Brazilian domestic traffic surges 26% in July

Washington DC
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Brazil's domestic carriers saw their traffic surge by 26% in July after only a 3% increase through the first six months of the year.

New data from Brazil's ANAC show Brazilian carriers collectively carrying 5.3 billion RPKs in the domestic market in July, a 26% increase compared to the 4.2 billion RPKs carried the previous year. Capacity was up 15% and the industry's average load factors improved six percentage points from 67% to 73%.

The new figures are encouraging because through the first six months of this year the average load factor dropped from 67% to 63%. For the first half of 2009 ASKs were up 10%, driven by rapid growth at low-cost start-up Azul, but RPKs were only up only 3%.

The chief executive of Brazilian low-cost carrier Gol, Constantino de Oliveira Junior, says the market is starting to show signs of a recovery after a weak first half. He says Brazil's GDP is now projected to have healthy growth in the second half of 2009 and in 2010.

"We still have great potential for growth in the airline industry in Brazil," Oliveira says, pointing out passenger traffic growth is typically double the rate of GDP growth.

But he says the July domestic traffic figures were also boosted by the H1N1 virus prompting passengers to cancel holidays overseas and instead take their winter vacations domestically. Oliveira says traffic on Gol's services to northeast Brazil in particular benefited from H1N1 while traffic to Argentina, which had an outbreak of the virus, was particularly impacted.

Gol reported a 29% jump in July traffic on a capacity increase of only 8%. As a result its domestic load factor reached 75%, compared to 62% in July 2008.

In the first six months of the year Gol saw its domestic traffic drop 5% on flat capacity. Its first half load factor was only 62%.

Based on ANAC July figures, Gol now has 44.8% of the domestic market. TAM remained the market leader with a 48.6% share. In July TAM saw its domestic traffic increase by 6% on a 4% increase in capacity.

Azul, which launched last December, has already captured 4.7% of the market based on July RPKs. Azul had the industry's best load factor in July - 85%

Another low-cost carrier, Webjet, captured 4.5% of the market. But its load factor dropped from 75% to 66% as traffic grew 79% while capacity more than doubled.

OceanAir, Brazil's fifth largest carrier with a 2.5% share of the market, saw traffic grow by 52% while capacity increased 51%.