With rising prices for domestic and international flights, the alternative for Brazilians is to postpone travel or look for destinations that used to be less visited. According to the latest data compiled by the National Civil Aviation Agency (ANAC), the average fare for 2022, taking into account domestic destinationsis 483.17 reais, up 20.1% compared to the beginning of last year, but in practice it is difficult to find flights in this price range. For North America, the average check in the first quarter of 2022 was USD 1,064.09 (an increase of approximately 9% compared to 2021), while trips to Europe cost an average of USD 1,033.63 per the first three months of this year (an increase of 24%). The adjustment for Asian countries was also high, with the tariff an average of $2,145.58 (an increase of 20.3%). As this week’s VEJA report showsAs companies struggle to organize to reopen the market as the Covid-19 health crisis subsides, passengers are paying more to travel.
The price of the real against the dollar deters travel abroad, and the high interest rate dampens the demand for buying tickets on credit and in installments. In addition, the rise in the average price of a barrel of oil (a source of jet fuel) is a direct driver of rising airfare and is putting pressure on inflation in Brazil. For an economist Valor Investimentos, Piter Carvalho, The volatility of ticket prices makes domestic destinations even more expensive to buy on some international routes. “A lot of people see great promotions and it really makes sense to go to Portugal, for example, and not to Fernando de Noronha,” he says. A round-trip ticket to Fernando de Noronha from November 10 to 15, for example, costs 4627 reais per adult (cheaper). As for Lisbon, a passenger spends 4,039 reais in the same period, according to research done in a report on the website. skyscanner.
The pricing of air tickets is carried out by the companies themselves, based on the tariff freedom regime in the sector, established by the federal government in 2001 and ratified by Law No. 11,182/2005. OUR Anak has the function of continuous monitoring of already sold tariffs. Fluctuations are partly due to competition in the sector and factors such as contractual terms, pre-purchase, airport of departure and destination, and promotions. However, the greatest price sensitivity is associated with macroeconomic factors that determine the level of supply and demand.
When the dollar and euro are higher, it’s not just tickets that go up; procedures such as issuing or renewing a visa are also more expensive. The solution is to postpone possible international travel until next year or next vacation, or look for destinations in Brazil. However, as demand for domestic destinations increases, the price follows the increase. “When there is a lot of demand for travel, in the case of domestic destinations, especially now around the holidays, airlines raise prices to make more profit. They can represent this demand very well,” says Carvalho. OUR The average price per kilometer flown (yield) in 2022, considering only domestic destinations, was R$0.3741, according to the latest figures from Anac, up 22.3% from the first quarter of last year.
Decolar Flight Director: Daniela Araujo, suppressed demand in the last two years of the pandemic and the July holidays (the first school holidays in the context of more flexible health regulations) are boosting demand. Despite the rate hike, the online travel agency ended the month of April with 51% higher demand than March, including tickets for the July holidays. “Brazil is a very rich country in terms of tourism and what we are seeing now are new destinations like Chapada. In South America, we are seeing (high demand) for destinations that have already been in demand (eg Bariloche and Santiago) as well as new places like Salta in Argentina that have not been in demand by Brazilians,” he notes.
To keep up with demand, airlines are also adapting, especially with new forms of payment, successive promotions and more flexibility for the consumer. “For several months, we have seen an increase in searches for flexible fares, which allow people to, for example, cancel or change the date of their tickets. And I believe that this is a model that cannot be deviated from, the aviation industry has realized that you can be ready for changes, ”he said. Araujo. Increasing payment for trips and vouchers in installments, paying in installments (without using a card), buying tickets in advance are other movements observed by the performer. “There is a rule in the tourism sector: if you want to pay less, plan your trip in advance,” he notes.
The President of the Brazilian Association of Airlines (Abear), Eduardo Sanovic, stressed in a note that airlines deal “every day” with the high price of aviation kerosene (QAV). A barrel of oil has hovered around $100 in recent days, especially given the impact of the war in Ukraine (sanctions on Russian oil/supply cuts). However, since the pre-pandemic period, the aviation sector has become more expensive, according to Abear. “The sector’s expectation in 2017 was to keep the fall in tariff costs that has been tested since 2003, but the high exchange rate (60%) and kerosene (209%) from 2017 to now have reversed this movement,” – he notes.
According to Latam, between January 1 and May 1, the increase in QAV in Brazil reached almost 50%. The company also forecasts further growth in jet fuel in the coming months and, as a result, a further impact on ticket prices. Economist Peter Carvalho concludes that the fee for checked baggage can also be reflected in ticket prices. “Unfortunately, the amount that companies expected, mainly for this year’s budget (fare revenue), will be transferred indirectly, dissolving into ticket prices. There are no free meals.” For Carvalho, airline operating costs are key. “Company margins are under a lot of pressure. For example, if the fare is 10, the fare will automatically be 12. It’s not just about increasing profits (for companies), it’s about the cost going up,” he says.