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Best of Airways — The Aviation Cup

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Best of Airways — The Aviation Cup

INFRAERO

Best of Airways — The Aviation Cup
September 01
09:24 2017

By Jeff Kriendler • Airways Magazine, June 2014


Are Brazil’s Airports Ready For The 2014 FIFA World Cup?

In a few weeks, ADIDAS BRAZUCA balls will be kicked, rolled and headed in 12 Brazilian cities in what IATA’s CEO Tony Tyler calls “The Aviation Cup”. He explained in a February press conference in São Paulo, “In no other World Cup has aviation played such a vital role, owing to a large number of host cities, the large distances between them and the lack of transport options”. He noted that the host cities are responsible for over 75% of all passenger transportation in Brazil and warned that accommodating the additional traffic with a minimum of inconvenience will be a major undertaking. Brazilian aviation authorities estimate that some 3 million Brazilians will be traveling to the games in the various cities on top of the 600,000 foreign football fanatics that are estimated to cheer on Brazil and the 31 other nations participating.

FIFA, the governing body of International Football (Soccer) awarded Brazil the tournament seven years ago when the country’s economy was booming and it was viewed as a darling of the emerging BRIC (Brazil, Russia, India, and China) markets. In 2010, the economy grew by 7.5% and millions of new consumers entered the middle class. At the height of the economic growth LCC’s, notably Azul and Avianca Brasil, propelled growth in the air sector, doubling domestic air traffic from 2007 to 2012. This surge in demand led to increased capacity by both TAM and GOL, the established carriers, which prior to the inauguration of LCC’s, dominated Brazilian air corridors.

As the economy sputtered, combined with a devalued local currency, the Brazilian airline industry plunged into heavy losses just as the World Cup approached. Adding to the mix, thousands of demonstrators took to the streets last year protesting against government expenditures on the World Cup infrastructure investments desperately needed to upgrade stadiums, airports, and ground transportation. Final preparations for the 64 football games scheduled for June 12 until July 13 are in their home stretch, but the bloom is off the lily and concern has been expressed about the country’s ability to handle the masses that are expected to flood Brazil’s airways.

SDU was enhanced in 2007 when a new terminal was built featuring 8 jet bridges.
Before then, passengers had to walk to/from the aircraft under the hot weather and rain storms. PHOTO: INFRAERO.

Fines for Delayed or Cancelled Flights

Marcelo Pacheco dos Guaranys, the President of ANAC, Brazil’s Civil Aviation Agency, said airlines will be on the hook for accommodating passengers even if bad weather or air traffic control is to blame for delays or cancellations which are the current regulation and will be in effect for the World Cup. For flights delayed more than 4 hours, carriers face fines of as much as Rs10,000 reais ($4,200) per passenger if they do not reimburse tickets, switch them to another flight or accommodate them in a hotel. Flights are expected to operate at near capacity and hotel rooms are already at a premium, commanding inflated prices with few options.

Carlos Ebner, Director of IATA in Brazil states, “Airlines are prepared for the World Cup but there are factors beyond their control. Things like bad weather and air traffic are the unknowns”, and he says that Brazil should establish rules on fines for delays and cancellations in line with international regulations. Azul’s CEO David Neeleman said it is not fair to expect airlines to cover passenger expenses for events beyond the control of the airline, noting that it is difficult to operate in Brazilian airports which have an insufficient infrastructure, many of which are operating beyond capacity. “We are doing the most we can, with aircraft available and staff ready for any event,” he noted, “but you have weather, rain and many other factors that become barriers to what we do.”

The air conditioned departure gate areas at SDU will get maximum use for the Cup’s final match on July 13th at Rio’s Maracanã Stadium.
Built in 1950 for Brazil’s first World Cup hosting experience, Maracanã is now completely refurbished. PHOTO: INFRAERO.

2,000 New Flights Approved

ANAC has approved some 2,000 new flights and has approved many changes to the normally scheduled flight offerings, particularly to provide services in markets that do not currently have nonstop flights. LAN and TAM have announced an extra 300 international flights to support demand for the games. Argentina, Chile and the UK are set to receive the majority of the additional flights. From a domestic standpoint, TAM will increase capacity on its domestic services by 31% with an extra 750 domestic flights being scheduled between June 10 and July 15. TAM said that it would submit additional requests during the second half of the tournament once it’s determined which teams will qualify for the quarterfinal round.

In addition, both LAN and TAM have requested authorization from ANAC to operate over 200 international charters during the games. A TAM official said, “The decision to add flights came after we evaluated all the approvals granted by ANAC and with the modifications, we will operate approximately 22,000 flights within Brazil during the World Cup with a total domestic capacity of seven million seats offered on a daily average of 800 flights, of which 640 will be on domestic routes.” Claudia Sender, CEO of TAM noted, “Our operation will be highly focused on the logistical challenge of crisscrossing a continent-sized country day and night by operating flights that are synchronized with the World Cup match schedule. We will offer connectivity and transport to a large share of the fans from around the world. We are fully committed to the success of the event.”

