A Brazilian fare war has intensified, with Varig and TAM announcing new price cuts. Both airlines have introduced discounts on regular flights of up to 60% as the affects of the recent market liberalisation raise questions over some rival services.
Air fares have tumbled since the end of last year, when Brazil's Department of Civil Aviation (DAC) announced a partial deregulation of the previously rigidly controlled market.
Among the measures which DAC pushed through was the opening up of central city airports in the conurbations of Rio de Janiero, Sao Paulo and Belo Horizonte to all flights, rather than just regional ones, authorised discounts of up to 65% on fares and allowed charter operators to offer services on any route.
RioSul, a Varig subsidiary, Transbrasil and VASP are all offering their own discounts, but Varig and TAM appear to be the keenest to battle for marketshare. Analysts have criticised the fare-slashing as predatory, while Transbrasil president Omar Fontana has admitted that his company is the most vulnerable of the airlines.
The carrier says it is actively looking for an international partner and is negotiating an alliance with Delta.
Transbrasil and VASP, meanwhile, have begun combining flights on some routes such as Sao Paulo-Brasilia.
Varig has also announced that it intends to pull out of the high density route between Rio and Sao Paulo which it now operates on a pooling basis with VASP and Transbrasil.
Source: Flight International
