TAM takes an innovative approach to attract Brazil’s emerging middle class

Rising disposable income in emerging economies such as the BRICs and the Next-11 enables the rapidly growing middle classes in these countries to start travelling by air, often for the first time (see this graph for the link between GDP and the average number of flights per capita). For example recent IATA estimates project there will be 3.3 billion air travellers by 2014, up by 800 million from the 2.5 billion passengers in 2009, with China accounting for more than a quarter of this growth.

According to Brazilian airline TAM, the middle class in Brazil has grown three times as fast as the overall population since 2002, and in 2011 roughly 6 million people are expected to move from Class C (yearly income of USD700 to 3,000) to Class B in 2011, earning over USD 6,000 a year. TAM furthermore estimates that 10.7 million Brazilians are set to hit the skies for the first time in 2011, 8.7 million of whom belong to the ‘emerging classes’ C and D (source: TAM/Sparksheet).

Reaching first-time flyers
Research by TAM shows, however, that 53 percent of the Brazilian middle class has never travelled by air, while 58 percent has travelled more than 8 hours by bus, since a lot of people in Brazil work outside their home states. In an effort to make air travel more accessible to the overall Brazilian population, increase the volume of passengers at off-peak hours, and to counter growing competition from low-cost airlines such as GOL and Azul, TAM has taken an innovative approach to reach this new segment.

The airline sells tickets via low-end retail chain Casas Bahia, will open 200 ‘TAM Viagens’ travel stores in smaller cities across Brazil, offers new ways to pay for tickets, provides advice to first-time flyers and created ads (for example on pizza boxes) that include price and payment plans to show that travelling with TAM is affordable (tagline: “Você vai e vai de TAM” / “You go and go by TAM”).

Says Líbano Barroso, CEO of TAM: “The strengthening of the Brazilian economy over the past few years increased the consuming power in the country. It is necessary to prove to this new middle class that the privilege of flying no longer is limited to just a few. In order to do this, we will be active on a number of fronts: points of sale located in many parts of the country, beginning in São Paulo; new financing lines; advertising campaigns; and products for this new public.”

Casas Bahia
TAM in August 2010 teamed up with Casas Bahia, Brazil’s largest non-food retailer. Casas Bahia caters primarily to low-income customers and most of its outlets are located in poor neighbourhoods. Says Manoela Amaro, marketing director at TAM: “We can’t expect the passenger to come to the airport or one of our stores to buy a ticket. We have to be where they are.” Casas Bahia also lets customers pay for goods in multiple installments, making it possible for low-income customers to purchase products which they would not be able to pay off in a single payment.

TAM currently operates kiosks at six branches of Casas Bahia in various neighbourhoods in Sao Paulo. Customers can buy air tickets here in up to 12 installments free of interest, with a minimum installment of R$ 20 (USD12; EUR9), an option which is also offered by Azul.

Furthermore, TAM staff at the Casas Bahia kiosks help novice flyers in choosing the best travel options, flight hours and financing and explain air travel procedures, such as advanced arrival to the airport, check-in options, rules for luggage dispatch, etcetera. Additionally, Casas Bahia clients receive a printed booklet with useful information when flying for the first time. The airline also launched a microsite ‘Como Viajar’ (“How to Travel”) where people can learn everything about flights, especially the English terminology. A printed sheet containing information for first-time passengers is also distributed at the airports and both the check-in staff and flight crew are trained to help passengers who are travelling for the first time.

For more on TAM’s strategy to reach the flying ‘Mass Class’, see this excellent article from Sparksheet: “Brazil’s Emerging Classes Take Flight.”

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