MD11_SW
26th May 2005, 01:14
Founded 78 years ago, Brazilian Varig Airlines is one of the most traditional and respected airline companies in the world.
Since 1945, the company is controlled by a profitless foundation, supposed to provide social benefits for the company’s employees.
Although the company has always been privately owened, since the early 60s it has functioned as the country’s flag carrier, always keeping an outstanding operational and safety record.
Throughout the 80’s, Brazil’s struggle against inflation has compromised the whole country’s economy. The Fernando Collor de Mello’s government’s started in 1990 with a strong and unreasonable public services fares control policy, that has cut the aviation industry legs. Collor de Mello decided to keep the fares artificially low, even after the companies proved that there revenue were well bellow their expenditures.
On the other end, Collor de Mello, opened the international lines to it’s protégé Wagner Canhedo, owner of VASP Airlines, starting a disastrous operation that ended up with several additional counterparts flying to Brazil (including Delta, Continental and American) and VASP giving up its international adventure a few month later.
Collor the Mello was soon impeached by the Brazilian Congress, in a corruption scandal that included his relations with Canhedo and VASP. Within ten additional years, two out of the three great airline companies of that period (VASP and Transbrasil) are already grounded for good.
In spite of all the losses inflected by the preposterous government policy, Varig has survived and has lately sued the government demanding compensation for its purposely deprivation policy. Up to now, it has won up to the one but highest court of the country, something between $1 and $2 billions.
On the shadow of Varig’s difficulties, a small commuter liner – Transportes Aéreos Marília (TAM) - found its way up, at first investing everything in marketing (leaving behind safety, maintenance and training) and ignoring every single regulating law of the country, including crew duty limits, training specifications and even IAL Minima...
Varig kept doing it by the book, but the succession of mismanagements, the oil crisis, 09/11 and the Iraq War brought it to its knees.
Since 2002, the “low fair” factor also arrived to Brazil, materialized in GOL Airlines. The tropical touch was the miracle through which the newly born company has received for free the best São Paulo Congonhas downtown airport slots, the very same ones the other companies where fighting for long ago. GOL has no training center (it has hired its pilots out of VASP and Transbrasil former flight group) and overhauls its airplanes on Varig's VEM (Varig engineering and Maintenance) workshops.
TAM and GOL have won two thirds of the internal market that has been once 65% of Varig. The Old Lady has accumulated a huge debt, most of it with the same government that owes her $ 2 billion, but refuses to accept it and make a compensation deal.
The worst part of this sad tale is that neither TAM nor GOL are interested in being a real flag carrier. Varig disputes its international lines with the greatest world airlines - Aeromexico, Air France, Alitalia, American, British, Continental, Delta, Ibéria, JAL, KLM, Korean, Lufthansa, SAA, Swiss, TAP, United, etc, many of them protected and openly subsidized by it’s governments and it’s still resisting. TAM and GOL are only interested in the few highly profitable lines, the real ‘fillet mignon’.
If the Brazilian government does not change it’s neglecting attitude, Brazil's long history of sovereignty on its air links with the rest of the world will probably vanish.
Since 1945, the company is controlled by a profitless foundation, supposed to provide social benefits for the company’s employees.
Although the company has always been privately owened, since the early 60s it has functioned as the country’s flag carrier, always keeping an outstanding operational and safety record.
Throughout the 80’s, Brazil’s struggle against inflation has compromised the whole country’s economy. The Fernando Collor de Mello’s government’s started in 1990 with a strong and unreasonable public services fares control policy, that has cut the aviation industry legs. Collor de Mello decided to keep the fares artificially low, even after the companies proved that there revenue were well bellow their expenditures.
On the other end, Collor de Mello, opened the international lines to it’s protégé Wagner Canhedo, owner of VASP Airlines, starting a disastrous operation that ended up with several additional counterparts flying to Brazil (including Delta, Continental and American) and VASP giving up its international adventure a few month later.
Collor the Mello was soon impeached by the Brazilian Congress, in a corruption scandal that included his relations with Canhedo and VASP. Within ten additional years, two out of the three great airline companies of that period (VASP and Transbrasil) are already grounded for good.
In spite of all the losses inflected by the preposterous government policy, Varig has survived and has lately sued the government demanding compensation for its purposely deprivation policy. Up to now, it has won up to the one but highest court of the country, something between $1 and $2 billions.
On the shadow of Varig’s difficulties, a small commuter liner – Transportes Aéreos Marília (TAM) - found its way up, at first investing everything in marketing (leaving behind safety, maintenance and training) and ignoring every single regulating law of the country, including crew duty limits, training specifications and even IAL Minima...
Varig kept doing it by the book, but the succession of mismanagements, the oil crisis, 09/11 and the Iraq War brought it to its knees.
Since 2002, the “low fair” factor also arrived to Brazil, materialized in GOL Airlines. The tropical touch was the miracle through which the newly born company has received for free the best São Paulo Congonhas downtown airport slots, the very same ones the other companies where fighting for long ago. GOL has no training center (it has hired its pilots out of VASP and Transbrasil former flight group) and overhauls its airplanes on Varig's VEM (Varig engineering and Maintenance) workshops.
TAM and GOL have won two thirds of the internal market that has been once 65% of Varig. The Old Lady has accumulated a huge debt, most of it with the same government that owes her $ 2 billion, but refuses to accept it and make a compensation deal.
The worst part of this sad tale is that neither TAM nor GOL are interested in being a real flag carrier. Varig disputes its international lines with the greatest world airlines - Aeromexico, Air France, Alitalia, American, British, Continental, Delta, Ibéria, JAL, KLM, Korean, Lufthansa, SAA, Swiss, TAP, United, etc, many of them protected and openly subsidized by it’s governments and it’s still resisting. TAM and GOL are only interested in the few highly profitable lines, the real ‘fillet mignon’.
If the Brazilian government does not change it’s neglecting attitude, Brazil's long history of sovereignty on its air links with the rest of the world will probably vanish.