Recently, Spanish Airlines company air Europa shown interest in investing into Brazil’s domestic aviation market, to do so the company has requested authorization to operate domestic flights in Brazil. The government and officials of the country considered the proposal as they see this investment as a ray of hope in deflated aviation market of Brazil.
When asked for votes Brazil’s lower house of Congress voted for the foreign-controlled airlines to operate domestic flights in Latin America’s largest economy, which opens the door to more competition in an growing aviation market.
The chamber has approved a decree passed by former President Michel Temer in December that removed the 20% limit on foreign ownership of Brazilian airlines.However, debates continued on voting to tweak the final language of the bill that will be sent to the Senate. The upper chamber is expected to pass the measure, which would then go into effect immediately.
The removal of the restriction could the economy of the country as well as good services to the passengers. This proposal has open the door for foreign airlines to increase their existing stakes in the big three Brazilian carriers.
Air travel within Brazil has become more alligned towards the three major carriers including Azul, Latam, GOL and previously Avianca, these companies control 92% of the flights, according to the civil aviation regulator ANAC.Since Avianca Brasil has filed bankruptcy, and it lost market share, it has left the question behind that now who is going to operate the major routes. So far, Brazil’s three largest airlines – Gol Linhas Aereas Inteligentes SA, LATAM Airlines Group and Azul SA – have placed the proposal for the routes.
A foreign player could also potentially bid on Avianca Brasil’s routes at an upcoming auction.Currently, Delta Air Lines Inc owns 9.4% of Gol, the leader in domestic flights in Brazil. Qatar Airways owns 10% of LATAM, Brazil’s No. 2 domestic airline. United Airlines owns 8% of third-place Azul.
Spanish airline company Globalia, or Air Europa brand, is planning to operat in Brazil. On Saturday, Brazil’s infrastructure minister said the company would create a subsidiary in Brazil.
Adriana Simoes, a Brazilian aviation lawyer with the Mattos Filho law firm, said the approval was “excellent news” that had been long awaited by the industry. But foreign investors, she said, were still awaiting more clarity on how the law would be implemented.
