April 20, 2020 / 11:06 PM / 2 months ago

Exclusive: Brazil considers further flight cuts as coronavirus crisis bites

RIO DE JANEIRO/SAO PAULO (Reuters) - Brazil’s government is discussing with the country’s main airlines further reducing a minimal flight schedule implemented due to the coronavirus crisis as travel demand remains close to zero, three sources told Reuters.

FILE PHOTO: A woman wearing a face mask stands in front of arrival and departure electronic boards after the Brazilian airline Azul stated that it will cut all of its international flights out of its main hub due to the coronavirus outbreak, at Viracopos International Airport, in Campinas, Sao Paulo State, Brazil, March 16, 2020. REUTERS/Rahel Patrasso

The existing pared back flight schedule was designed by Brazil’s civil air travel regulator in late March and connects 46 of Brazil’s cities with close to 180 flights per day on average. Brazil is larger than the continental United States and has some 210 million people.

But a study by Brazil’s government, two of the sources said, found that there are too many empty or close-to-empty flights in the current schedule. The country’s three main airlines are also bleeding cash, like their peers around the world, with most of their fleets grounded.

LATAM Airlines, Gol Linhas Aereas Inteligentes and Azul SA have been seeking government cash help to weather the crisis. They have also suspended more than 90% of their regularly scheduled flights.

“What we are studying is that instead of the three carriers flying the same route with empty planes, they could join together and offer just one flight,” said one of the sources, who is familiar with the government discussions.

The proposal is reminiscent of a time before the liberalization of Brazil’s air travel market in the late 1990s and early 2000s when prices were regulated across airlines and travelers could buy tickets without necessarily knowing which carrier they would be flying with.

A second source said this would only be temporary, however.

“It’s not a cartel... it’s optimizing” the flight network, the source said.

A source within the airline industry said the companies were asking to reduce the schedule because many flights were empty. The current flight schedule is due for revision at the end of the month anyway.

All three sources requested anonymity to discuss negotiations that have not yet been finalized.

The country’s state-controlled development bank BNDES said on Sunday that it expects to finalize an aid package for the airlines in May. Azul and Gol have said they are each negotiating a potential loan of 3 billion reais ($566 million).

($1 = 5.3045 reais)

Reporting by Rodrigo Viga Gaier in Rio de Janeiro and Marcelo Rochabrun in Sao Paulo, Editing by Rosalba O'Brien

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