$ 650 ticket to such markets.
Of course markets like CCS and BOG, more restrict in terms of capacity, continues to show higher fares.

Two days ago ANAC just announce they will also release airlines to offer during the next 3 months, discounts of up to 20% (IIRC, Europe nowadays minumum fare is US$ 849 and United States US$ 899).

This means that AA, DL, UA and CO can offer now tickets from Brazil (US-Brazil is already cheaper) for around US$ 720 while Europe can be sold for US$ 680.

After three months, airlines will be authorized to offer discounts up to 50% of the current minimum fare.

Effective November, airlines will be free to charge any fare on any international flight.

* Africa, Middle East and Asia are also included, but there was no space on the topic

This measure will for sure allow airlines that now offer extra revenue to travel agents, to advertise lower fares and increase their load factors. Airlines like BA and TP already said that they can use the lower fares, however they do not expect immediate fare reductions.


New York + Rio de Janeiro = One of the best combinations !
11 replies: All unread, jump to last
 
User currently offlineHardiwv From Brazil, joined Oct 2004, 8780 posts, RR: 50
Reply 1, posted (5 years 5 months 1 week 4 days 23 hours ago) and read 2843 times:

This is excellent news for Brazil. Fares sold in Brazil are extremely expensive as compared to US and Europe. For example, KLM is currently selling US destinations for as low as EUR150, while this practice would be illegal in Brazil.

This will enhance competition and the winners will be travelers, especially at the lower end of yields. It could also drive up loads for some routes which can now market at lower fares attracting more passengers.

Rgs,


User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Reply 2, posted (5 years 5 months 1 week 4 days 23 hours ago) and read 2829 times:
AIRLINERS.NET CREW
FORUM MODERATOR



Quoting Hardiwv (Reply 1):
This will enhance competition and the winners will be travelers, especially at the lower end of yields. It could also drive up loads for some routes which can now market at lower fares attracting more passengers

Agree, and we may see bigger planes with lower costs being planned to fly to Brazil. The only question is how TAM will react, and more and more, they will need to provide a good service to passengers connecting as foreign airlines will focus more on their gateways (São Paulo and Rio).



New York + Rio de Janeiro = One of the best combinations !
User currently offlineHardiwv From Brazil, joined Oct 2004, 8780 posts, RR: 50
Reply 3, posted (5 years 5 months 1 week 4 days 23 hours ago) and read 2808 times:



Quoting LipeGIG (Reply 2):
Agree, and we may see bigger planes with lower costs being planned to fly to Brazil. The only question is how TAM will react, and more and more, they will need to provide a good service to passengers connecting as foreign airlines will focus more on their gateways (São Paulo and Rio).

This is an important point, it will scale up density which will also enhance the flight performance. I think the new rule is good news for airlines, especially considering the current scenario. It also shows the importance of hubs for airline development.

Rgs,


User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Reply 4, posted (5 years 5 months 1 week 4 days 22 hours ago) and read 2768 times:
AIRLINERS.NET CREW
FORUM MODERATOR



Quoting Hardiwv (Reply 3):
This is an important point, it will scale up density which will also enhance the flight performance. I think the new rule is good news for airlines, especially considering the current scenario. It also shows the importance of hubs for airline development.

I disagree about the hub, because TAM in fact will be the one getting the big hit (i.e. they fight for the same market foreign airlines will mostly focus). No one will be able to offer MAD-REC for US$ 450 ! In this case, it's São Paulo that will receive more deep discount fares because it's where airlines mostly fly to.
That's why i believe TAM will need to protect their hub-feed markets like POA, CWB, BSB, FLN and even GIG/SDU, because foreign airlines will focus to offer more seats and in order not to lose ground and market share, TAM will need to charge less for O&D and will need the "protected" markets to get better fares and yields.
For me it's sure DL for example can put a 744 on ATL-GRU (as well as a bigger plane on ATL-GIG) with lower fares for Brazilians purchasing GRU/GIG-ATL-XXX-ATL-GRU/GIG. But they can't offer such deals for VIX (because the connection is limited, their own flights are not!), POA, CWB...
Agree with my point of view ?



