Variglog Domestic Freight Route Structure – Impacts due to Varig Resizing

• Leandro SilveiraInstituto Tecnológico de Aeronáutica (ITA)
• Carlos MüllerInstituto Tecnológico de Aeronáutica (ITA)
• Cláudio Jorge Pinto AlvesInstituto Tecnológico de Aeronáutica (ITA)

Journal

Journal of the Brazilian Air Transportation Research Society (JBATS) · ISSN 1808-3331

Edition

v. 4, n. 1, 2008 · pp. 9-23

Editor-in-chief

João Batista Camargo Jr. (Escola Politécnica, Universidade de São Paulo)

Guest editors

Li Weigang (Universidade de Brasília); Alexandre de Barros (University of Calgary, Canada)

Abstract

VARIGLOG domestic freight route structure is heavily dependent on VARIG domestic passenger route structure. Commercial and operational agreements allow the sharing of the large cargo compartments of VARIG wide-bodies passenger planes, therefore freight VARIGLOG routes were structured accordingly. This reality changed dramatically in 2005 and 2006 with VARIG bankruptcy process and selling hustle and its immediate resizing and restructuring. The paper analyzes the impacts of VARIG resizing and restructuring over VARIGLOG aiming to identify the more promising all cargo routes VARIGLOG should seek presence. VARIGLOG presence was modeled with a Binomial LOGIT model calibrated using 2001 to 2004 available data. The model uses explanatory variables that represent: (1) domestic routes cargo demand, (2) regional economic activity, (3) routes length, (4) rivals supply, (5) passenger flights cargo supply and (6) a dummy of airline hub airport. Application of the model showed improved fitting compared to an early model developed by Silveira et al (2006). Finally, the model was used to evaluate VARIGLOG all cargo route structure policy in a changing market where VARIG has reduced its passenger domestic flights in the second period of 2006. Results showed about 30 routes with increased indication of good opportunities for VARIGLOG presence in this new scenario.

Keywords: route choice; choice models; LOGIT model; air freight; cargo airline