World Cup Brazil 2014

A few months ago, IATA, the International Air Transportation Association, issued a warning informing that Brazilian airports are not ready for the World Cup.

Last week, Veja, the most influential Brazilian magazine, published on the Issue #2159, April 7th 2010, a detailed report (pages 68 through 77) about the infrastructure of the Brazilian airports, and concluded that: most airports are already working above nominal capacity; even with the planned investments (and assuming those investments will be actually realized), several airports will be still uncapable of handling the expected increase of traffic by 2014.

Access to previous issued of Veja is free (click here and search for the desired issue).

According to Veja, problems stem from mostly two reasons: the number of passengers in Brazil has been growing very rapidly, and the investments have been growing too slowly.

Brazil is experiencing an economic boom, and people from lower classes are now travelling by air, rather than by road. Besides, some new air companies were created recently, and competition is being prices downwards. These factors are increasing the number of passengers in the airports.

The graph below shows the impressive growth rate year-on-year of the number of passengers in all major Brazilian airports combined; from 2006 to the end of 2010, the total number of passengers should grow by more than 100%. During the same period, the nominal capacity of those airports didn’t increase anything.

According to Veja, the main consequences of this lack of investments are: long check-in queues; over crowding in the boarding rooms; long delays to claim baggages; shortage of fingers for aircrafts to dock and passengers to board and unboard.

The image below compares the airports of Guarulhos, in São Paulo (the busiest in Brazil) and the airport of Gatwick, in London.

São Paulo receives a bit more than 21 million passengers per year (nominal capacity is 15 million per year), whereas Gatwick receives a bit more than 34 million; in Guarulhos, there are 61 fingers, against 108 in London; São Paulo have 260 check-in counters, against 317 in London. São Paulo looks much more crowded.

All major Brazilian airports are ran by Infraero, an State owned company. Infraero’s site publishes statistics about passengers and cargo in all airports.

Infraero collects the boarding taxes paid by passengers (R$ 19.62 – about US$ 12 – for flights within the country, and US$ 36 for international flights); besides, Infraero collects several fees from aircrafts operators.

Infraero should employ that money to maintain airports running smoothly; but apparently they are not capable of doint that.

This other report talks about problems in Brazilian airports.

Yesterday, FIFA announced that Brazilian corporation OI will be World Sponsor of the World Cup 2014 (the word Oi means “Hi” in Portuguese).

So, besides having stadium works behind schedule, airports not ready,  poor transportation infrastructure (and new projects also delayed), now FIFA will partner with the worst  telecommunication company in Brazil to provide the communications infrastructure of the World Cup 2014.

The sound of the word FIASCO is growing louder and louder.

As FIFA said, Oi is the largest telecommunications company in Brazil. But there are many other facts that FIFA didn’t comment on; this post will direct to a few sources in the internet which talk about Oi; from this point below, personal opinions were avoided.

Oi is the new name (changed a few years ago) of Telemar (at the time of this writing, www.telemar.com.br redirected to www.novaoi.com.br).

Telemar was a consortium created to participate in the privatization process in 1998. There were several accusations of corruption in the participation of Telemar (a detailed report is here); there are voice recordings of high staff Governments indicating that the selection of bidders was biased, and that pension funds and BNDES funds (public money) were used to favor certain competitors and unfavor others (by the way, Telemar won the bidding process for one of the areas with an overprice of only 1% above the minimum bid; the winners of the other privatization areas had to pay overprices of 64%, 47% and 6% – read more about Telemar and bribes).

Today, the man behind Oi is Daniel Dantas, banker, owner of Opportunity (who, at the time of the privatization process, was involved with consortium Brasil Telecom).

Mr. Dantas appeared on the news several times in the past few years, such as (among others that I won’t remember) having spied on competitors, having spied members of the Government; having ‘business disagreements’ with Citicorp.

In 2005, news came out that Telemar had businesses with Lulinha, son of President Lula. Formerly, Lulinha worked in a Zoo, being paid barely above minimum wage; after his father was elected President, Lulinha started an obscure TV program, that few people cared about; Telemar paid R$ 5 millions to sponsor that program, and Lulinha became millionaire.
In 2008, Telemar wanted to buy Brasil Telecom (other of the winning bidders in the privatization process). This was against the law, because would result in too high concentration of the market. Just at the right time, however, Brazilian regulatory agency Anatel changed the legislation and allowed the purchase.
Brazilian news sites are full of notes about the coincidences involving Dantas, Oi, José Dirceu, Anatel, Lulinha, etc.

Dantas was arrested on July 8th 2008. Dantas threatened to open his mouth and talk about Senators, Deputies, judges. On July 9th, Dantas is released. On July 10th, Dantas is arrested again. And on July 11th, Dantas was released again.
The orders to arrest Dantas were issued by a First Instance Judge, Fausto Martin de Sanctis; the orders to release him were issued by a Justice of the Supreme Court, Gilmar Dantas.
On July15th 2008, Humberto Braz,  the lieutenant of Dantas, was arrested, charged of trying to bribe (US$ 1 million) a Federal Agent, so that the agent would exclude Dantas and his sister from criminal investigations. In conversations recorded by the Police with Judicial authorization, Mr. Braz says to the Agent that “Daniel Dantas is worried only about what’s happening today. Up there, what’s going to happen there (in the Superior Courts), he doesn’t care. In the STF (the Supreme Constitucional Court) and in the STJ (the Supreme Law Court), he won’t have any problem”.
Today, Dantas is free, and the criminal process against him is still in the Courts; Brazilian news sites are full of notes about the process.