Brazil’s second largest airline, GOL Linhas Intelligentes, received an investment of $100 million in February from Air France-KLM as the European mega-carrier targets a potential surge in travel demand during the soccer World Cup and 2016 Olympics. Under terms of the deal, Air France-KLM will buy $52 million of GOL preferred shares at $12.23 each. The balance of $48 million will come in the form of commercial agreements and a bonus based on the achievement of potential cost savings. Both companies expect to obtain regulatory approval in time for the start of the World Cup. The agreement will allow both companies to increase their reach to 318 destinations in more than 115 countries.

Hosting the games was intended to showcase Brazil’s emergence as a powerhouse, but instead, it runs the risk of not completing improvements to airports and ground accommodations. According to FIFA President Sepp Blatter, “Brazil eventually realized that it had started too late in its construction of infrastructure improvements. This is the most procrastination that we have ever experienced in World Cup preparation and they had more than 7 years to prepare.” With only weeks remaining before the first game, some stadiums have not been completely finished and many that have, lack landscaping around the stadiums.

Legendary Brazilian soccer hero, Pele, has been very disappointed by delays in his home country’s preparations for the World Cup. “It is sad as this was an opportunity for Brazil not just in terms of football. But unfortunately, we are a bit behind the pump,” he recently said. “It is difficult to say why this is happening because we had time.”

American continues to expand its large presence in Brazil with new flights to Belo Horizonte, Brasilia, Manaus, Recife, Rio de Janeiro, Salvador and São Paulo. PHOTO: JOSE SALGUEIRO.

$52 Billion Price Tag

The total investment for the World Cup is estimated to be around $52 billion, a similar amount to that which Russia spent on Sochi Winter Olympic Games earlier this year. Of that total, approximately $3.4 billion was spent on airport improvements. Initial promises that private finance would cover the cost of building new stadiums did not materialize and about 80% of the bill is being met from the public purse. Commitments to build rapid transit systems, light rail, and other transport improvements have been quietly shelved or radically downgraded. A reported 13 of the original 50 planned infrastructure works announced by the Brazilian Sports Ministry in 2010 have already been canceled and new projects were introduced, but at a much smaller scale than those originally proposed.

“The process of the privatizations took too long, so the reforms have been compromised,” said Adriano Pires, President of the Brazilian Infrastructure Institute, a consulting group in Rio de Janeiro. “All we will get is makeup to hide the awful state of the airports. It’s the classic quick fix in Brazil”.

Most Brazilians are optimistic about their country’s ability to produce a successful World Cup, however. Eternally optimistic, Brazilians will put aside the lack of some creature comforts to concentrate on what they call “Jogo Bonito” (the Beautiful Game), especially if the home team wins.

Rio is Ready

For Cariocas, as Rio natives are known, the World Cup is a forerunner for an even more extensive makeover planned for the 2016 Summer Olympic Games. Rio is Brazil’s second largest city (7 million) and most appealing to tourists. The city is served by 2 airports, Santos Dumont (SDU), located along Guanabara Bay in the center of town and Tom Jobim International Airport (Galeão – GIG), some 13 miles (20 kilometers) further up the coast to the Northeast on Ilha Governador.

Named in honor of Brazil’s aviation pioneer, Santos Dumont is arguably the world’s most accessible airport, literally within walking distance of the city’s financial district. The airport had a major overhaul in 2007 when jet bridges were constructed to allow direct access to aircraft from the terminal. The airport is in good condition to receive the throngs expected, but it has had to place large air conditioning blowers throughout the terminal to deal with summer heat, which will not be as problematic because the World Cup will be held in June and July, winter time in the Southern Hemisphere. Says the airport’s Superintendent Aparecido Ibere de Oliveira, “The dedication and effort of the Infraero team will continue the long-standing tradition of providing top quality service to the thousands of passengers visiting during the World Cup, yet another exciting event for our beloved Rio de Janeiro.”

The A380 demonstrator aircraft made appearances at São Paulo and Rio
de Janeiro in Brazil in 2012. The multi-
country visit included a flight from São Paulo for visiting airline pilots, compatibility
evaluations at Rio de Janeiro’s Galeao-
Antonio Carlos Jobim International Airport. PHOTO: JOSE SALGUEIRO.

The contract to privatize Galeão was just signed in March with the new team set to takeover in August after the World Cup rush. According to Infraero’s boss at Galeão, Superintendent Emmanoeth Vieira de Sa, “Our airport is ready to receive visitors from around the world after completing our critical projects such as runway-widening to accommodate the A380, new roofing, new elevators, and escalators, and expanded embarkation areas.” He noted that some projects were deferred until the new partners assume control.

