Brazil's June traffic flat despite World Cup

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The World Cup that took place in Brazil from mid-June to mid-July had no noticeable impact on domestic traffic as in June as available seat kilometeres (ASKs) declined by 1.5% compared to June 2013, while revenue seat kilometres (RSK) grew slightly by 0.5%.

According to data provided by Brazil's Civil Aviation Authority ANAC, the systemwide load factor in June grew to 78.4%, two points higher than in the previous year and marking an all-time high for June traffic.

While the World Cup led to increased leisure traffic, it hardly compensated for the significant decrease in higher yield business traffic during the period.

TAM continues to be the market leader with a market share of 37.8%, followed by Gol with 35.4%, Azul (17.7%) and Avianca Brazil (9.1%).

Despite the flat June traffic, the first half of 2014 saw an 6.56% year-on-year increase in passenger numbers from January to June.

Internationally, TAM transported in June 85.8% of the international traffic flying on Brazilian carriers, followed by Gol in a distant second position with a 14.2% market share.

Weaker business travel demand during the World Cup has led LATAM Airlines Group to revise downwards its operating margin estimates for 2014 to 4-5%, down from 6-8%.

"LATAM Airlines Group estimates the impact of the World Cup on LATAM’S operating margin to be between US$140 million and US$160 million, mainly as a result of decreased revenues," says the carrier.

The airline has also revised downwards its capacity growth guidance for 2014. It now expects total ASKs to be flat or decline up to 2%. Previously, it had expected capacity changes to be in the range of between negative 1% and up 1%.

Domestic Brazil traffic in 2014 is now expected to stay flat or decline by up to 2%, compared with a flat guidance previously. Spanish speaking countries' domestic traffic is forecasted to grow 3-5%, compared with 5-7%. International traffic is expected to decline 1-3%, compared with the previous guidance of staying flat or decreasing by up to 2%.

The revision also takes into consideration the weaker macroeconomic situation in Latin America, says the airline.