After purchasing Brasil Telecom, Oi became an even bigger company. But clients became more and more unhappy with the services. A survey in google for oi telemar procon (Procon is the Consumers Defense Agency) returns 200,000 pages. Oi is constant presence in the list of most complained about companies in Brazil (notice: among all companies, not only telecom companies); reclameaqui.com.br, a site about complaints, has thousands of records against Oi.

Update, April 10th 2010. Yesterday, April 9th, newspaper O Globo published a short note informing that the Brazilian Government was considering to contract Oi to manage the National Bandwidth Plan. The note sparked more than a 100 comments, almost unanimously attacking Oi; comments were on the line of “Oi is dishonest, Oi doesn’t deliver the bandwidth I paid for, Oi is an expensive monopolist, my bandwidth internet hasn’t been working for days, Oi is the worst telecom company in Brazil, I had to bribe Oi employees to have my bandwidth installed” and so on. Definitely, Oi is  not the most popular corporation in Brazil.

This is the company that FIFA is partnering with.

Anyone who stays in the Copacabana Palace in Rio or the Hilton in São Paulo knows that those are five star hotels. But how about the other less known hotels?

Today, there are not official standards to rank hotels by quality of services, comfort levels, prices, etc. Classifications mentioned by the hotels or travel agencies are usually self-attributed.

The Minister of Tourism has just announced a project to establish norms and standards for the hotels in Brazil. Among the actions of the project, are included: creation of a reference hotel, against which other hotels may be compared; creation of a seal of quality; creation of a matrix of references, which shall be used to categorize hotels.

This matrix will separate hotels in classes (resorts, inns, ranch hotels, jungle hotels, historic, urban, bed and breakfast) and categories, (from one to five stars). The classification and categorization, as well as the issuing of seals of quality, will be made by Inmetro, the Brazilian Institute of Weights and Measures (see notice).

The General Law of Tourism, passed in 2008, already provided for a kind of standardization of tourism services. Among other measures, the law determined that all travel related establishments should be profiled and classified by the Government.

So far, little of the law was implemented though. It is the expected influx of (demanding) international tourists during the World Cup 2014 which is moving the Brazilian government to improve the quality of hotels in Brazil.

Is the transportation infrastructure in Brazil ready for the World Cup 2014? Will it be?

First point: Brazil is much bigger than South Africa, and the host cities of the World Cup 2014 are much more far apart than those in 2010.

In France, Japan, Korea and Germany (hosts of the most recent Cups), the main means of transportation between cities was the train. Brazil has no railway networks for transportation of passengers (most long distance railways operate cargo only); a bidding process is going on to build a bullet train between Rio and Sao Paulo, but it is uncertain whether it will ready by 2014 (estimated costs border US$ 20 billion) – update: the Government already declared that the bullet train will be ready only by 2018.

That means taht there are not and there will not be trains connecting the host cities of the World Cup 2014.

Brazilian airports are poor, compared to those in developed countries. Usually, there is only one major airport in each State (exceptions are only São Paulo, Rio and Minas Gerais), which concentrates all traffic. See notes about the airports here, here and here.

Air control, despite recent accidents (like this and this), is considered safe; however, it is uncertain whether the system will stand the major increase in air traffic expected for the World Cup.

Besides, supply of seats is limited. Just two airlines, TAM and Gol, control about 90% od all flights; there are strong restrictions for other international companies to operate in Brazil. This lack of competition caused the services of both companies to be poor; the companies rank amongst the most complained about in the Consumer Defense Agencies in Brazil. The companies never had interest in expanding the aerial network in Brazil; several of the host cities have no direct connection today (usually, a stop over is necessary in the major hubs: Sao Paulo and Brasilia).

Brazil announced heavy investments in airports, but frauds and delays are already being reported. It is dubious whether air companies will have the willing and the money to buy new aircrafts.

Brazil has an extensive network of highways. Several roads are in bad conditions, but the Governments are making efforts to improve them, either by chartering operations to private parties (NovaDutra operates the highway between Rio and Sao Paulo), or by investing large amounts of money (BR-101, which connects Salvador, Recife, Natal and Fortaleza, will be double laned next year).

So, long distance highways should be in good conditions for 2014. It remains to be seem if foreign visitors will endure the long distance drivings and the proverbial lack of education of Brazilian drivers (from 1999 to 2007, a staggering 254,000 deaths occurred in transit accidents in Brazil).

Governments are investment heavily to improve urban circulation; more highways, more metros, better urbanization. This will certainly help the residents, but won’t help visitors move around cities.

Then, there are ships. Almost all host cities have a port nearby. Cruises are growing in Brazil, and ships may be an option in 2014.

