‘Air travel can become a luxury if we don’t attack costs’, says CEO of Azul
While the deterioration of the economic scenario signals that Brazilians will have more and more difficulties ahead, ticket prices continue to increase. According to the CEO of Blue, John Rodgerson, tariffs will continue to rise amid rising oil prices. In his view, Brazil’s high structural costs need to be resolved so that air travel is not even more restricted in the country.
According to a survey by the Brazilian Association of Airlines (Abear), the price of aviation kerosene has risen by 71% until July 1st. In the consolidated for 2021, the accumulated increase was 92%. “If fuel is going up and the dollar is appreciating, the ticket will have to go up for revenue to cover costs. But I don’t believe this situation will continue like this, I don’t see the war (in Ukraine) lasting forever,” said Rodgerson, who also cited local costs, such as ICMS on fuel and PIS/Cofins. The executive also highlights that companies are raising prices to “survive”. “We were practically eight months without a prescription because of the pandemic.”
Currently, the average occupancy of Azul’s aircraft is 80%, says Rodgerson. “We have 30% more flight offers than in the pre-pandemic period and even so, the fares are more expensive. Imagine if we hadn’t put more flights on the market, the prices would be absurd.” The average price of domestic tickets is on an upward trend and has already increased by 21% in the first four months of this year, compared to 2019, according to data from the National Civil Aviation Agency (Anac).
For him, Brazil needs to align itself with the international practices of the sector, as in the case of the discussion about charging for baggage allowance. “When the franchise is mandatory, this demands a huge number of employees, generating additional costs, which will end up making the rates more expensive”, he explains.
In an election year – which make the market even more volatile -, the Executive says that the company will continue investing to remain competitive. “I don’t control what happens in Brasilia. What we can control is within the company, we invest in new technologies and fleet renewal, which will be much more economical. We have to be more efficient, everyone is focused on that.”