Carriers to limit flights between capitals to two per day

Carriers to limit flights between capitals to two per day

Brazilian airliners will reduce daily flights between the country’s 26 capitals—plus Brasília—to just two flights per day. The decision was announced after discussions between Brazil’s major airlines and the federal government. 

Gol—the biggest local airline—will be the first company to change its itineraries from this Saturday. The move represents a 92-percent reduction in the domestic airline market—while all international flights have been canceled altogether. Even the flights that will be maintained will not have occupancy rates above 40 percent, according to the sector’s representatives.

The air travel market in Brazil is dominated by three big players: Gol, Azul, and Latam. They have already posted huge market cap losses in 2020— significantly more than their international peers. According to a ranking by consultancy Economatica, (GOL4) and Azul (AZUL4) lost 86 and 83 percent of value since January. Latam, a Brazilian-Chilean company, comes in third (down 79 percent). The top 20, however, is mostly filled by U.S. carriers.

A majority stakeholder in one of Brazil’s largest airlines says the sector will take at least two to three years to recover from the Covid-19 crisis—even with the government’s help. The executive told The Brazilian Report that mergers and acquisitions will be the only way to make air travel profitable in the short-term future. The problem? The market is already highly concentrated as it is.