Market conditions drive international airlines away from Brazil, Airbus says

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2 years ago

Complicated market conditions have prevented foreign airlines from launching local operations in Brazil, planemaker Airbus’ head in the country told Reuters.

In 2018, rules which had limited the size of the stake a foreign investor could hold in an airline were overturned in a bid to open up competition among carriers in Latin America’s largest economy.

Still, market share in Brazil is dominated by just three companies: Azul , Gol and LATAM Airlines.

Airbus executive Gilberto Peralta said in an interview last week that the reluctance from international airlines to enter Brazil was mainly due to judicial uncertainty, citing a high number of legal actions taken by Brazilian customers against airlines, as well as high fuel prices.

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“Capital barriers are gone, a foreigner could come and set up a company in Brazil, but they don’t… It’s a lot of trouble,” he said.

Brazil’s strong consumer protections make it easy for flyers to sue carriers for a range of issues, including delayed or canceled flights.

Late last year, airline lobby group IATA had urged state-run oil company Petrobras to reduce fuel costs, calling kerosene prices in the South American nation “excessively high.”

Petrobras said earlier this month that jet fuel prices in Brazil have already fallen 8.8% so far in 2024.

Most Airbus orders come from customers in Asia, the U.S. and Europe. In Brazil, orders from Azul and LATAM stand at more than 100 aircraft in the coming years.

Asked about the impacts of the quality crisis faced by fellow planemaker Boeing which has generated delays in aircraft deliveries, Peralta said he hopes for stabilization at the competitor.

“I’m sure they’ll fix it… that’s not good for the market, as it creates insecurity and generates concern among users,” he said.