Story ID: GPtam12192014
TAM Reveals Plans for Regional Expansion
By: Gregory Polek
Caption: Decision on order for 18 new jets due in first quarter 
Word Count: 384
Brazil’s TAM Airlines plans to add between four and six new regional routes every year into the foreseeable future, regardless of whether or not the country’s legislature approves any regulatory changes meant to encourage regional airline development, the airline announced Friday. It added that it has reached an advanced stage of negotiation with Embraer and other manufacturers on a planned firm order for 18 airplanes in the size category of Embraer’s E2 E-Jets and options on another 10. TAM said it expected to conclude negotiations by the end of next year’s first quarter.

The Brazilian government has proposed legislation to take effect next year called the Regional Aviation Development Program (PDAR), meant to subsidize regional service to airports that handle less than a million passengers a year. However, Brazilian lawmakers have yet to approve the measure and disagreements over the formula for determining the size of airplanes to benefit from the subsidies persist.

To TAM, however, developing airport infrastructure in small cities will prove more important than the subsidy model the government plans to regulate, noted TAM CEO Claudia Sender.  “Regional aviation is where we started; it is in our corporate DNA,” she said. “We serve cities in the so-called average-density markets and, therefore, we are already established in this segment...Given its vast size, regional aviation is vital to Brazil.”

TAM cites fleet investments of $4.6 billion through 2018 as evidence of its willingness to help expand domestic aviation in Brazil. That investment, which covers 50 new aircraft, does not include the 18 airplanes on which it plans to decide by the end of the first quarter. Until those airplanes get delivered, it said, it would operate regional routes using leased equipment or airplanes already in its fleet. Its 144-seat Airbus A319s are its smallest airplanes.

TAM expects late next year to become the first airline in the Americas and the fourth in the world to take delivery of the Airbus A350. “We are also investing around US$183 million within the next two years in over 200 projects that will provide for new services and technologies for our customers, productivity and sustainability technologies, and infrastructure for our employees,” said Sender. “This initiative reinforces our confidence in the country and our desire to advance even further.”