Brazil will resort to patchwork solutions to get the infrastructure ready for the masses of football fanatics. In some cases, such as in Fortaleza (Northeastern Brazil), a temporary terminal has been constructed at a cost of nearly $725,000 to handle the inbound flow of passengers for only three months of use. On this occasion, Brazil will play Mexico in an early round, which will put the four-gated facility to its maximum test.

Brazil is the world’s third largest domestic air travel market, but passengers rated the country as being 131st in terms of infrastructure quality according to a 2013 World Economic Forum study. The Brazilian track record for airline service is not good: In 2012 more than 1 in 10 flights was delayed by 30 minutes or more and 7.5% were canceled. This poor service is despite the fact that Brazil has some of the highest domestic air fares in the world which have prompted the large growth in LCC operations.

The capital of the State of Bahia, Salvador, is the center of Afro-Brazilian culture and site of the second most popular Carnaval in Brazil – after Rio. Luis Eduardo Magalhaes International Airport airport serves vacationers from Brazil and several international points, especially Europe where travelers flock to Bahia’s sun-drenched beaches and vibrant cultural attractions. PHOTO: INFRAERO.

Privatization Came Too Late

Infraero, the government agency responsible for airports, is working nonstop to accommodate the numerous construction projects. As part of their World Cup planning, the government began privatizing several of the country’s biggest airports but industry observers say the delay in pushing through privatization has imperiled the work projects that had to be performed to accommodate the expected demand.

Critics of the government say that their privatization process started far too late to get the benefits from the expertise and funding that was intended to come from the process. The leftist government of President Dilma Rousseff was opposed to the concept of privatization and dragged its heels. The winning bidders paid more than $8 billion and represent investors from all over the world.

Infrastructure and Investment Holdings S.A. won the bid for São Paulo-Guarulhos (GRU/SBGR), the country’s largest airport by traffic volume, while Brazil Airports Consortium gained the rights to operate Campinas Viracopas (VCP/SBKP), Azul’s largest hub. Inframerican was awarded the concession for Brasilia (BSB), while in November 2013, the rights to operate Rio de Janeiro-Galeão was awarded to Odebrecht TransPort, a consortium in which Singapore’s Changi Airports International is a partner with the winning bid of $3.5 billion. Finally, Aerobrasil Consortium, which includes investors from both Zurich and Munich airports, won the bidding for Belo Horizonte (CNF/SBCF) for $788 million.

In every case, the bids were substantially above the minimum asking price with Brasilia receiving a 633% premium followed by Guarulhos at 373%, Rio Galeão at 294%, and finally Campinas at 160%. The Brazilian government attempted to maintain a 51% ownership position through Infraero but the foreign investors balked and their percentage ownership was reduced to 49% at each airport.

Recife’s Guararapes International Airport is the country’s 5th largest by passenger traffic.
Capital of the north-eastern State of Pernambuco, Recife (reef) is Brazil’s 5th most populous metropolitan area, boasting some of the country’s finest beaches. It will host the first round match between Croatia and Mexico at the newly-built 44,248-capacity Arena Pernambuco. PHOTO: INFRAERO.

Says Bill Williamson, former Editor and Chief and Co-Publisher of the now-defunct English language Brazil Herald, “Brazil will do just fine, getting everything almost ready at the last minute in spite of wide spread confusion, corruption, cost overruns and delays to the surprise of doubters and the thrill of visitors who don’t understand Brazilian traditions and “jeitinhos” – getting things done outside of the normal process. No doubt there will be some criticism from the Western press, but not as much as the Russians got for lack of hotel amenities in Sochi.”

Paulo Benaim, a thirty-year-old São Paulo business executive who frequently travels to major soccer events, symbolizes the rabid fan base in Brazil. He says, “I went to the Euro Cup 2012 in Poland and Ukraine and, especially in Ukraine, I experienced stadiums and airports that were barely finished and the landscaping needed a lot of work but it did not affect the overall good impression I had of the games. My biggest concern is not the completion of stadiums and airport amenities because unfortunately, in the end, we Brazilians are used to things being done this way. I am concerned about possible protests which might be staged by unhappy Brazilians against the corruption and poor public services. They could use the World Cup as a stage to get visibility. Their main slogan is ‘There will be no World Cup’”.

When Brazil was awarded the World Cup event, their then President Luiz  Ignacio Lula da Silva could not hide his joy, noting, “Soccer is more than a sport for us – it is a national passion”

His handpicked successor has suffered a drop in popularity since the outbreak of protests last year and is standing for re-election in October. A record sixth win for the “Selecão” could boost her chances at the polls. In the end, in spite of delays and frustrations over opportunities lost, Brazilian aviation infrastructure is certain to be the real winner as will be their visitors from abroad who will be charmed by the hard-partying Brazilian hosts.

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