Brazil Domestic Load Factor Improves as Supply Shrinks, Demand Grows

SAO PAULO--Brazilian airlines reduced the number of seats they offered on domestic flights in October, while overall demand grew, helping boost the percentage of seats filled, civil aviation agency Anac said Friday.

Brazilian airlines in October offered 2.1% fewer seats than for the same month last year, Anac said on its website. Meanwhile, RPK, or revenue passenger kilometer, a measure of demand, climbed 6.7%. That helped lift load factor, the percentage of seats filled, to 73.7%, from 67.6% in October 2011. However, load factor slipped from September, when 75.6% of seats were filled on flights.

Brazil's two biggest airlines were responsible for the pullback in seat offerings, with leading airline Tam cutting back on supply by 3.8%. Tam, which merged with Chile's Lan earlier this year to form regional power Latam Airlines Group SA (LFL, LAN.SN), said it will cut back on domestic supply by 7% in the first half of next year.

Gol Linhas Aereas Inteligentes SA (GOL, GOLL4.BR), which promised a cutback of 5% to 8% in the first half of next year, reduced October seats by 9.5%, while recently acquired WebJet cut back 6.8%. WebJet is being phased out and 20 of its planes will be returned early next year, Gol said earlier this month, leading to the cutback in supply.

Load factor climbed on the year by about 5 percentage points at Gol to 70.4%, while for Tam load factor jumped almost 10 percentage points from October 2011 to 76%.

Azul, which is taking over Trip to consolidate its position as Brazil's third-biggest airline, once expanded seat offers. The carrier, which has focused on serving smaller cities that Tam and Gol don't fly to, offered 11.8% more seats on domestic flights, while Trip expanded 18%.

Write to Paulo Winterstein at [e-mail]

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