Cheap flights lure Brazilians off the bus

This new class of Brazilian has reaped the fruits of a decade and a half of economic stability and, since 2003, of steady economic growth, interrupted only briefly by the global crisis. Over the past seven years, more than 30m people have entered Brazil’s middle-income sector, with family incomes of between R$1,100 US$610 and R$4,800 US$2,600 a month.

Airlines have to convince them to turn their backs on the bus in favour of transport traditionally seen as the preserve of the well-off.One consumer already convinced is Jose dos Santos, who bought return flights so she, her daughter Tátia and grandson Jonathan could fly from São Paulo to Salvador to visit relatives, a road journey of 1,200 miles 1,900km.They bought their tickets at Voe Fácil, a store opened in December by Gol, one of Brazil’s two biggest airlines, in Largo 13, a busy low-to-middle-income shopping district in São Paulo. The store Gol’s first  is strategically placed just along the street from ticket booths run by bus companies. Even at mid-morning on a Thursday, it was doing brisk business.

Usually, they would go by bus. But the bus takes 36 hours each way at an adult return fare of R$555 – plus at least another R$100 on food and other expenses, Tátia says. By booking their trip in advance, they paid R$360 return for each adult and R$230 for six-year-old Jonathan  and the flight will take just two hours.Constantino de Oliveira Junior, Gol’s chief executive, says Brazil’s airline industry has been growing up to 3.5 times faster than gross domestic product over the same period. “It is difficult to see an end to this cycle,” he told the Financial Times during a recent visit to New York.

But courting new customers is not always easy. For many Brazilians, air travel is still intimidating. As part of a drive to win them over, Gol staff have been on the streets handing out leaflets that explain the benefits of air over bus travel, and talking first-timers through the process of buying, understanding and using an air ticket.Another, more familiar, marketing ploy is the instalment plan. At Gol, passengers may pay for their tickets in up to 36 monthly instalments. At TAM, the market leader, they can spread the cost over 48 months. Gol charges interest of 6 per cent a month; at TAM, the credit risk is handed off to its partner banks at similar rates.

Such charges may seem to defeat the point of affordable flying. But consumers are unfazed. When buying on credit, they typically look only at the size of individual instalments rather than the overall cost.Líbano Barroso, CEO of TAM, which started its instalment plan in December, says selling this way has yet to really take off; the fact that air travel has, for many, ceased to be a luxury and is now merely a means of transport is much more important.For years I’ve been telling the doormen in my building that, when you travel more than 1,000 kilometres and buy in advance, it’s as cheap or cheaper to go by air, he says. Every one of them that has flown for the first time has never taken the bus again.”

Mr Barroso says TAM has been carrying out research among people from the poorer north east who now live in the south, who make up a large share of the new low-cost market.Meanwhile, the market is growing. At TAM, passenger numbers rose by 30 per cent in January over the same month last year, although January 2009 was a slow month because of the crisis. This year, Mr Barroso expects growth of 12 to 16 per cent.

For cheap fares, though, customers must usually buy well in advance. On TAM, a single fare from São Paulo to Salvador can cost between R$241 and R$1,768 depending on what flexibility you require and what seats are available.But even at short notice customers can get lucky. Back at Largo 13, Jefferson Carlos da Silva, a 48-year-old security guard, has just bought a one-way ticket to Recife because of a family emergency. He is flying two days from now but, at R$392, he reckons he has got a better deal than the R$323.50 he would have paid to go by bus.

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