The five-way race between Brazil's airlines is moving towards three as Vasp languishes and a defunct Transbrasil awaits a death certificate.
The latest market share data hints at the changing dynamics. At the top of the league, Varig and its subsidiaries with a 39% share are almost in a dead heat with TAM, which holds 38% of the market. Vasp remains at 14%, while low-fares contender Gol has raised its share of the market to 8%.
More revealing is analysis of who have been the winners and losers in this battle over the last year. Varig and Vasp have each dropped one percentage point, while Transbrasil ducked out of the battle, shedding its 13% share. The spoils have been shared by TAM and Gol which boosted their shares by eight and seven percentage respectively, sharing the spoils. Between them these two carriers have filled the vacuum left by Transbrasil's demise.
No-one has formally declared Transbrasil dead, but for all practical purposes it is. Officially, the civil aviation director is awaiting a restructuring plan, but Transbrasil lacks a president, many staff have quit, courts are seizing its assets and the government airport authority has started turning Transbrasil ticket counters over to TAM. TAM and Gol have each hired cockpit and cabin crews from the defunct airline.
Wagner Canhedo, president of Vasp, still talks of a three-way merger with Varig and TAM. "I have always defended the idea that we must have one merged operation in the domestic market," he says. But none of the other airlines want anything to do with merger. The last time Canhedo floated this idea, other airline presidents jointly rejected it. Nor is there anything to make them more interested now. Vasp has accumulated debt of 2.6 billion real ($1 billion).
Canhedo talks of a capital injection this year and resumption of international flights next year. Yet the airline has not yet revealed its 2001 results and lost $46 million during the first half of last year after making a profit the year before.
For now, each of the other three carriers is pursuing a different domestic strategy. Varig relies on regional subsidiaries Nordeste and Rio-Sul, plus an extensive network of its own. It remains Brazil's uncontested international airline.
TAM chose late last year to shift much of its capacity from foreign to domestic services, in a bid to capture Transbrasil traffic and evade the international downturn that followed the 11 September terrorist attacks in the USA.
Gol only started flying in January last year and has grown dramatically with a low-fare strategy that includes selling tickets in supermarkets. If current growth rates continue, TAM will soon be Brazil's domestic leader, followed in turn by Varig and Gol.
Source: Airline Business
