Market Dynamics Deter International Airlines from Brazilian Operations, Airbus Reveals

Airbus’ executive in Brazil, Gilberto Peralta, explained in an interview with Reuters why foreign airlines are hesitant to establish local operations in Brazil despite regulatory changes that have removed capital barriers. Since 2018, foreign investors have been allowed to hold larger stakes in Brazilian airlines, yet the market remains dominated by three major carriers: Azul, Gol, and LATAM.

Peralta identified judicial uncertainty and high operational costs as significant deterrents. He highlighted the frequency of legal actions by Brazilian customers against airlines and the excessively high fuel prices as major concerns. These challenges are compounded by strong consumer protections in Brazil, which facilitate legal claims against carriers for issues like delayed or canceled flights.

In 2022, the International Air Transport Association (IATA) called on Petrobras to lower jet fuel costs, which they described as “excessively high.” Although Petrobras has reported an 8.8% decrease in jet fuel prices this year, the high costs have historically been a barrier to entry for new players in the aviation market.

Airbus itself aims to ramp up its global production capacity from 60-65 aircraft per month to 75 by late 2025 or early 2026, with significant orders from Azul and LATAM in Brazil. Despite the challenges faced by its competitor Boeing, which has seen delays due to a quality crisis, Peralta expressed hope for stabilization, noting that market insecurity benefits no one.

This situation underscores the complexities of entering and competing in Brazil’s aviation market, despite the potential opportunities following the liberalization of ownership rules.