Jan. 14 (Bloomberg) -- Avianca Brasil became the second Brazilian airline to cap the price of travel ahead of soccer’s World Cup, matching a promise by Azul Linhas Aereas last week that no trip would cost more than 999 reais ($424).
The company’s move comes after government warnings to airlines and hotels about price gouging during the month-long tournament that kicks off June 12.
“We are betting that this promotion will bring more passengers,” Avianca Chief Executive Officer Jose Efromovich told reporters in Sao Paulo today, saying the offer would run from February to July 31.
Brazil’s tourist agency Embratur published a report in August that showed hotels in the 12 host cities were raising prices as much as fivefold, while Brazilian media reported a 50-minute flight between Rio de Janeiro and Sao Paulo during the tournament costs as much as $1,000, more than some flights from Rio to New York.
Brazil’s biggest carrier, Tam Linhas Aereas, hasn’t introduced a cap on fares, and the No. 2 airline Gol has yet to announce its plans for the World Cup. In October, Tam had 39 percent of the market and Gol had 36 percent, according to data on total kilometers of air travel purchased by customers released by the National Agency of Civil Aviation. Azul had 13 percent and Avianca had 7.5 percent.
Later this week authorities will give details of a new flight grid for the World Cup. The tournament is expected to bring as many as 600,000 foreign visitors and 3 million domestic tourists for games that will be played across South America’s biggest country.
Efromovich said his company, which hasn’t been profitable in more than a decade, has asked the state regulator for 430 additional flights for the World Cup, about half of the 850 Tam has requested. In total, domestic airlines have asked for a total of 1,523 extra flights, the regulator said.
“Our investment to operate these flights will be more than 50 million reais,” said Tam President Claudia Sender in a statement. The company said its prices would be “competitive and accessible.”
Azul founder David Neeleman told reporters last week that capping flights at 999 reais would cost his airline 20 million reais in lost revenue, and the World Cup would hit income because of the loss of business travelers during the period.
Brazil’s civil aviation authority, ANAC, welcomed Azul’s move, saying it was monitoring the sector for abusive prices and would report any abuses to the consumer watchdog. ANAC said it had no set maximum price for tickets.
“We hope other companies will follow this trend, but we consider it essential that they continue also offering promotional prices,” ANAC CEO Marcelo Guaranys said
Brazil’s size means fans following specific nations face long treks. The U.S. has the most challenging schedule in the opening phase, playing three games in cities which are a combined 8,866 miles (14,268 kilometers) apart.
The state of the airports in host cities is among concerns for World Cup organizers. Renovation work at many locations is behind schedule, and some projects won’t be completed until after the event.
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