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'Perfect Storm' Blocks Aviation in Brazil, Says International Association

12/09/2016 - 13h35

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FABRICIO LOBEL
SPECIAL ENVOY TO GENEVA (SWITZERLAND)

A perfect storm. That was how the regional director for South America of Iata (the International Air Transport Association) justified the negative results of the air sector in Brazil.

In the words of Peter Cerdá, the combination of the political, economic and social crisis is responsible for the retraction in the sector - it has seen the number in passenger demand fall for the last 15 months.

Cerdá highlights the 12% decline in Brazil in the domestic market supply and 4% in the market of international flights.

"Virtually every [international] air company has seen the frequency or type of aircraft serving Brazil diminish to avoid the economy's volatility [...]", says Cerdá.

Cerdá also highlights that operational costs have risen 24% in recent years, while the companies' revenues in the country grew only 3.7%.

Meanwhile, the political instability witnessed in Brazil in the last 18 months has blocked the regulations that could help leverage the sector.

Among the points under discussion is the change in the tariff system on airplane fuel.

In Brazil, each of the country's states establishes the value-added sales tax (ICMS) tariff on airplane fuel.

Iata says that the wide range of tariffs used in the country creates further obstacles to the air companies' performance.

Cerdá believes that the Brazilian government should see the sector as a resource generator and work to reduce "a complex network of regulations" as well as the high fees in the country.

The association also says that the sector's worst moment has already passed.

Translated by THOMAS MUELLO

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