Low oil stabilizes airline ticket prices, says CEO of Latam

the CEO of Latam , Jerome Cadier said to CNN Brazil that the reduction in the price of aviation kerosene caused a stabilization in the value of air tickets, despite the fact that they still have high prices due to fuel.

“After a very strong rise, in the last five weeks we have seen greater stability, which has made ticket prices also stabilize. I hope that from now on we will also see a more stable exchange rate and low oil. We suffered with the price of oil and refining, which also rose a lot. The price level today is very high, but it is proportional to the fuel”, he told the director of CNN Brasil Business, Fernando Nakagawa.

According to Cadier, it is necessary for the fuel to fall further so that the airline industry can stimulate the recovery to pre-pandemic travel levels. “We really want to fly as much as we used to fly before, but for that, the airfare needs to be reduced, and oil becomes cheaper,” he declared.

Another topic analyzed by the CEO of Latam was the free baggage rule. For him, it is a discussion that is “little relevant” when comparing it with other topics that could, in fact, reduce ticket prices.

“My perspective on this is that, if the baggage rule is changed again here in Brazil, we will have less appetite from companies wanting to enter the Brazilian domestic market. This ends up affecting competitiveness in the Brazilian market in the long term and should be considered”, he said.

“Much of the discussion has always been about price, but the truth is that when you have fuel and exchange rates that are so representative of an airline’s costs, whether or not to carry a suitcase is not going to make the average price vary significantly. It is small compared to 60% of the tariff linked to the dollar or 35%, 40% linked to fuel, these are very large variations. So, everyone was discussing a topic that is not very relevant”, he added.

Finally, when asked about possible future partnerships between the country’s aviation companies, Jerome Cadier stated that he wants more competitiveness in the Brazilian air market, with prospects for the expansion of companies operating in the sector.

“I think that at the moment, if you look at the Brazilian market, we have three large, very solid companies that operate very efficiently. I think it is unlikely, but it is possible that any association or approximation of these companies will be discussed. But I think we should think the other way around, about how to make Brazil have more airlines and more competition, not less,” he said.

“Of course, a merger is possible, but I think we have to look at the routes operated by a single company, and there are many that have a single competitor. Instead of discussing air shuttles, we are going to lower fares and have more competition from routes that are operated on a monopoly basis. This is the big discussion from the consumer’s point of view that I hope we can have from 2023 onwards, thinking about expansion and not consolidation”, he concluded.