Brazil's Brazilian Association of Airlines (ABEAR) warned (10-Oct-2013) "it is not possible to maintain the downward trend in fares in Brazil, which caused prices to fall 43% between 2002 and 2012" due to rising costs and the rising USD. ABEAR president Eduardo Sanovicz noted Brazilian carriers have made efforts to reduce costs such as adopting more fuel-efficient aircraft and improving procedures and management, but said "these measures have reached their limit". Mr Sanovicz said the industry is now dependent on actors such as the Government to provide relief at key pressure points, including "the heavy taxation of the sector and the price of fuel", which he noted was "20% more expensive than the world average". Mr Sanovicz continued, "The high taxes made sense when air transport was restricted to a small number of people", but noted air transport has now become "mass transit" and that since passenger numbers have tripled, taxes should be reduced by a third. Mr Sanovicz added, "The industry is not asking for help. It is asking for objective conditions to continue to grow and contribute to building a modern country." [more - original PR - Portuguese]
Brazil ABEAR: Not possible to maintain downward trend in airfare, now up to the gov't for relief
You may also be interested in the following articles...
CAPA Airport Finance & Privatisation Review 2015/2016. The day has come for PPPs
CAPA's 170-page "Global Airport Finance and Privatisation review 2016 – the day has come for the PPP" is is the fourth in a series of CAPA reports on airport privatisation and investment published since Jan-2015.
During that time a number of deals have been concluded and announced across the world though their volume remains below the levels prior to 2008. One of the key trends is an identifiable increase in activity in public-private partnerships (PPPs) globally.
In a world where obtaining a viable return on investment remains a difficult task it is evident that investor sentiment once again favours long term transport infrastructure. Airports are among the well tested models for investment.
Qatar Airways buys 10% of oneworld's LATAM, to add to its 15% in IAG
Enter Qatar Airways. As Etihad Airways looks to bed down its investments in other airlines, Qatar is gradually expanding its airline investment portfolio. Qatar's 15% stake in IAG is now being followed with a 10% stake in LATAM for USD613 million – nearly 1.5 times Qatar's net profit of USD446 million, disclosed (for the first time) on the day prior to the LATAM equity announcement. It is a safe investment; LATAM group has a strong market position and its share price has remained strong even in the face of a brutal downturn in Latin American economies.
Qatar gives LATAM needed cash and a distant shareholder. Latin America is the smallest market by far for Gulf airlines, but while currently in the economic doldrums, has a longer term potential for growth. It is also a key future market for US airlines, albeit very small on the Gulf airlines' networks. Qatar is spending nearly EUR2.5 billion on equity investments, still smaller than Etihad's but illustrating a willingness to acquire airline assets, for investment and strategic reasons. In this case the immediate strategic purpose for Qatar is less apparent.
Star Alliance's privately owned Avianca is also considering a strategic shareholder; that would mean five of Latin America's eight largest airline groups could have an airline investor from outside the region.