Technical study contributes to well-being of consumers at Congonhas Airport
In order to contextualize a proposed regulatory change and its direct effects on consumers’ well-being, FGV Projetos recently carried out a technical study on the commercial aviation sector. Researchers analyzed the economic and regulatory impacts of increasing the number of competitors and revising the rules for the allocation of airport slots. After the study was completed and delivered, the National Civil Aviation Regulatory Agency applied the proposed changes during the recent redistribution of slots that previously belonged to Avianca at Congonhas Airport.
José Bento do Amaral, the executive manager of FGV Projetos, explains the effects of this change. “For example, Azul managed to more than double its number of slots at Congonhas. In fact, the final number may be even higher, if the airport is privatized and current slots are redistributed in line with the new rule,” he says.
A slot is an authorization to land or take off at a particular airport during a specified time period. In Brazil, the National Civil Aviation Regulatory Agency is responsible for assigning them.
Under the old rules, 94.8% of slots were occupied by major airlines and this concentration resulted in higher average fares and fewer passengers transported. The study’s central hypothesis is that when the concentration of slots decreases, the degree of competition will increase and this will result in more passengers transported and optimization of the Brazilian aviation network.
To test this hypothesis, different scenarios involving the distribution of new slots at Congonhas Airport in the city of Sao Paulo were simulated. In simulations involving proportional allocation in line with domestic market share, the results indicated that competition would increase, infrastructure use would be optimized and contestability would be ensured. For consumers, this means lower prices, more flights and higher quality services.
José Bento stresses the new model’s benefits. “This new distribution model generates more competition, leading to better quality services and more competitive prices, thereby benefiting consumers and the Brazilian economy as a whole,” he says.