For part of 2019, travel and tourism professionals who promote and sell Visit USA product to Brazil, the largest market in South America, were optimistic that the market would sustain a remarkable recovery from a low point in 2016, the trough year of a two-year economic recession during which inbound travel to the United States declined 24 percent. Then, in a turnaround, arrivals from Brazil to the U.S. increased 28 percent from 2016 to 2018.
But it hasn’t gone as well as the industry had hoped it would this year, as the table below illustrates.
What happened? In its latest monthly report on the performance of the tourism industry in Brazil, the travel trade publication PANROTAS, which reviewed developments of the first half of 2019. Among the key points noted are the following, as INBOUND has digested them.
—Nothing hampered industry growth and recovery as much as an “aviation crisis” triggered by the bankruptcy filing last December of Avianca Brasil (it is a separate company from Avianca, the flag carrier of Colombia), reduced the number of available airline seats, causing domestic airline prices to increase by as much as 120 percent and international prices by 30 percent, with the largest increases in ticket prices for travel to the United States.
—Among international airlines marketed by the 29 members of Abracorp (Brazilian Association of Corporate Travel Agencies), among the top 10 carriers in its ranking, only LATAM, United Airlines and Copa Airlines showed growth in the first half of 2019.
1 – LATAM: 19.7% of share (+ 11.2%)
2 – American Airlines: 13% (-5.3%)
3 – United Airlines: 10.7% (+ 20%)
4 – Air France-KLM: 9.3% (-7.5%)
5 – Lufthansa/Swiss: 6.8% (-20.8%)
6 – Delta Air Lines: 5.9% (-3.4%)
7 – British/Iberia: 5.2% (-7.7%)
8 – Emirates: 4.8% (-2.3%)
9 – TAP: 3.7% (-13.2%)
10 – Copa: 3.5% (+ 10.5%) Source:
—The economic crisis in Argentina—where the economy has plummeted into a deep recession, its currency has grown woefully weak against the U.S. dollar, and inflation is out of control—has had an impact on numbers in Brazil and “the balance sheets of large companies such as CVC Corp. and Decolar/Despegar.”
—Through all of this, it comes as no surprise that consumer confidence and the business community’s confidence has taken a hit. The São Paulo City Consumer Confidence Index shows that, since the beginning of the year, both declined, although consumer confidence experienced a small bump at the end of the first half of the year.
Note: The ICC and ICEC range from 0 to 200 points. The level from 100 to 200 points is considered optimistic and below 100 points, pessimistic. Although the indicators are from the city of São Paulo, they follow the trend of what is happening in the rest of the country since the largest city in Brazil represents 11 percent of the national GDP.
—Late-Breaking Development: Delta Air Lines last week announced late last week the acquisition of 20 percent of LATAM Group for $ 1.9 billion. Together, the two companies will serve 435 destinations worldwide and will carry more passengers between North America and Latin America than any other company or partnership ever deployed. One gets and idea of the reach of LATAM by taking note of a just released OAG study which showed that LATAM has a 41 percent share of international carrier activity from São Paulo’s international airport, which is the country’s busiest.