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Avianca Brazil has filed the bankruptcy in recent past, this big news has changed the market dynamics of Brazilian aviation market. Avianca Brazil comes in the top three airlines of Brazil. But the sinking of Avianca Brazil’s has opened gates for rest bankruptcy national and international carriers.

GOL, LATAM Airlines Brazil and Azul have already shown interest in buying Avianca Brazil’s routes, but the government suspended an asset auction, including airport slots, and now the fate of Avianca Brazil is anyone’s guess. Brazilian government is planning to reschedule an auction to handover the assest to the highest bidder.

It is estimated that Brazil’s domestic traffic has grew 4% while Avianca Brazil’s share plummeted after it sought bankruptcy protection in late 2019. Now everyone has a eye on how be seen how Avianca Brazil’s assets is going to distributed.Despite that uncertainty, Brazil’s airlines hold reasonably confident views of the country’s domestic market.

Avianca Brazil’s market share falls as its fleet shrinks .Brazil’s domestic travel increased by 4.3% and capacity grows on 3.4%.GOL remain the domestic market share leader, with a 36% share. LATAM Airlines Brazil’s share slipped to 30.8%, and Avianca Brazil’s share 11.0% .

LATAM Airlines Group is shrinking its planned international growth to flat to a 2% increase, a reduction from previous estimates of a 3% to 5% expansion. The company’s overall capacity growth for 2019 is now projected at 3% to 5%, versus previous estimates of an increase of 4% to 6%.

LATAM has agreed to forge leasing deals on 10 Airbus A320s. The company believes that opportunities exist in Brazil, as well as Chile, Peru and Colombia.

Avianca Brazil’s bankruptcy protection has been complex.Earlier in 2019 Azul forged a non-binding agreement to acquire significant assets of Avianca Brazil, paying USD105 million for 30 Airbus 320 jets and 70 airport slots that included slots at Sao Paulo Congonhas. Azul does not currently serve Congonhas, which is key market for business travellers taking the air shuttle to Rio de Janeiro airport.

This gives the positive outlook to Azul.Subsequently, Avianca Brazil’s largest creditor, the hedge fund Elliot Management, struck a deal with each of LATAM and GOL to offer USD70 million for Avianca Brazil’s assets at an auction originally scheduled for early May-2019. The company was divided up in seven segments to be auctioned off.

After a legal challenge from Swissport Brazil, a court temporarily suspended the auction.At the same time, Azul has submitted a new bid for of USD145 million for slots pairs, including the slot pairs for shuttle service from Congonhas to Rio.

LATAM executives have stated that if there is no action for Avianca Brazil’s airport slots then the process would fall under current rules, which means they would be returned to a pool and distributed to the current players. As a result, Azul would lose out on an opportunity at Congonhas.

Brazil’s domestic market remains on solid ground, driven by sustained demand.As the industry waits for the outcome of Avianca Brazil’s bankruptcy, the overall domestic market in Brazil remains solid despite rising fuel expense and currency pressure.

Brazil’s aiviation industry have maintained a positive view of the domestic market over the past few months as the country slowly emerges from a recession. Now the airlines are achieving a certain heights in the market as Avianca Brazil has now ceased operations.