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Two Weeks Before Takeoff, Brazilian Start-Up ITA Cancels Several Flights
Two weeks before the start of its regularly scheduled operations, Brazil’s newest airline — Itapemirim Transportes Aéreos, or ITA — has cancelled dozens of flights, drastically reducing its initial schedule.
Although the exact numbers of the reduction are still not clear, the start-up did not announce the changes openly. Reports initially surfaced on social media, followed by wider media coverage. Only then did the airline add its piece.
Brazilian aviation news website Aeroin compiled a sample of 75 flights in a report. The 399 weekly frequencies that make up those 75 distinct flight numbers quickly became 317 — including three flights that were withdrawn for good from the company’s network.
On Friday morning, ITA put out a press release regarding the cancellations, which was also shared by Aeroin. The communication affirmed that the “network readjustments make up a part of the structural process for the airline launch in the national market.” The airline also said all routes and cities were kept in the network, and that all passengers affected were assisted under rules set by the National Civil Aviation Agency (ANAC), the country’s civil aviation regulator.
The following day, economy column Capital from O Globo newspaper amplified the issue beyond the aviation circle, also interviewing newly-appointed ITA chief executive Adalberto Bogsan, who brings experience from several airlines, more recently the regional carrier ASTA. He said that the need for accommodation of passengers was limited, with changes affecting “less than 1% of the volume of sold tickets,” the periodical reported.
“Demand did not come in the way we were expecting,” Bogsan told the column. “We had to do a readequation [in order] to have a level of occupation and supply that matches our start, for we cannot start up at a loss. We need a good profitability to turn the company over.”
Additionally, the column reported the airline’s load factor is currently sitting at 45% — though there are still around two weeks until the operations start — well under the load factor of over 80% that the Brazilian market achieved in May, according to data by ANAC.
Though the plan was to start with 10 aircraft, the column reminded, the start-up’s fleet count currently sits at four, with a fifth one arriving in Brazil next week, entering into service July 8.
“We have faced many restrictions to bring the aircraft due to the pandemic,” Bogsan said.
Finally, the airline pledged to actively contact the affected customers to grant them a free roundtrip to any of the airline’s destinations within 12 months.
Competitors have largely downplayed ITA’s efforts. In a recent interview with PANROTAS, a Brazilian publication specializing in travel, Azul Director for Institutional Relations Marcelo Bento Ribeiro said the airline will not compete directly with his company due to a smaller overlap. ITA will rely heavily on trunk routes that are already flooded by GOL and LATAM Brasil.
However, he also remembered the case of Avianca Brasil, a company which had a business model that resembled ITA’s.
“For small mistakes, things got tough to manage and did not make possible the company’s continuity,” he told the site. “The mortality rate is high for the risks are high. The most difficult part is the access to capital, because investing [on] aircraft, investing eight years in advance in such an unpredictable country like ours is complicated. Without cash and without being prepared to bear the brunt, you go away.”
And within Azul’s peers, the feeling is apparently the same. Obviously, as demand is expected to return in the second half of the eyar if Covid-19 recedes, both GOL and LATAM Brasil, much better capitalized and with leaner structures post-restructuring, will fight for every passenger in the same trunk routes on which ITA will compete. Itapemirim’s efforts to counter such attacks will be fundamental to the airline’s survival — and the fact it has not even started flying only goes to show the size of the challenge.
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