Latam confirms increase in ticket prices; sector estimates delay of new routes

Faced with the vertiginous escalation of oil prices on the international market, as a consequence of the war in Ukraine, airlines are suffering a substantial increase in aviation kerosene (QAV) costs.

In this scenario, Latam confirmed an increase in air tickets. With no predictability about the market balance, the sector estimates a postponement of the offer of new routes.

Latam Brasil informed through a note that it remains attentive to the evolution of the war in Ukraine, which directly impacts the price of oil and also the predictability to make adjustments to its flights, if necessary. “The impact on airline costs is undeniable due to the rise in QAV prices”, says the company.

Faced with the new scenario of “unprecedented and predictable crisis”, the airline says that this will lead to an increase in ticket prices without estimating, however, how much this adjustment will be.

Azul states in a note that, although the value of a barrel of oil has already exceeded current levels 14 years ago, the situation today “is much worse, because at that time the value of the dollar was much below the current R$ 5.00 and was quoted below R$ 2.00”.

“This math is very impactful for the airline industry, especially for Brazilian companies, which have several costs in dollars and one of the most expensive fuels in the world”, highlights the area.

Historically, fuel accounts for more than a third of the sector’s costs, according to the Brazilian Airlines Association (Abear).

“The continuity of this scenario could postpone a more vigorous resumption of the offer of flights in the country, as well as the inclusion of new cities, routes and frequencies between airports that already have air service”, adds Azul.

In a note, Abear informs that the advance of oil prices puts even more pressure on the already high price of QAV, which in 2021 accumulated a high of 76.2%.

“The increase in QAV in the short and medium term could slow down the resumption of air operations, the logistical service to essential services and make routes with higher costs unfeasible, including the focus on expanding regional markets”, says the statement.

According to the entity, the sector accumulates a loss of BRL 37.4 billion from 2016 to the third quarter of 2021. “Abear defends that emergency price containment measures that may be taken during the conflict include the QAV, mitigating this shape the crisis in the sector.”

Sought, Gol reported that it is in a period of silence and that it positions itself through Abear.