Brazil Airport Traffic Sees Sharp Growth
The number of air travel passengers in Brazil is expected to grow 51% in the last quarter of 2021 according to Belo Investment research forecast which is weekly and based on alternative data.
Research by Belo Investment Research points out that the number of passengers on flights in Brazil should grow 51% in the last quarter of 2021 compared to the previous three months.
Short-term forecasting, also known as nowcasting, was developed from an architecture based on "Recurring Neural Network". The nowcasting includes "Traditional Data", such as the history of air travel passengers and vaccination rate, and "Alternative Data", such as mobility rate by economic activity and the number of searches for flights on the internet. It reveals that the number of air travel passengers per week until December 2021 will reach numbers close to the pre-pandemic period.
To nowcast the number of passengers per week, Belo Investment Research considers people's recent behavior concerning COVID-19. Firstly, nowcasting, a word originating in meteorology that has been used in the economic area in recent years, contemplates the intention to purchase an air ticket based on an index built from the number of searches for flights on the internet.
Fig. 1 Index of searches for flights on the internet between January 2019 and July 2021.
Second, the nowcasting contemplates the mobility history, capturing the flow of people by type of activity. For example, increasing mobility in retail, recreation, transport station and workplace activities is already equal to or greater than at the start of the first COVID-19 wave. It also captures the reduction in the number of people at home and the growth of mobility in parks, both approaching pre-pandemic levels.
Fig. 2 The mobility of people by activity.
Thirdly, the nowcasting also contemplates the evolution in the number of people vaccinated, which directly explains the increase in mobility and searches for flights on the internet.
The change in people's behavior concerning COVID-19 directly influences the number of air travel passengers, which is expected to reach 2 million in the last week of December 2021. This was the highest number of passengers per week since February 2020, when the first case of COVID-19 was registered in Brazil.
Fig. 3 Nowcasting number of air travel passengers per week in Brazil
Although 14% lower than in February 2020, the nowcasting indicates that the number of passengers for the last week of December this year will be 35% higher than that observed in the same period in 2020. Between September and December, air travel passengers are expected to grow by 2.6% per week.
Two factors can explain this growth. The first is associated with seasonality and reflects the increased interest in travel in the last quarter of the year. The second factor is associated with people's recent behavior and reflects the increase in mobility, the search for flights on the internet and the evolution of vaccination in Brazil.
Director of Strategy at Belo Investment Research, Rafael Foscarini, points out that this is possibly the first nowcast on the number of air travel passengers ever made in Brazil. "The historical number of air travel passengers used in the forecasts is monthly. Therefore, the forecast for the number of passengers is also monthly.
To prepare the nowcasting, Belo Investment Research adopts an approach called Bridge.
This approach transforms monthly data into weekly data through a function. The nowcasting is built based on weekly internet search data and daily mobility and vaccinations, resulting in a weekly forecast of passengers on air travel. This makes it possible to improve the planning of companies in the airline industry, benefiting customers as companies can match the demand and supply of flights".
Belo Investment Research is an independent research company that combines traditional and alternative data to analyze market trends since 2016.