Flight at R$ 200 will not work if others have to pay more, says Azul CEO – 03/29/2023 – Market

Azul’s chief executive, John Rodgerson, says that the government’s plan to offer airline tickets at BRL 200 for certain groups may make sense as long as the other passengers do not pay the bill.

He defends, however, that air fares currently considered high be attacked with a broader effort to reduce costs for companies – including a review of Petrobras’ pricing policy.

“To say that we want a lower tariff would be a lie”, he says to Sheet. “I want a tariff that covers our costs. And if our costs get cheaper, it’s easier to have [passagem] cheaper,” he says.

He says that current values ​​are driven by the price of aviation kerosene and defends analyzing Petrobras’ results to find out who should be considered guilty.

“Look at our balance sheet and look at Petrobras’ balance sheet. Who is the villain in the story?”, he asks. “Look at last year how much they won and how much I lost,” she says.

Azul had a loss of BRL 722 million in 2022, impacted by the 112% increase in fuel prices compared to before Covid-19. In comparison, Petrobras had a profit of R$ 188 billion last year – the highest in the history of Brazilian companies.

“I’m being charged because I charge the ticket price. People can’t see that the price of fuel has doubled for us. But has Petrobras’ cost doubled? It hasn’t doubled,” he said.

He says that the state-owned company applies a price policy on its national production that includes values ​​with maritime freight and other items – as if the fuel were all imported. The criticism is also made by the new president of Petrobras, Jean Paul Prates, who has already stated on different occasions that he intends to change the practice.

“When the price of fuel drops, I can put more supply on the market,” says Rodgerson. “But when the cost is too high, I restrict supply to have higher demand and a price above our cost,” she says.

Rodgerson says that the initial conversations about the R$200 ticket plan, announced without much detail by Minister Márcio França (Transport) this month and discussed in a working group with representatives of companies and the government, make sense. But, he says, it is still necessary to check whether the plan is viable in practice.

“The question is how to do this in a way that is not like half-price tickets at the cinema, with other people paying more for it”, he says. “You have to make sure it’s viable and not subsidized [pelos demais]why [caso contrário] the public won’t like it. It has to be something that works for everyone.”

He suggests that the proposal meets a set of guidelines for moving forward. Among them, that it be restricted to low-season flights, for people who purchase in advance, aimed at empty seats and that it be used by passengers who would not travel without the program.

Conversations in Brasilia also include trying to convince Congress to enact the PIS/Cofins tax cut for the sector made at the end of the lights of the Jair Bolsonaro (PL) government through an MP (provisional measure).

This measure is seen by him as more important than the exemption from federal taxes on aviation kerosene adopted in January and which will be valid for four months. “I think Congress is scared of ticket prices. We’re not making a profit, we’re losing money,” he says.

In the tax reform, he demands a differentiated treatment for the sector – contrary to what the Ministry of Finance defends, which defends a text as homogeneous as possible and with the minimum of exceptions.

He cites international competition among the reasons for the breach. “I have a flight that leaves tonight from São Paulo to Orlando”, he exemplifies. “All these guys [concorrentes estrangeiros que disputam passageiros na rota] are subsidized by their government, [e também] pay lower interest rates and lower fuel”, he says.

“I don’t want subsidy from my government here, the only thing I want is to run as equals”, he says. “So, in the tax reform, our sector has to be thinking differently”, he says.

According to him, today Brazilians travel by plane much less than their neighbors in the region due to high costs. “Brazilians fly a third of what Chileans fly”, he says, adding that the discrepancy occurs in relation to countries like Colombia and Mexico.

For Rodgerson, discussions about the bullet train project linking São Paulo and Rio are not part of the sector’s agenda. Although it has the potential to increase competition in transport modes between the two states —which would force a reduction in air fares, for example—, the project is viewed with skepticism by the executive.

“I’ve been here for 15 years [no Brasil] and for 15 years I’ve been hearing about the bullet train project”, he says.