- Passenger traffic (RPKs):
- International: +3.6%;
- Avianca Brazil: +27.1%;
- GOL: -18.9%;
- Grupo TAM: +7.3%;
- Load factor:
- Domestic: 74.7%;
- International: 84.5%;
- International: +3.6%;
Brazil domestic passenger traffic up 7.8% in Jan-2012, international traffic up 3.6%
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Avianca Brazil slows domestic growth. Perhaps time to expand into the international market
Avianca Brazil is slowing down expansion after quadrupling in size over the last four years. Avianca will again pursue faster domestic capacity expansion in 2014 than its three larger competitors as six additional A320s are delivered, replacing smaller Fokker 100s, but the rate of growth will slow significantly.
Avianca Brazil now accounts for 8% of Brazil’s domestic market, up from only 2% four years ago and 5% two years ago. Gol, TAM and most recently Azul have all slowed down capacity growth while Avianca Brazil has continued to expand rapidly but from a small base.
As Avianca Brazil’s domestic position could be approaching maturity, the airline will need to turn its attention to international market potential. Avianca Brazil remains purely a domestic carrier while TAM has a dominant position in Brazil’s international market, Gol is increasing its international focus and Azul has unveiled plans for a new long-haul operation. If Avianca Brazil is to maintain its relevance, an international move should be on the radar, particularly as it prepares to enter Star while the alliance also controversially continues to court rival Azul.
Brazil’s domestic traffic shows encouraging growth in early 2014 as capacity remains rational
Traffic in Brazil’s domestic market rebounded during the first four months of 2014 as overall capacity growth in the country remained disciplined largely due to continuing restraint from Brazil’s two largest airlines TAM and Gol.
Avianca Brazil and Azul continued to grow capacity, as measured by ASKs from Jan-2014 to Apr-2014, as both airlines work to solidify their respective stances in the Brazilian market. But the expansion by those carriers should not result in a state of oversupply.
Despite the hype of the FIFA World Cup tournament held in Brazil beginning in mid-Jun-2014, the country’s two largest carriers do not expect any financial benefit from the event, and are bracing for a decrease in traffic and revenues.