Kerosene is now 60% more expensive and prices for flights rise up to 40% in Brazil

RIO DE JANEIRO, BRAZIL – Anyone planning a vacation and looking for airline tickets has already noticed that tickets are much more expensive in Brazil. In some cases, prices have increased by as much as 40%, especially for domestic flights, industry officials estimate.

The reason is the increase in the value of aviation kerosene by 60% in one year. According to the National Agency of Petroleum, Natural Gas and Biofuels (ANP), fuel reached an average price of R$4.805 (US$1.050) in Brazil in March.

Faced with higher operating costs, airlines such as Latam, Azul, and Gol announced not only an adjustment in tickets but also in flight offerings.

Who works in the sector, says the impact is more likely to be felt in domestic traffic. Jacqueline Brito, the owner of JB Unique Travel, points out that for international travel, the value of tickets increases by up to 15%. However, it is possible to find good deals with a little research.

The entrepreneur points out that the number of flights to Salvador departing from Confins has increased significantly, similar to Maceió. An offer for a trip in July, which previously cost between R$800 and R$900, was found to cost R$1,600. For the international market still, a lot of good opportunities, especially if it is a trip planned for the coming months “, he stressed.

IMPACT

For Fernanda Nunes, general manager of UMA Viagens, the impact is already evident in the signing of new contracts. She has seen an increase in the number of budgets, but a decrease in actual sales. “When the person sees the budget, they think twice,” she says. Nunes says demand for business travel has remained steady, with the strongest result for leisure travel.

“Gave a brake on demand. If you are flexible within the month, if you have 30 days of vacation, it is easier to get an interesting price than if you are tied to a specific date,” says Fernanda, who has noticed an increase in prices for flights to Rio de Janeiro, Porto Seguro, Espírito Santos and cities in the Northeast.

According to the president of the Brazilian Association of Airlines (Abear), Eduardo Sanovicz, the sector is likely to remain unstable for at least the next 120 days.

Both Sanovics and the individual companies do not specify which routes are affected. “But it is mainly the places farthest from the kerosene production and distribution centers. Fuel is more expensive there and demand is lower,” he explains.

He estimates that companies could cut the number of flights to certain destinations in half. “Each company will look at the cost that the route will incur and whether the region is able to sustain that cost. Sometimes it increases so much that the number of passengers is not enough to justify the operation,” he analyzes.

KEROSENE PRICE LEAVES GASOLINE BEHIND

According to a study conducted by Abear, between January and March of this year, aviation fuel was the fuel offered by Petrobras whose price increased the most in the country.

The increase was 15.9%, while the price of diesel rose by 7.8% and gasoline by 3.6%. “We are living in a permanent crisis in which, before leaving behind the previous crisis (pandemic), we have plunged into the next crisis due to the impact of the war on fuel costs,” stresses the president of the association, Eduardo Sanovicz.

According to Abear, kerosene and lubricants account for 25% of the sector’s costs. According to a report published by the National Civil Aviation Agency (ANAC), the average airfare in Brazil in 2021 was R$494.

This figure is 19.28% higher than the 2020 fare, which was offered for R$414.15. “This was the highest cumulative percentage for a year since 2008 when there was a 37.82% increase,” ANAC certified

The agency attributes this record to the increase in the average price of kerosene. Another factor that came into play, according to ANAC, was the 40% increase in air transport demand in 2021 compared to 2020.