The International Air Transport Association (IATA), an airline advocacy group, has called on the Brazilian government and Petrobras, the state-run oil company, to adjust the pricing mechanism for jet fuel in the country to lower costs. They argue that the kerosene prices in Brazil are “unreasonably high.” IATA stated on Monday that the local prices do not align with the fact that Brazil is an oil-producing country and pointed out that fuel costs are a major hurdle for the industry in Brazil.
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Petrobras, the largest oil producer in Brazil, is in charge of most of the country’s refining activities. It adjusts jet fuel prices monthly based on global oil prices and exchange rates. IATA’s Americas head, Peter Cerda, criticized Petrobras’ monopoly and the extra administrative costs imposed by suppliers, which he believes led to inflated jet fuel prices.
The Brazilian Ministry of Mines and Energy did not immediately respond to a request for comment. Petrobras, on the other hand, noted that it had reduced kerosene prices at its refineries by an average of 6% starting December 1, resulting in a total reduction of 19.6% this year. The company emphasized that the Brazilian market is open to free competition and there are no legal, regulatory, or logistical barriers for other companies to produce or import jet fuel.
High fuel prices have been a longstanding grievance of local airlines. Last month, Azul’s CEO, John Rodgerson, claimed that Brazil has the world’s most expensive fuel. Jet fuel accounts for approximately 40% of an airline’s total costs in Brazil, Latin America’s largest economy, compared to a global average of 30% during periods of exceptionally high global fuel prices, according to IATA. The group also criticized the heavy taxes on kerosene in Brazil, arguing that they adversely affect the sector’s competitiveness. Azul, Gol, and Latam are the largest airlines in Brazil.