New York + Rio de Janeiro = One of the best combinations !
User currently offlineHardiwv From Brazil, joined Oct 2004, 8780 posts, RR: 50
Reply 5, posted (5 years 5 months 1 week 4 days 21 hours ago) and read 2728 times:



Quoting LipeGIG (Reply 4):
I disagree about the hub, because TAM in fact will be the one getting the big hit (i.e. they fight for the same market foreign airlines will mostly focus). No one will be able to offer MAD-REC for US$ 450 ! In this case, it's São Paulo that will receive more deep discount fares because it's where airlines mostly fly to.

This is not right. TAM has a position in GRU and GIG which no other airline has, with ample feeder network. Your reasoning about TAM position in GRU/GIG is the same any airline has in its own market which exposes KLM to competition in AMS, IB to competiton in MAD, BA in LHR, etc. The advantage of the hub lies with the airline which operates the feeder traffic there and not the other way around. This is why GRU and GIG (as TAM hubs) will actually reinforce TAM under fare competition and not the contrary.

The hub principle in fare-liberalised markets apply, see the examples I gave you. LHR is the most evident example where BA has extreme competition on fare level by other airlines, but the fact LHR is its homemarket, hub, feed network and major O&D serves to protect BA operations and not the contrary.

Rgs,


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 6, posted (5 years 5 months 1 week 4 days 21 hours ago) and read 2699 times:

This is great news for Brazilian consumers and travelers. It is high time they enjoy the fruits of competition that exists in much of the rest of the world.

There are challenges and risks as well as benefits for carriers from both the US and other countries as well as for Brazilian carriers. Brazilian carriers do have the ability to protect their share because of their hubs, esp. at GRU, and US/other foreign carriers can hub in their own countries. However, AA and DL will have an advantage because of their new ex-GIG/GRU flights throughout Brazil - and interest in those destinations will continue to grow as market driven instead of government regulated fares become more prominent.

The ability to upgauge will be important for carriers to protect market share. JJ obviously will be able to put its new 77Ws to good use since new slots are not being added. Of the US carriers, DL probably has the best potential to upgrade thanks to NW's 744s and 330s. CO also can upgrade all of its services to 764s which might be justified even with the increase in capacity thanks to the new route awards.

Of course, the profitability of Brazilian routes might go down but they probably still have a long way to go before they are no longer at the profit levels necessary to justify future investment. Nonetheless, Brazilian consumers and travelers to/from Brazil will benefit from ticket prices more in line with other S. American destinations.


User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Reply 7, posted (5 years 5 months 1 week 4 days 21 hours ago) and read 2696 times:
AIRLINERS.NET CREW
FORUM MODERATOR



Quoting Hardiwv (Reply 5):
This is not right. TAM has a position in GRU and GIG which no other airline has, with ample feeder network

Yes, but you probably agree that you don't need feed for JFK-GRU and LIS-GIG for example. Will be easy to a foreign airline to access the key markets.

Quoting Hardiwv (Reply 5):
TAM position in GRU/GIG is the same any airline has in its own market which exposes KLM to competition in AMS, IB to competiton in MAD, BA in LHR, etc

Yes, that's the point. But KL is not protected till now in AMS. TAM was protected.



New York + Rio de Janeiro = One of the best combinations !
User currently offlineHardiwv From Brazil, joined Oct 2004, 8780 posts, RR: 50
Reply 8, posted (5 years 5 months 1 week 4 days 21 hours ago) and read 2689 times:



Quoting WorldTraveler (Reply 6):
Brazilian carriers do have the ability to protect their share because of their hubs, esp. at GRU, and US/other foreign carriers can hub in their own countries. However, AA and DL will have an advantage because of their new ex-GIG/GRU flights throughout Brazil

100% correct.

Quoting LipeGIG (Reply 7):
Yes, but you probably agree that you don't need feed for JFK-GRU and LIS-GIG for example. Will be easy to a foreign airline to access the key markets.

Indeed, these are O&D routes which means airlines which do not have scale and therefore have less scope for competition will probably have more difficulties such is the case of JAL and DL in JFK-GRU againts TAM and AA which will operate inter-bub and are better protected and therefore can act more agressively.

