Brazil Suspends TAM Ticket Sales As Delays Surge

November 29, 2010

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Brazil's civil aviation regulator suspended sales of domestic tickets by airline TAM for all flights until December 3 after cancellations and delays topped the industry average.

The regulator, known as Anac, also said on Monday that it had begun an audit of Sao Paulo-based TAM, Brazil's biggest airline. The audit could last at least a week.

"Anac verified that TAM is having delays and cancellations above the sector's average," the agency said in a statement. "The expectations are that the situation will be fully resolved by Wednesday, otherwise new steps will be adopted."

The delays underscore the difficulties facing Brazil's airline industry as surging demand from a growing middle class stretches airport capacity and companies struggle to expand operations without incurring too much overhead.

On Monday, almost 22 percent of TAM's flights were delayed and 11 percent were cancelled, according to data obtained from government-owned airport operator Infraero. For the entire aviation traffic system, delays were 12 percent and cancellations were 5.6 percent, according to Anac.

On Sunday, TAM cancelled 13 percent of its 870 flights and reported delays in 25 percent.

TAM, controlled by the Amaro family, said its delays and cancellations came after heavy rains in some of Brazil's largest cities at the end of last week forced it to reschedule most domestic flights. The changes also triggered some capacity strains because it blocked management from rotating flight staff in a more flexible way.

Rival Gol Linhas Aereas was the target of Anac's scrutiny in early August after the delay and cancellation of more than 300 flights during the winter holiday season.

At the time, Gol may have overstretched flying schedules to the extent that many pilots had reached their maximum allowable hours. Under current regulations, pilots are required to take rest days.

Anac's auditing of TAM comes a week after airlines agreed to a government plan to avert overbooking and stick to operational procedures during the upcoming Christmas and New Year holiday season.

(Reuters)