So, if the poor infrastructure in South Africa raises concerns in CBF, the situation in Brazil seems even worse.

Several people have been accessing this blog looking for information about “jobs World Cup 2014″, “jobs Brazil 2014″ and other similar terms.

Probably the best way to get a job in Brazil during the World Cup is as a volunteer. All host countries of World Cups make a call for volunteers (see volunteer work in South Africa 2010); volunteers gain a lifetime experience, and FIFA gets cheap labor force.

In Brazil, there will probably be a higher demand for volunteers than in past World Cups. And the reason is that Brazil has very few English (and other foreign languages) speakers, unlike South Africa (where many people have English as first language) or Japan/Korea and France (where there is a high number of educated people who speak foreigner languages).

The advantage of being chosen as volunteer by FIFA is that all volunteers will be granted a Visa to enter and stay in Brazil during the World Cup. And the Visa is a problem for those looking for a paid job in Brazil during the Cup.

Brazil, like most countries, doesn’t issue visas easily for people looking for jobs (see the legislation about visas to Brazil). Today, a foreigner only gets a work visa under special conditions (e.g., the job vacancy must be offered first to a Brazilian, and the contractor must prove that no national is capable of filling the job, etc).

However, this can change until 2014. Brazil is experiencing a very fast paced growth, and it is clear that Brazilian professionals will not be capable to fill all the jobs which require interaction with foreigner people (e.g., there are no Brazilian doctors capable of talking to foreign patients, there are no Brazilian lawyers capable of handling international laws).

There will probably be opportunities for foreigners to work in Brazil during the Cup, but this will demand changes in Brazilian immigration laws (to facilitate the issuing of work permits). FIFA will probably lobby in favor of such changes, as already happened with tax laws and visual pollution laws.

Only time will tell.

A few weeks ago, FIFA asked the Brazilian Government for a full tax exemption not only for the Association, but to all contractors.

This week, another news brought another evidence of how business oriented FIFA is.

Since Jan 1st 2008, a municipal law has been in force banning outdoors in certain areas of the city, and limiting the size in others. Such law became known as “Lei Cidade Limpa” (Clean City Law).

A report by the New York Times reads:

“All our efforts to negotiate have had no effect because none of the accords and agreements we reached with the advertising sector were ever complied with,” Mayor Gilberto Kassab said in an interview. “A billboard that was forced to come down would be back up a week later in a different spot. There was a climate of impunity.”

Since “it is hard in a city of 11 million to find enough equipment and personnel to determine what was and wasn’t legal, we decided to go all the way, to zero things out,” Kassab said. “When you prohibit everything, society itself becomes your partner in enforcing the law” and reporting violations.

Popular reaction has largely been supportive.

FIFA thinks differently. Using the argument that world sponsors are going to spend US$ 7 billion during the Cup, FIFA wants the city of Sao Paulo to pass a law allowing privileged conditions for the sponsors to use billboards and other means of advertising during the 2014 event.

Mayor Kassab said that a Commission is studying the demand; one of the  Secretaries affirmed that violations of the laws will not be tolerated, but admitted that a law permitting exceptions during the Cup can be passed.

It’s difficult to say no to FIFA.

Sponsors that will be benefited: Coca-Cola, Emirates Airline, Hyundai, Sony and Visa. Don’t be surprised if you visit Sao Paulo during the World Cup 2014 and all the billboards you see carry these brands.

A note published in Brazilian portal Terra informs that FIFA and the Brazilian Government are having a dispute about tax exemptions.

One of the requirements of FIFA to choose a country to host the World Cup is that the Association be exempt of all taxes; according to the Ministry of Sports, this condition was accepted by the Brazilian Government.

However, now  Receita Federal (the powerful Brazilian Tax Service) affirms that the exemption would not be extented to FIFA’s contractors. The note says that Receita is studying limits to the tax rebates that the contractors will be allowed to claim; FIFA, however, wants the contractors to be fully exempted.

This brings to mind an infamous incident between Receita and the Brazilian Federation which happened in 1994, right after the Brazilian team returned from the winning campaign in the United States.

The Brazilian team was led by Ricardo Teixeira, President of CBF. Teixeira used the “clamor of Brazilian people to meet the heroes of the World Cup” as an excuse to not pass through customs; the customs staff felt the pressure and let them pass. The episode became known as “voo da muamba” (smuggle flight).

Later on, it was verified that many of the heroes illegaly imported stuf without paying taxes; Teixeira himself brought an equipment to produce beer, probably the most expensive product in the lot.

Teixeira and the Government have been fighting in courts since. Brazilian public opinion sided eventually with the Government, rather than with “the heroes”. Receita Federal seems to have very few reasons to be complacent with FIFA.

Update, April 24th 2010: the Minister of Sports informed that a law draft will be sent to Congress this month. Every tax exemption must be approved by the Congress. If the law is approved before December 31st 2010, FIFA and all contractors related to the World Cup 2014 will be tax exempted starting on January 1st 2011.

Update, May 26th 2010: the law was approved, as per FIFA requests.