By Bertha Henson

BRASILIA, BRAZIL: Singapore and Brazil are expected to sign an air services agreement, the fourth between the Republic and a Latin American country.

The agreement, to be signed during Prime Minister Lee Hsien Loong's Brazil visit, will give Singapore carriers access to Brazilian airports 14 times a week to ferry passengers, and seven times a week to ferry cargo.

Singapore airlines can fly to any point in Brazil, but are limited to three flights a week to Sao Paulo, the country's most industrialised state, where several Singapore companies have set up shop.

Sao Paulo is the most visited part of Brazil, garnering about 40% of tourists. By contrast, Rio de Janeiro, famed for its beaches, gets just 30%.

Singapore already has air services agreements with Argentina, Mexico and Chile, but Brazil is considered a jewel in the crown due to its population of 190 million. An agreement with Peru is also a possibility.

Despite the agreements, some sticking points remain. One is the need for an intermediate point for carriers flying between Singapore and South America.

This would require negotiations for "fifth freedom" rights with countries in Europe, or perhaps South Africa. These rights allow airlines to fly to one country, and then on to another.

Yesterday, Singapore Airlines (SIA) chairman Stephen Lee said other considerations include whether there is enough demand to justify flying to South America.

SIA uses only wide-bodied aircraft, which can carry from 250 to more than 400 passengers.

The carrier does not fly to any countries in the continent now. It used to fly to Mexico City, but this was stopped a few years ago due to a lack of demand. Mr Lee, however, pointed out that signing the agreements is a vital starting point: "Without them, we would not be able to go one step further at all."

Asked how SIA was weathering the effects of the economic downturn, he made it clear that other steps will be taken to contain costs before it resorts to cutting jobs. "We are not looking at that last resort now." The SIA group has 25,000 employees.

Though a decline in fuel prices has helped the carrier, airlines around the world are facing a drop in demand. Mr Lee pointed out that SIA has trimmed unprofitable routes such as the Bangkok-Osaka and Los Angeles-Taipei routes.

This article was first published in The Straits Times on Nov 26, 2008.

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