Post on 03-Apr-2023
The rise of Middle Class and the
Credit Impact on Demand for Air
Transport in Brazil
SET 1
Aluno: Leonardo Carvalho da SilvaProfessor: Alessandro Oliveira
Brazilian Middle Class4 to 10 minimum salaries
44,7 million has arise in Brazil to Middle Class (from 2003 to 2013)
Consumption of new products and services (as Air Transport)
Brazil: Airline industry
Will be the double in size until 2020 – adding 146 billion to the GDP
Increase of 2.5% in the airline industry for each 1% increase in GDP
2010: sales record of airline tickets due the Middle Class entrance
Source: ABEAR, 2013.
More PAX each yearThe domestic and international
travel growth from 2002 to 2012 is 180%
Reflex of Economic Growth
Increase expenditures in travels (2002-
12)
Passengers distribution:
monthly household income
Annual trips Frequency
% passengers only
Source: ABEAR, 2013.
Credit in the Air Travel
The usage o credit cards increased 142% from 2003 to 2008
Partnership with banks or development of their own card for payments
Literature and TheoryKharas
(2010)
Characterization of the global middle
class, trends, growth projections and
behaviour. About Brazil (in 1980) a
brief statement of the inequality as a
factor influencing growth and masking
certain indices.
Banerjee
e Duflo
(2008)
Argues that the middle class has
stopped focusing exclusively on needed
items. With the social ascent other
consumption possibilities were opened.
From 1.8 billion in 2010 to 4.9 billion in 2030, an increase of 85%
Expenses improving the life quality
Access a new forms of credit and loans
Great attention to emerging economies in particular China and India
Literature and Theory
Literature and TheoryBilotkach
(2005)
And
Ueda
(2012)
Three different scenarios for
acquiring tickets between London
and NY, the third one focussed on
advanced purchase with low and
homogenous fares. We can suppose
strongly that part of that
customers are from middle class
income.
Phenomenon that was observed by
Bilotkach can be applied in
Brazil: The study of GRU and
CGH identify similarities.
Brazil: Airline industry
Source: ABEAR, 2013.
Air transport is the cheapest way to travel planned long distances in Brazil
There was an increase in travellers with lower frequency of annual flights of 21 (less than ¼) to 37% (more than 1/3)
Travellers for personal reasons (not working), increased from less than half (48%, 2009) for approx. 2/3 (66%, 2013)
Literature and Theory
O’Connell e
Williams
(2006)
Brazil and India as emerging
economies, enables us to set
parallels regarding the air
transport of both countries.
The internet as instrument of
popularization and access of air
transport. Evidencing the use o
credit as main form of payment.
Literature and Theory
Dana
and
Orlov
(2009)
The use of internet has
increased the purchase of
airline tickets in the US.
Internet penetration have a
bigger impact on load factors on
flights in more competitive
markets and on flights with
fewer total passengers
HypothesisH1 - Aumento do crédito impacta positivamente a demanda por transporte aéreo.
H2 - A disponibilidade de Transporte aéreo varia negativamente com o aumento da desigualdade na distribuição de renda
H3 - A demanda de viagens aéreas da classe média brasileira é essencialmente por razões turísticas e de lazer
Modelo Conceitual
Aumento da Renda
Passagens mais
Baratas
Demanda de Transporte Aéreo da Classe Média
Crescimento da Demanda Desigualda
de na Distribuiç
ão de Renda
Aumento do Crédito
Aumento das viagens
Turísticas
H1 H3
H2
ReferencesABEAR, Associação Brasileira das Empresas Aéreas. Agenda 2020. 2013.BANERJEE, Abhijit V.; DUFLO, Esther. What is middle class about the middle classes around the world? The journal of economic perspectives: a journal of the American Economic Association, v. 22, n. 2, p. 3, 2008.BILOTKACH, Volodymyr. Understanding Price Dispersion in the Airline Industry: Capacity Constraints and Consumer Heterogeneity. Darin Lee, Org. Advances in Airline Economics, vol. I. Elsevier. 2005DANA, James D.; ORLOV, Eugene. Internet penetration and capacity utilization in the US airline industry. Northeastern U. College of Business Administration Research Paper, n. 08-001, 2009KHARAS, Homi. The emerging middle class in developing countries. 2010.MARAZZO, Marcial; SCHERRE, Rafael; FERNANDES, Elton. Air transport demand and economic growth in Brazil: A time series analysis.Transportation Research Part E: Logistics and Transportation Review, v. 46, n. 2, p. 261-269, 2010.O’CONNELL, John F.; WILLIAMS, George. Transformation of India's Domestic Airlines: A case study of Indian Airlines, Jet Airways, Air Sahara and Air Deccan. Journal of Air Transport Management, v. 12, n. 6, p. 358-374, 2006.PARKER, John. Burgeoning bourgeoisie: A special report on the new middle classes in emerging markets. The Economist, v. 14, 2009.UEDA, Thiago Vinicius Alves. Partir do aeroporto de Congonhas é mais caro que de Guarulhos? Um estudo econométrico dos preços das passagens aéreas. Journal of Transport Literature, v. 6, n. 3, p. 121-135, 2012.