A Study of Carriers Pricing Strategies for Domestic Travel in Brazil

Introduction

The carrier pricing strategies in Brazil are determined by the prevailing rates, which are determined by various factors, in transport industry. As such, each of the domestic carriers charges fair prices for movement of commodities within the national boundaries. The term ‘commodity’ implies the items that are being shipped using the carriers. There are many aspects that are considered in the determination of the pay that a person will pay in order to use the domestic carriers.

One of the determinants of the carrier prices is the commodity class. A classification system has been developed whereby goods of similar nature grouped together before being assigned a shipping price. Commodity classes pricing strategy also applies when it comes to transportation of people because different passenger classes require its occupants to pay specified amounts as transport charges. Another pricing strategy that is used in the determination of prices is the weight breaks. Ideally, an increase in the size or volume of the items being shipped will determine the rates that will be applied. With reference to this strategy, it is apparent that the cost of transporting heavier items is higher than that of transporting lighter items.

A study of the operations of the domestic carriers in Brazil indicates that there are business aspects that determine the pricing strategies. As such, individual carrier companies determine their own pricing by considering the prevailing market conditions. For instance, the GOL and TAM airlines are low-carriers that offer their services in cities and towns such as Sao Paolo and Brasilia. These companies compete on the basis of costs and in order to retain their customers and enjoy competitive advantages, each has been forced to maintain low carrier prices. Initially, TAM enjoyed the monopoly but when GOL commenced its operations in early 2000, carrier prices have reduced significantly. The government also has a hand in the determination of carrier prices in Brazil. The government imposes regulations on the pricing process because it intends to protect the interests of the users. The main intention of the government is to promote the aviation industry by preserving the rights of airline users.

Conclusion

With reference to the arguments that have been raised above, it can be confirmed that the determination of carrier prices in Brazil is not a sole responsibility of a single body. Different players in the sector play significant roles in the pricing process. The participation of key players leaves no one dissatisfied. On the other hand, it facilitates the improvement of the country’s aviation industry, which in turn boosts the performance of the economy.


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