Gol, Latam and Azul will increase airfare prices this month

The conflict in Ukraine, responsible for skyrocketing the price of oil worldwide, which ended up raising the price of fuel in Brazil, reached airline tickets.

THE sheet found that Gol, Latam and Azul are preparing an increase in the value of air tickets this March. The measure takes airlines at a delicate moment, interrupting the recovery movement in domestic tourism that started in the last quarter of last year.

Airlines were one of the sectors most impacted by Covid-19, because of the health restrictions that prevented or limited travel, in addition to the expansion of the home office, which caused the demand of the corporate market to collapse – business trips represented a third of the revenue of the companies. airlines.

“The entire industry, not just Latam, responds to this type of crisis with two measures: the first is an increase in tariffs and the second is a reduction in supply. sheet Jerome Cadier, president of Latam Brasil.

According to him, the movement to increase tariffs has been going on since January, because the year started with higher oil prices, which was accentuated in the last two weeks because of the war.

“We will see, yes, higher tariffs and this will slow down the recovery of the sector, which was already walking after the very strong impact of last year, because of the pandemic”, says Cadier. “We are now postponing the complete recovery of the number of flights”.

The company is adjusting the offer, mainly from the second quarter. “As for tariffs, we still don’t know how much the increase will be, because it will depend on the level at which the price of oil will stop.”

Around 2:30 pm this Friday (11), a barrel of Brent oil was quoted at US$ 112.11, up 2.78%. But on the 6th, it reached close to US$ 140 a barrel.

In the words of a top executive in the airline industry, no one yet knows how long the war will last and how long oil will stay at this level, which makes forecasts volatile.

There is still a pent-up demand for leisure travel, and fares have not risen significantly so far. But, according to him, the increase in the tariff price is “inevitable”.

Competitor Gol is in a period of silence, because it discloses the results of the fourth quarter of 2021 next Monday (14). But sheet found that the company intends to change the price of tariffs this month, as it considers it “unsustainable” to operate at the current levels of oil prices. And he believes that this should impact demand.

Sought, Azul confirmed that high oil prices should affect air fares later this month. Through its press office, the company argued that the impact of the conflict on the price of oil also strongly affected QAV (aviation kerosene).

According to Azul, the current situation is much worse than it was 14 years ago, when the value of a barrel of oil had already exceeded this level. “At that time, the value of the dollar was much lower than the current R$ 5, it was quoted below R$ 2. This math is very impactful for the airline industry, especially for Brazilian companies, which have several costs in dollars and one of the fuels most expensive in the world,” he said in a statement.

Route expansion is postponed

In a statement, Abear (Brazilian Association of Airlines) points out that the quotation close to US$ 140 is the highest in the country since 2008. “This puts even more pressure on the already high price of the QAV [querosene de aviação]which in 2021 reached its highest level, accumulating a rise of 76.2%, surpassing the variations of diesel (+56%), gasoline (+42.4%) and cooking gas (+36%), “says the association , citing data from the ANP (National Agency for Petroleum, Natural Gas and Biofuels).

“It is important to highlight that, historically, fuel accounts for more than a third of the sector’s costs, which in turn have a share of more than 50% indexed to the dollar. In this scenario, Abear informs that the consequent increase in QAV in the short and medium term may slow the resumption of air operations and make routes with higher costs unfeasible”, he says.

According to Latam Brasil, the launch of new destinations, which should take place until June, was postponed to the third quarter of the year, due to the high price of aviation kerosene.

They are: Bauru (SP), Montes Claros (MG), Cascavel (PR), Caxias do Sul (RS), Juiz de Fora (MG) and Presidente Prudente (SP). The start of operations in Sinop (MT) is scheduled for May.

Azul said in a note that “the continuity of this scenario could postpone a more vigorous resumption of the offer of flights in the country, as well as the inclusion of new cities and new routes and frequencies between airports that already have air service.”

According to Abear, the sector accumulates a loss of R$ 37.4 billion, from 2016 to the third quarter of 2021, which impacts cargo transport and the entire tourism chain. “Abear defends that emergency measures to contain prices that may be taken during the duration of the conflict include the QAV, thus alleviating the crisis in the sector”, he said.