Brian Homewood/RIO de JANIERO
BRAZIL'S THREE national airlines, Varig, Vasp and Transbrasil, have asked the Government to abolish a tax which they say effectively forces them to subsidise one of their main rivals.
The airlines pay 3% of the value of each ticket sold into a regional aviation fund, which is used to subsidise unprofitable regional services. TAM and Rio-Sul, a Varig subsidiary, have been the main beneficiaries of the fund, which was created in 1976 when both were small companies flying only on regional routes.
The three airlines claim that TAM now effectively offers a large number of national flights with brief stops at provincial airports to get around a regulation that prevents it from flying non-stop between state capitals.
The airlines argue that the disadvantage of having to stop en route is wiped out by the fact that TAM operates out of Sao Paulo's central Congonhas Airport, while they are forced to use the distant Guarulhos Airport.
TAM argues that it flourished by flying routes in which the national airlines never showed any interest. In September, the airline took over Paraguayan carrier LAPSA and now offers international flights from Brazil using its own Fokker 100s chartered by LAPSA.
Varig, Vasp and Transbrasil also want the Brazilian Government to back down on a 9% ticket tax imposed at the beginning of October. Varig estimates that the tax will cost the airline $90 million a year, and has joined others in threatening fares rises.
Rivals are objecting to TAM's financial assistance
Source: Flight International
