Consumer Behavior in Brazil: Crisis boosts advancement of aviation
Brazil is experiencing one of its best moments in the aviation industry, and today the country with the second largest fleet of jets, behind only the United States and the third most produced aircraft of this type. Ahead of Embraer (a Brazilian local manufacturer), are only the American Cessna and Canadian Bombardier.
The good performance is due in large part to the international crisis started in 2008, which created a favorable environment for the purchase of these aircraft in other countries, and the growth of emerging.
“The real overvalued, depressed foreign markets, the emergence of better interest rates and even discounts that just reducing the price, and the good performance of the national economy are factors that have made it easier for Brazilians to buy these aircraft abroad” evaluates Francisco Lyra, head of consultancy C-Fly Aviation and former president of ABAG (Brazilian Association of General Aviation).
He explains that traditionally had more business aircraft in the United States and Europe, but with the ongoing crisis in these markets and the advancement of developing economies, especially the BRIC (Brazil, Russia, India, China and South Africa) have become centers other large engines of this industry – and the trend is expanding.
“Of course they are benefiting from the moment circumstantial, but in addition, these countries are continental in scale and are investing to expand the sector. China is building hundreds of regional airports and Brazil plans to build more than 200. There is a huge demand, and growth will continue, “said Lyra.
According to the Brazilian Institute of Geography and Statistics (IBGE), Brazil has 5,565 municipalities, but of these, according to the analyst heard by BBC Brazil, only 130 have airports served by airlines.
In contrast, there are 4,105 airstrips for small aircraft, with 713 paved and 3,392 land. In comparison, the United States has 500 airports serviced by commercial airlines and 18,000 directed to jets.
The tracks of land can only be used by turboprops, and are usually located in the interior regions of the country, as well as farms. The figure denotes the growth potential of the business jet market in the country and the pent-up demand for more regional airports.
“The capillary system is by aviation. In a country the size of Brazil is not feasible for an entrepreneur to have national reach through the commercial airlines. This becomes the only option,” indicates.
Mirando get a larger share of this segment, Embraer, which since 1969 has become the third largest manufacturer of commercial aircraft and defense in the world, behind only Boeing and Airbus , has plans to increase its investments in the executive market.
While the first aircraft type has been delivered in 2002, the company only assembled a complete line of jets five years ago, with models that cost $ 4.1 million (£ 8.2 million) to R $ 55 million ( U.S. $ 110.06 million).
In this short time the Embraer already holds a prominent position globally, accounting for 15% of the deliveries of these aircraft in the world in 2012 – and the intention is to increase this number even among the Brazilian public.
“Brazil is going quite well, the buyer’s market, and we expect to deliver a significant number of aircraft in the country this year,” says Marco Tulio Pellegrini, vice president of Embraer Executive Jets, which currently has factories in Portugal, United States and China, in addition to Brazil.
The jets now account for 21% of sales of Embraer, and intention, Pellegrini says, is that the figure is increased to 25% by the end of 2013.
He explains that even in countries where there is still a market crisis, and that the United States, for example, although not register increased sales, still the number one shopping world.
“The number of millionaires in Brazil and the world continues, business is booming. Exists some uncertainty about the global economy, but is a doubt. Persons who lead the business world accept taking risks in times of uncertainty. And where is do well, “he says.
The United States top the list of buyers of Embraer, with 40% of the 630 Brazilian jets currently in operation worldwide. The Brazil is second with 20%, followed by Britain, Germany and UAE.
The analyst Francisco Lyra says there is a stereotype among the public that the jets are associated to the luxury market, when in fact, despite the sophistication, they are primarily aimed at the business world and help to optimize the time and resources of larger companies.
“There is this view of stewardship, luxury, but actually it is a mobile office with internet, phones and meeting venues. Nowadays, 80% of trips jets are related to decision-making on investments. These are CEOs, presidents, directors, and the cost per hour of these people is so high for companies that is better to send them a private plane rather than leaving them idle in traffic,” he explains.
In addition, large banking networks and retailers (like supermarket, which have national presence) could not be managed differently, and there is also the issue of security and confidentiality. “You discuss strategic decisions that take into account investments of billions of dollars on a flight with 150 people, or a bus?” He says.
Lyra says Jets Ultra Long Range (ULR, or long-range jets), with greater flying range, were one of the fastest growing segments within the business aviation in recent years and they are bought by investors and the largest mega multinational . “This type of aircraft had demand in Europe. During times of crisis, we need to seek new business,” he says.
In the case of Embraer, the model in this category is of similar size to the ERJ-190, which is used by airlines around the world, and in executive configuration can take up to 19 passengers. “The buyers of these aircraft are usually large companies, and even governments of various countries,” says Marco Tulio Pellegrini.
He explains that the airplane is able to route to the United States and Europe with only one stop and that among its differentials are five cabin zones, with entrance hall, living room and meetings and even a suite with double bed and bathroom with shower.
“It’s like your house has every comfort, but with the difference being 40 thousand feet,” Pellegrini says, adding that there are hundreds of options available to configure the aircraft interior – enough £ 110 million to personalize this.