Jan. 23 (Bloomberg) -- Remote Amazon airports, new computer operating systems and too-short runways are among the challenges for airlines including Gol Linhas Aereas Inteligentes SA as they shuttle 3.6 million people around Brazil during the World Cup soccer championship.
Failing to deliver passengers to their destinations in a timely manner could come with a hefty price tag: as much as 3.2 million reais ($1.3 million) in fines per flight.
Marcelo Pacheco dos Guaranys, president of Brazil’s civil aviation agency known as Anac, said airlines are on the hook for accommodating passengers even if bad weather or air traffic control is to blame for delays or cancellations, and the regulator doesn’t plan to ease the rules during World Cup. For flights delayed more than four hours, airlines face fines of as much as 10,000 reais per passenger if they don’t reimburse tickets, switch them to another flight or put them up in a hotel.
While Brazil’s largest airports in Rio de Janeiro and Sao Paulo are already operating above capacity, other cities are bringing new facilities online that will remain mostly untested until the games start. Cities like Natal have a single runway and limited slots for flights, while some smaller cities may not have enough hotels to accommodate stranded passengers.
“Airlines are prepared for the World Cup, but there are factors beyond their control,” said Carlos Ebner, director of the International Air Transport Association in Brazil, adding that 70 percent of delays in Brazil are due to weather and airport conditions. The group says Brazil should bring its rules on fines for delays and cancellations in line with international regulations. “Things like bad weather and air traffic are the unknowns.”
Tam SA, a unit of Chile’s Latam Airlines Group SA, said in an e-mail it would hire 1,000 temporary workers to handle the swell of passengers during World Cup. As the games get closer, airline Tam will also charge as much as 2,600 reais per one-way trip during the tournament amid concern that disorganization at airports will hurt operations and pare margins, a person familiar with the plan who asked not to be named because the strategy isn’t public told Bloomberg News.
Latam fell 0.6 percent today in Santiago to 8,723.7 pesos and Gol dropped 4.6 percent to 10.94 reais.
David Neeleman, chief executive officer of Azul Linhas Aereas Brasileiras SA, said it’s not fair to expect airlines to cover passenger expenses for events beyond their control. He said it’s difficult to operate in Brazilian airports with insufficient infrastructure.
“We are doing the most we can. We have planes available, we have staff ready for any event,” Neeleman said in an interview in Sao Paulo. “You have weather, you have rain, you have many things that become barriers to what we do.”
Avianca Brasil and Azul will cap World Cup flights at 999 reais. Neeleman told reporters capping flights would cost his company 20 million reais in lost revenue.
Gustavo Rocha, CEO of Invepar, which runs Sao Paulo’s Guarulhos international airport, said its new terminal will be ready by the May deadline set by the government.
“It’s a huge challenge to do an investment of this size in the time allotted,” Rocha said in an interview in Sao Paulo on Jan. 16. “So far we are still on route and the skies are blue.”
Anac last week announced almost 2,000 new flights and changes to more than 80,000 normally scheduled flights to attend to World Cup demand. Guaranys said while the World Cup flight grid has been approved, it remains flexible to fill unforeseen demand as the tournament gets closer.
Guaranys told reporters last week that Anac was “very conservative” in its evaluation of airport capacity and didn’t approve any new flights that airports couldn’t handle. More than 7 percent of flights were canceled in 2012, according to Anac data.
“Companies can always charge more, go to court or charge extra in other areas,” Guaranys said this week in an interview in Brasilia. “Of course you have some cancellations, but that’s part of the industry.”