American Airlines bets on Brazil with larger-than-expected flight offer

RIO DE JANEIRO, BRAZIL – The end of measures to combat Covid-19 in much of the world and the reopening of U.S. borders led American Airlines to experience a sales boom in Brazil and plan a larger supply of flights than scheduled in the pre-pandemic period.

Demand for tickets gained momentum in mid-September when Washington announced it would allow vaccinated foreign tourists to enter. “Our stores overnight had a 140% increase in transactions. In one week, the volume of calls in the call center grew by 125%. The impact was immediate, even without knowing at that moment the exact date or the rules [for entry into the USA],” says Alexandre Cavalcanti, the company’s sales director in Brazil.

In October, American Airlines increased the number of weekly flights between Brazil and the USA from 17 to 20 – the São Paulo-New York route went from three times a week to daily operations. There are already 27 weekly flights in November, which will be increased to 47 in January and 54 in February.

Before the new coronavirus crisis, the company operated 52 weekly flights between Brazil and the United States at peak times, but the origin and destination cities were not the same. There were already plans to end the operations of the São Paulo-Los Angeles and Brasilia-Miami stretches, for example, says Cavalcanti.

“Taking that number into consideration, we are better off in terms of supply than we were pre-pandemic because we were already going to take those routes out [and stay with a smaller number],” he explains.

The expectation is that the reestablishment of the flow of passengers will take Brazil back to being the airline’s most significant foreign market in the Americas, currently occupied by the Caribbean countries. Several of them did not close borders last year and became popular destinations for North Americans on vacation or at the home office.

However, the exchange rate is a factor that may hinder these plans for both the company and consumers. The projection of economists heard by the Focus survey this week is that the dollar will end the year at R$ 5.50, which does not exclude the possibility of solid volatility until then.

Cavalcanti, however, believes that the impact of the quotation should be limited. “Brazilians adjust themselves. As long as the exchange rate is stable, Brazilians program themselves to travel. Maybe the travel profile will change,” he says.

The importance of the Brazilian market for American Airlines is reflected in the company’s strategy, which has been in the country for 31 years. In September, the company invested R$1.05 billion (US$182 million) in purchasing a 5.2% stake in Gol, ensuring a seat on the board of directors, and sealing the codeshare partnership (sharing flights).

The investment came at a good time for the Brazilian airline. In the third quarter balance sheet, Gol reported a loss of R$884.6 million and net debt estimated at R$15.8 billion.

With information from Forbes Brasil