Quoting LipeGIG (Reply 7):
Yes, that's the point. But KL is not protected till now in AMS. TAM was protected.

The result was KL dropping fares, but still holding strong to its hub.

Rgs,


User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Reply 9, posted (5 years 5 months 1 week 4 days 21 hours ago) and read 2684 times:
AIRLINERS.NET CREW
FORUM MODERATOR



Quoting Hardiwv (Reply 8):
The result was KL dropping fares, but still holding strong to its hub.

As well as will be the result with JJ. So you agree they got the hit on the O&D.

Quoting Hardiwv (Reply 8):
Indeed, these are O&D routes which means airlines which do not have scale and therefore have less scope for competition will probably have more difficulties such is the case of JAL and DL in JFK-GRU againts TAM and AA which will operate inter-bub and are better protected and therefore can act more agressively.

DL will be able to lower its fares (which in fact are around US$ 530 for JFK-GRU-JFK) which will obligate TAM to lower fares also. But for sure, TAM will continue to charge a premium for CWB-GRU-JFK, as DL will never be in condition to match the fare. But as i mentioned, the feed markets protect the Hub, up to the time a competitor come to your secondary market.



New York + Rio de Janeiro = One of the best combinations !
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 10, posted (5 years 5 months 1 week 4 days 20 hours ago) and read 2642 times:



Quoting Hardiwv (Reply 8):
Indeed, these are O&D routes which means airlines which do not have scale and therefore have less scope for competition will probably have more difficulties such is the case of JAL and DL in JFK-GRU againts TAM and AA which will operate inter-bub and are better protected and therefore can act more agressively.

DL has as much or more feed at JFK than AA does. Lower fares will indeed help DL as the junion player in the market by allowing them to generate more traffic. Also, DL did in fact plan to upgrade JFK-GRU to larger equipment and could still do that (and likely will in the northern winter when larger aircraft are not needed to Europe) if demand justifies doing so.

Quoting LipeGIG (Reply 9):
But for sure, TAM will continue to charge a premium for CWB-GRU-JFK, as DL will never be in condition to match the fare.

I fully expect that the south of Brazil will get attention from the US carriers since it is the only region of Brazil that hasn't yet benefitted from the liberalization of the Brazil-US treaty. And you know I am interested in seeing that happen.  Smile


User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Reply 11, posted (5 years 5 months 1 week 4 days 18 hours ago) and read 2579 times:
AIRLINERS.NET CREW
FORUM MODERATOR



Quoting WorldTraveler (Reply 10):
I fully expect that the south of Brazil will get attention from the US carriers since it is the only region of Brazil that hasn't yet benefitted from the liberalization of the Brazil-US treaty. And you know I am interested in seeing that happen

I know and agree with you. The south of Brazil is closer to 15% of the country's GDP and have NO service to both North America or Europe. For sure one of the largest VFR markets for Europe (Germany, Swiss, Italy mainly) as well as a good market for leisure.
But they need to increase runways in Curitiba (CWB) and Porto Alegre (POA)



New York + Rio de Janeiro = One of the best combinations !
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Cities In The US With 747 Service To Europe. posted Fri Sep 14 2007 05:57:03 by Mudboy
US Air To Europe Question posted Sun Jun 17 2007 11:31:41 by LIPZ
BA Plan Premium Class Services From US To Europe posted Fri Jun 15 2007 18:12:58 by VV701
Transiting From US To Europe Via YYZ posted Mon Oct 16 2006 20:48:09 by AF022
US West Coast To Europe Non-Stop posted Sat Jul 29 2006 02:15:37 by StarGoldLHR
Sidetrip To Europe Is Cheaper Than Direct US! posted Mon Jun 12 2006 20:51:01 by Sampa737
US Airlines To Europe Right Before Deregulation posted Wed Feb 22 2006 19:29:01 by Kkfla737
US Airways 757's To Europe. Questions... posted Sat Feb 11 2006 15:40:39 by Gilesdavies
US Airways 757's To Europe? posted Tue Dec 20 2005 14:00:08 by Gilesdavies
US Air Flights To Europe Out Of PHL posted Sat Jul 9 2005 02:37:11 by LXsaab2000