Domestic traffic impacted by TAM A320 crash consequences

The consequences of the fatal crash at Sao Paulo Congonhas airport on 18 July involving a TAM A320 has had a measurable impact on the demand for domestic air travel in Brazil. Having averaged over 10% growth in the first half of 2007, traffic in July was up just 2% and in August it was down 5%.

Chart: Brazilian Domestic Traffic Growth
Source: Infraero

Given that Varig collapsed in July 2006 what this actually means is that whereas domestic traffic in the first six months of 2007 was up around 25% compared with 2005 for the following two months traffic has been at the same level as 2005 which indicates that underlying domestic traffic demand is down 20%.

TAM loses market share as load factors suffer

Maybe not surprisingly comparing monthly data for September 2007 with a year earlier shows that TAM has lost market share while GOL, BRA and Oceanair have all benefited.

Chart: Brazilian Domestic Market
Source: ANAC

Between them TAM and GOL now have around 85% of the Brazilian domestic market with no other carrier having more than 5%. In August 2007 average load factor across all airlines was just 59% down 14 percentage points compared to a year earlier.

Chart: Brazilian Domestic Market
Source: ANAC

In September load factors were still down but now the difference had been reduced to just eight percentage points compared to the previous year.


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