US major, Delta Air Lines believes changes to its network in Brazil will help it overcome an economic slowdown in the country as it leverages its partnership with local carrier Gol Linhas Aéreas Inteligentes in the market.
The carrier is reducing its capacity into Brazil this winter through route switches, frequency reductions and aircraft changes in preparation for what its vice-president of Latin America, Mexico and Caribbean, Nicolas Ferri describes as a “long cycle” economic slowdown in the country, in an interview posted on the airline’s website.
“We understand this is an economic cycle in Brazil – probably a long cycle – but this too shall pass. As a result, we have reduced our capacity there. In December, we’ll be down 20 per cent year-over-year,” said Ferri.
Delta is realigning its network into Brazil and reduced capacity on its flights between Atlanta to Rio de Janeiro Galeao and Sao Paulo Guarulhos and between Detroit and Sao Paulo through the use of smaller single-aisle equipment.
“We’re very quick at understanding and forecasting dynamics, as well as moving our assets to where they will generate the most return. The results we’re seeing in Latin America are a testament to the agility we’ve had in terms of deciding which locations to serve,” said Ferri.
Alongside this redeployment, Delta is also cutting its Atlanta - Brasilia route and instead serving the Brazilian capital from Orlando from next month, alongside launching a new link from the Florida city to Sao Paulo.
“The reason behind this move is the fact that Florida is one of the biggest destinations for Brazilians. Between second home ownership and the leisure aspect of Disney World, the sunshine state is a big market for Delta,” said Joe Esposito, Vice President – Network Planning, America, Delta Air Lines.
The carrier has invested heavily on capacity in Latin America over recent years and the region now comprises eight to nine per cent of the total company available seat miles. But, right now, the greatest growth for the company is in the domestic system which is being supported by the contracting of its widebody operations in international markets, especially in Brazil and the Pacific arena. This will mean the Delta strategy in Brazil will lean more heavily on its relationship with Gol.
“We’ve also doubled down on our efforts to continue expanding and enhancing our cooperation with Gol. It’s this combination that allows us to continue to provide great customer service and to do so profitably. Through our partnership with Gol, we cover 99 per cent of the demand points in Brazil.” said Ferri.
The partnership with Gol makes Delta “relevant” in the Brazilian market, according to Joe Esposito and allows it serve more markets more efficiently and effectively than with direct flights from the US market.
With Gol, we wanted to partner with a carrier that can carry our customers beyond that initial hub. There’s dozens of destinations beyond Sao Paulo and Rio that, if we didn’t have Gol, we couldn’t access the rest of the country. If we want to be relevant in Brazil, we need to serve more than just those top two destinations,” he said.
Schedule data from OAG shows that Delta’s capacity reduction in Brazil will reduce its share of monthly seats in the US – Brazil market to 10.8 per cent in December 2015, down from 13.4 in the same month last year as one-way capacity reduces from 41,000 seats to just 33,000, a 19.2 per cent decline.