There have been plenty of reports on the state of the airport, the air traffic control network and other aviation-related services in Brazil in advance of the World Cup starting later in just over a week. Despite all of the questions raised in the media there has not been much in the way of public statements from the airlines about their expectations for the coming month of travel in the country. Speaking at that IATA Annual General Meeting in Doha TAM CEO Marco Bologna offered up some insight on how his airline expects to fare during the period.
Operationally, Bologna expect to see a notable drop in RPMs during the 30 day period surrounding the event, something to the tune of 10-12%. And not only will they have fewer total RPMs but the fare mix is shifting as well. As Bologna explained it, most business travelers will either be home watching the games, out of the country or otherwise not traveling for business. On top of that there are also a number of adjustments being made to the schedule and operations to manage traffic for the fans.
It is a huge impact in terms of costs because we need to reshape our operations to be where the teams are going to play. … We need to prepare extra crew, have more aircraft reserves, more contingencies in general. And [we expect] a reduction in revenues because the business travelers are [not traveling]…. We consider it an investment we are making…cost of 50 million reals (~$22 million USD). We are expecting to have reduced fares because we are replacing business travelers by leisure travelers.
Despite these challenges and costs, Bologna remains optimistic about the potential long-term value of the event to TAM.
It is a good business for us. It is an opportunity for passengers to know our company, to fly with us. It is an investment.
Here’s hoping that works out for them in the end.
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