Why 123 Miles and Hurb can no longer offer super-cheap packages

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The business model became unfeasible with the increase in costs in all sectors of the tourism market, especially accommodation and airline tickets. 123 Milhas e Hurb Reproduction Since last Friday (18), the only thing that has been said is the general cancellation of promotional trips scheduled for 2023 for clients of the travel agency 123 Milhas. Those who had shipments scheduled for the “Promo” line for the months of September to December will have their money refunded through vouchers. The same happened with Hurb in April this year, which started to cancel promotional trips for customers. The crisis caused the resignation of the CEO and a relocation operation or refunds for those affected. Over the weekend, the g1 showed that the 123 Miles measure offered vouchers in the amount that had been spent by customers with monetary correction. Even so, there was a significant impact on customers because it is practically impossible to make trips scheduled for the coming months in such a short time, for such low prices. 123 miles: consumer is entitled to reimbursement in cash The journalist Polyana Lima and the publicist Carlinhos Pimentel had to change their honeymoon plans, which would be in October, because the amount made available would not cover the costs of the trip from Maceió (AL) to Gramado (RS). The solution was to cancel the trip and take legal action against the company to get the amount back. This is just one of many similar cases that were mapped by g1. The company will have to answer about the case to the federal government and Procon. In this report, you will understand: What went wrong? How did travel prices go up so much? How is the situation of the company? Is the miles market in crisis? Ministries of Tourism and Justice will investigate 123 Miles What went wrong? 123 Milhas reported over the weekend that the decision “is due to the persistence of adverse economic and market factors, mainly related to demand pressure and the price of airfares”. The case is not unprecedented, and economic factors are not new. In April of this year, Hurb went through the exact same process, of canceling or indefinitely postponing the trip of customers with promotional lines. The reason was the same: inability to make the trips at the contracted prices. Both 123 Milhas and Hurb operate promotional packages as follows: A bet is placed on low prices for tickets and accommodation in order to offer prices below the market; The trips do not have a previously scheduled date because it is necessary to search for the cheapest possible flight and stay days; Since the easing of circulation with the cooling of the pandemic, the population’s demand for travel has increased; With more demand, service inflation — airline tickets, accommodation, restaurants, tours — began to impact the total value of trips; Hurb and 123 Milhas could no longer find options within the price range charged to their customers; Promotional trips, therefore, signaled a loss ahead; The alternatives for companies are to postpone or cancel trips. According to Marcelo Oliveira, ABAV Nacional’s legal adviser, the client needs to observe whether the practices of travel agencies adhere to the rest of the market. Prices that are very distant from the rest of the market indicate an operation susceptible to changes. “When the company assumes a business model, it needs to be compatible with reality. It needs to show that the model has the technical and operational capacity to honor what was promised”, says Oliveira. “A model that is not in the market standard assumes a risk condition.” READ MORE Why air travel is so expensive in Brazil Average price of airline tickets breaks record in 2022 and continues to rise in 2023 ‘Risk belongs to the company; it cannot be transferred to consumers’, says secretary about 123 Milhas How did travel prices rise so much? The rise in the tourism sector accompanies an entire rise in prices in the services sector, which happened since the easing of the movement of people with the cooling of the Covid-19 pandemic. Economists explain that, throughout 2022, the prices of bars, restaurants, beauty salons, tourism and other different types of service rose to replace the losses caused by the crisis, and by the increase in costs. Hurb and 123 Miles suffer from the impact on the prices of accommodation, airline tickets and other sectors related to tourism. On the demand side, there was a lot of public eager to resume travel. On the cost side, the price of aviation fuel and inputs for hotels had also risen sharply. The Extended National Consumer Price Index (IPCA), from the Brazilian Institute of Geography and Statistics (IBGE), shows that airline tickets accumulate a 1.03% increase in the 12-month window. It seems little, but in August 2022 the item had reached an accumulation of 74.9% in the previous 12 months. In other words, tickets went up a lot in price in 2022 and are still at a high level a year later. The accommodations are in progressive price escalation. The accumulated in July of this year reached 14.17%, in a slight deceleration compared to the 22.19% that accumulated in August 2022. Also translating the numbers: this is a considerable increase in 2022 and that was sustained month after month. month until July of this year. The same happens with tourist packages, another IPCA sub-item. The 23.18% increase in August 2022 shows an increase over the previous year. But there was a slowdown to 8.18% in July 2023. The rise is still considerable, but it has been retracting. National Consumer Secretary says that 123 Milhas needs to offer other types of reimbursement How is the company’s situation? 123 Milhas guarantees that the “Promo” packages represent only 7% of its operation, and that customers of the other packages will not be harmed. Hurb gave a similar justification in April and continues to operate without the promotional model. That’s because traditional packages are operated at current costs. They are more expensive because they already include readjusted prices, without dependence on mining for low prices. It turns out that there is a clear difference between prices, which is precisely what harms customers who bought the “Promo” packages. Values ​​are higher and part of the customers may not have resources to complement the expense. The Ministry of Tourism informed this Sunday (20) that it will evaluate the establishment of an investigative procedure to identify the customers affected and promote adequate damage repair. Is the miles market in crisis? The question of 123 Milhas is the business model of promotional trips, which proved to be unsustainable. For now, nothing indicates that the crisis will spread to other travel package models, as we cancel them so that the company does not absorb the loss of promotional trips.

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