Airlines announce plan with tickets up to R$799

The three main airlines operating in Brazil – Azul, Gol and Latam, which together hold a 99.6% market share – announced a plan to offer 25 million airline tickets for prices between R$699 and R$799. The price will depend on the airline.

The plan was presented by the presidents of these companies alongside the Minister of Ports and Airports, Silvio Costa Filho, who had been promising a program to lower prices. Since the beginning of the year, the same department had been promising a ticket program for up to R$200, Voa Brasil. Expectations now are that it will be released in February.

Prices, however, are close to the average charged in September, when the average price of domestic fares was R$747.66, according to the National Civil Aviation Agency (Anac). It is the highest real value – already discounted for inflation – in the last 14 years.

Azul CEO John Rogerson said the decision was taken after conversations with the minister. “We sat down with the minister and he said: ‘it’s not possible, the tickets are expensive’. We said: ‘wow, we have expensive tickets and we’re not making money. There’s something to solve here.'”

Tickets are one of the villains of inflation

Air tickets are one of the villains of inflation this year. Data from the Brazilian Institute of Geography and Statistics (IBGE) indicate that, between January and October, they increased by 35.9%.

According to the companies, three factors would have influenced the rise in prices: the increase in aviation kerosene, high interest rates and high judicialization. Costa Filho said that 8% of legal proceedings in the world against airlines occur in Brazil.

The Ministry of Ports and Airports said that, even with the companies’ strategy, the government will act on three fronts to reduce ticket prices.

The first involves negotiations with Petrobras and the Ministry of Mines and Energy to reduce the value of aviation kerosene, which rose 89% this year. Another is discussion with the Judiciary to provide more security against the “flood of judicialization”, which absorbs R$1 billion per year from airlines. A promise was also made to build 120 airports over the next three years.

Price scenario follows global trend

The Brazilian Association of Airlines (Abear) points out that the current scenario of air tickets in Brazil follows a similar trend to other markets around the world.

“Considering Anac’s historical series, it is clear that the average fare follows external effects, given that aviation is a sector strongly affected by the dollar, which represents 60% of an airline’s costs, and by fuel, which represents 40%” , highlights the entity.

The business entity points out that the average domestic tariff in 2023, between January and September, increased by 14% compared to the same period in 2019, the pre-pandemic year.

According to Abear, airlines around the world are still seeking to neutralize the impacts of the biggest crisis in history. In the US, data from the Department of Transportation (DoT) shows that fares became 10% more expensive between the second quarter of 2019 and 2023.

A study by aviation analysis company Cirium shows that average ticket prices for hundreds of the most popular routes in the world have increased by 27.4% since the beginning of 2022.