02 April 2011

Low Cost is Killing Bus Traffic In Brazil

Gol which is the largest Low Cost airline in Brazil and together with TAM carries the vast majority of the Country's domestic traffic came from humble beginnings. It was the idea of the son of one of the largest coach providers in the country.

As you can see from the diagram - the airline traffic overtook bus in mid 2008.

For the actual detailed chart please look here for the Portuguese language based version.

This is a classic example of how the world can benefit from air transport. However in my view the growth of the airline space will not come necessarily at the expense of the bus traffic. Our estimates are that the bus traffic will smooth out after a while and that will form the bedrock of the long distance coach traffic. Already we see the market evolving. However the achaic reservations systems and the complexity of booking online and fulfilling is significantly adding to the woes of the long haul operators. They need to rapidly change with new reservations systems and modern distribution attributes.

Without them - this chart will look a lot worse in just a few years.



Mike said...

Does the increase in Air traffic come at the cost of jobs in the busing industry? I definitely think this would be something worth examining-- I feel as if jobs in the air travel industry are a bit less accessible than those in the public transportation industry (i.e. licensing for bus drivers vs. licensing for pilots).

Mark Lenahan said...

One thing you have to realize is that bus trips across Brazil take a long time. This is partly due to the distances and partly due to the poor road network. SP to Salvadore is more than 24 hours on board the bus, you also need to pay for accommodation on the way if you aren't able to cope with that in one go. (That is not even a contrived example at about 1/4 the length of Brazil - look up Porto Alegre to Belem on Google maps for the extreme case!)

The growing middle class just won't accept road as a form of inter-state transport.

This is subjective but culturally the connection between states is very strong. Many people in Rio or SP have close family in the North or South. Brazil is a pretty cohesive nation.