06/17/2024 – 16:24
The lack of attractive market conditions has inhibited the arrival of local operations by foreign airlines in Brazil, said the president of aircraft manufacturer Airbus in the country, Gilberto Peralta.
Since the previous government, capital barriers for foreign companies to enter Brazil have been removed, but the national market remains concentrated in just three companies.
The trio Azul, Latam and Gol continue to dominate the market and the expected competition with foreign companies has not yet materialized. At the same time, passengers complain about the prices of airline tickets and the quality of the service provided.
According to IPCA inflation data calculated by IBGE, air ticket prices rose by around 36% in the year and more than 19% in 12 months.
For the president of Airbus in Brazil, several factors explain this reluctance of foreign companies to enter the Brazilian market. Legal uncertainty and high fuel costs are among the main reasons.
“Here, for example, you only have one company that covers the Amazon, Azul… Brazil could have more flights per capita than it has today,” Peralta said in an interview with Reuters. The executive mentioned that in Latin America, in per capita terms, Brazilians fly less than Chileans, Colombians and Mexicans.
According to him, the price of aviation fuel in Brazil is the “highest in the world in proportion to the cost of the ticket” and legal uncertainty is a “serious problem”.
“We no longer have barriers for a foreigner to enter here, the capital barriers are gone. A foreigner can come and set up a company in Brazil, but they don’t come because of the conditions. The market is regulated, fuel is very expensive, there are legal problems. It’s a lot of trouble.”
In 2018, the Michel Temer government removed the ban that prevented foreigners from owning more than 20% of an airline in Brazil, allowing them to control 100% of a Brazilian company in the sector.
Asked about the impacts generated by the quality crisis of competitor Boeing, which has caused delays in aircraft deliveries, the president of Airbus do Brasil said he hoped for the rival’s recovery and normalization.
“I don’t think this is good for anyone. It creates a credibility problem in the market. They have delivery issues and incidents. I’m sure they will resolve it, but this is not good for the market, as it creates insecurity and generates concern among users. If the market slows down, it’s not good,” he said.
According to him, Airbus’ global production capacity is currently between 60 and 65 aircraft per month, and the manufacturer’s efforts aim to increase this number to 75 aircraft per month by the end of 2025 or beginning of 2026.
“Our challenge now is to increase aircraft production. Airbus produces 60 to 65 planes per month and we want to increase to 75 by the end of 2025 or beginning of 2026”, said Peralta. “We are very focused on meeting this.”
The executive stated that the aircraft market is already “almost stabilizing” with the prospect of normalization by the end of the year in the supply of inputs and components. “The problem now is that the market recovered very quickly. There is a lot of demand and people buying planes.”
The majority of orders are concentrated with customers in Asia, the United States and Europe, while in Brazil orders from Embraer and Latam remain at the same level of more than 100 aircraft for the coming years.
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