17 de julio de 2019
ÚLTIMAS NOTICIAS:
Hispanic World

Avianca Brasil's bankruptcy creates challenges for airline industry

By Nayara Batschke

 An Avianca Brasil plane lands on March 11, 2019, at the airport in Rio de Janeiro, Brazil. EPA-EFE FILE/MARCELO SAYÃO

An Avianca Brasil plane lands on March 11, 2019, at the airport in Rio de Janeiro, Brazil. EPA-EFE FILE/MARCELO SAYÃO

By Nayara Batschke

Sao Paulo, Jul 8 (efe-epa).- Avianca Brasil's bankruptcy declaration last December has created challenges for Brazil's airline industry, which has some of the highest air traffic levels in the world, leaving just three main carriers, reducing competition and causing airfares to rise.

Avianca Brasil, previously known as OceanAir and a company that is independent from Avianca Holdings S.A., filed for bankruptcy protection after piling up debts totaling more than 1 billion reais ($260 million) and being hit with lawsuits by several creditors.

The company plans to sell some of its assets at auction on Wednesday.

"With the exit of a competitor, in this case Avianca, airfares rise and the three main remaining airlines can impose whatever rules they want," Fundacion Getulio Vargas economic research center professor Ulysses dos Reis told EFE.

During the first five months of 2019, according to National Civil Aviation Agency (ANAC) figures, Gol, Latam and Azul airlines handled more than 90 percent of departures on domestic flights, while Avianca handled 8 percent and other carriers handled less than 2 percent.

At the same time, airfares rose, on average, 14 percent in the wake of Avianca's decision to cancel thousands of flights starting in April, according to a survey conducted by online travel agencies.

The increase in the cost of airfares "is just the tip of the iceberg" because the lack of airline competition hurts the free market and has "a snowball effect across the entire economy of the country," affecting everything from the movement of qualified workers and products to remote markets to investment in infrastructure, Reis said.

Avianca Brasil's exit from the market comes at a time when the Sao Paulo-Rio de Janeiro route, the fourth-busiest airline route in the world, is celebrating its 60th anniversary amid a high degree of market concentration, with only Gol and Latam currently able to operate flights on the popular itinerary.

Brazil is a country with "continental dimensions" that has an "urgent need to integrate, to have knowledge flow from the poles to the periphery. The lack of options for mobility strangles development," Reis said.

Although the government has given foreign companies, such as Air Europa, authorization to enter the domestic market, "things will not change much without more investment and the break-up of the monopolies," the researcher said.

ANAC air services regulation superintendent Ricardo Bisinotto Catanant told EFE that the "abrupt exit" of Avianca Brasil from the market has caused a sudden drop in the supply of airline seats, affecting the prices and services offered by carriers.

Catanant, however, said that the free-market economic policies implemented by President Jair Bolsonaro's administration could "incentivize" and "promote" the entry of new companies into Brazil, "expanding competition" and balancing the market.

"(Spain-based) Air Europa was the first (foreign airline) to ask to enter the country and there are other groups interested. This makes for greater competition and we desire both competition and the entry of other companies," the ANAC official said.

The increase in airfares, however, has forced many Brazilians to shift to other modes of transportation, such as land-based transport.

Brazilian Land Passenger Transportation Business Association (ABRATI) representative Leticia Sampaio Kitagawa told EFE that the number of travelers switching from airlines to land-based transportation providers rose 12 percent between January and June, with passenger counts soaring up to 16 percent on some routes.

Airplanes, however, keep beating buses. In 2018, commercial airlines carried 93.6 million passengers on domestic routes, while buses transported 50 million. EFE

nbo/hv

Histórico de noticias
Guatemalan migrants return from US with complaints re treatment in shelters

By Emiliano Castro Saenz

Ecuadorian women scientists slam gender gap in their profession

By Christian A. Sanchez

Trump refuses to criticize Turkey after Ankara buys Russian missiles

Washington, Jul 16 (EFE).- President Donald Trump on Tuesday refused to criticize the Turkish government of Recep Tayyip Erdogan after the Pentagon blocked...

Los Angeles, Jul 16 (epa-efe).- "Game of Thrones" on Tuesday racked up a record 32 Emmy Award nominations, thus becoming the series that has received the...

Mexican nature preserve could take 200 years to recover from fire damage

By Lourdes Cruz

Paraguay taxi drivers again at war with Uber

Asuncion, Jul 16 (efe-epa).- Hundreds of taxi drivers suspended their service this Tuesday to again drive through the streets of Asuncion with a long...

Dried-up Aculeo Lagoon shows the woes of climate change in Chile

By Alberto Peña

Trump doubles down on tweets against Democratic congresswomen

By Lucia Leal.

Princess Mako thanks Bolivia for 120 years welcoming Japanese migrants

La Paz, Jul 15 (efe-epa).- Princess Mako of Japan thanked Bolivia this Monday for the welcome it has extended over the past 120 years to Japanese migrants...

Mexico rules out being safe third country for migrants despite Trump's order

Mexico City, Jul 15 (efe-epa).- Mexican Foreign Secretary Marcelo Ebrard on Monday ruled out that his country would become a "safe third country" for...

Salvadoran woman charged with abortion says she is innocent

Ciudad Delgado, El Salvador, Jul 15 (efe-epa).- Twenty-one-year-old Salvadoran Evelyn Hernandez said Monday that she is innocent of aggravated murder for...

Billionaire Buffett's real estate unit joins forces with Spain's LARVIA

New York, Jul 15 (efe-epa).- Berkshire Hathaway HomeServices, the real estate unit of billionaire Warren Buffett's Berkshire Hathaway Inc. conglomerate,...

Residents of historic Panama neighborhood fight gentrification

By Maria M.Mur.

Pressure mounts for Puerto Rico governor's resignation amid scandal

San Juan, Jul 15 (efe-epa).- Pressure is mounting in Puerto Rico for Gov. Ricardo Rossello to resign after the revelation of the contents of private online...

Trump says tariffs taking a toll on China's economy

Washington, Jul 15 (efe-epa).- President Donald Trump said Monday that the tariffs imposed by his administration were taking a toll on China's economy,...

Barry weakens over Louisiana, but flooding alert remains in place

Washington, Jul 14 (efe-epa).- Tropical Storm Barry weakened to a tropical depression as it crossed the state of Louisiana on Sunday, heading...

San Juan Parangaricutiro, Mexico's Pompeii buried by Paricutin volcano

By Manuel Soberanes Cobo

Khya, a baby kangaroo being raised by humans in western Mexican city

By Mariana Gonzalez

Getting Florida coral to reproduce in captivity is big challenge

By Ivonne Malaver

Former FARC rebels turn to coffee growing in Colombia

By Claudia Polanco Yermanos

Mercosur to hold summit after long-awaited trade deal reached with EU

Natalia Kidd

Full-figured "Euphoria" star finding success while staying true to herself

Alicia Civita

Madonna, fervent fan of the life and works of Frida Kahlo

By Ines Amarelo

More and more reports of sexual abuse against minors in Panama

By Ana de Leon