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Underserving Cargo Demand, Brazilian Airlines Resume Service to Some Cities
The lack of passenger demand brought by the COVID-19 pandemic has created an existential threat to airlines in Brazil. Despite a delayed initial outbreak compared to some countries, the onset of the coronavirus in the country eventually led to a drop in bookings and revenue similar to that seen abroad.
To face the crisis, the country’s three major airlines — Azul Brazilian Airlines, GOL Airlines and LATAM Brasil — dramatically slashed capacity. A coordinated effort between airlines and federal and state governments has ensured an “essential air network” exists, ensuring all states and their capitals, as well as several major cities, stay connected.
At first, such a network was supposed to stay in place until the end of April. However, as the days passed and the number of COVID-19 cases got out of control, it became clear that the situation would not improve soon. As a result, the reduced network was rolled over into May.
This was not officially announced by the National Agency of Civil Aviation (ANAC), but Azul and GOL have confirmed their plans for next month’s network. Rather unexpectedly, both will resume operations in several cities throughout the country.
Azul will restart operations to nine destinations, including four in the Southern region, two in the Northeast and one each in the North, Southeast and Center-West divisions of Brazil. Already during April, the airline had added four to its planned schedule. GOL, in turn, will start services to three, all in the Southern region.
While some of these were still served by LATAM Brasil, the natural next question to ask is why airlines would restart services during a time when passenger demand is nearing zero. However, the answer may be in a service that was less harmed by the COVID-19: cargo transportation. In a press release, Azul stated these new flights will “allow the transport of important cargo, such as medications and personal protective equipment.”
According to ANAC data, in March alone, domestic passenger traffic fell 35.5 percent. Meanwhile, transported cargo fell considerably less, dropping by 17.7 percent. Although April figures should be more precise in regards to the actual extent of the crisis — it was only the second half of March that saw traffic implode — this gives a sense that cargo is underserved.
In Brazil, the number of full-freight aircraft is low, with shipment demand heavily reliant on passenger flights. This translates into an unbalanced equation under the current situation, since capacity on April was around 91 percent lower than before.
Indeed, airlines’ cargo businesses are a vital source of revenue now. Azul CFO Alex Malfitani told Brazilian business outlet Valor Económico that demand for cargo in Azul “did not fall” since the coronavirus outbreak. Airline CEO John Rodgerson mentioned to InfoMoney that cargo yields are higher now than before the pandemic, given the smaller capacity brought by the capacity cuts.
LATAM Brasil was the only major airline to not announce any resumption of destinations on its May network. However, the airline is actively deploying some of its widebodies in domestic sectors, most probably to serve the still-existent freight demand.
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