The International Air Transport Association (IATA) recently held discussions with Brazilian government officials to address the high costs faced by airlines operating in the country. These costs have been a significant obstacle to President Luiz Inacio Lula da Silva's efforts to reduce airfares. Demand for air travel in Brazil, Latin America's largest economy, has been robust. However, airlines have been grappling with high operating costs, such as expensive kerosene prices and excessive litigation. These challenges have made it difficult for airlines to expand capacity and manage supply chain issues.
.gif)
The Brazilian government has been actively seeking ways to make airfares more affordable as ticket prices have been impacting Brazil's main consumer inflation index. Some of the measures introduced include credit lines to fund engine maintenance plans. The government has also previously mentioned that it is working on structuring a fund of up to 6 billion reais ($1.21 billion) to assist in financing carriers. Peter Cerda, IATA's regional vice president for the Americas, emphasized the need for government assistance in the industry before meeting Vice President Geraldo Alckmin and other cabinet ministers. He noted that carriers in the United States and Europe have received government support, which is critical for the industry.
Brazil's main airlines have faced financial struggles in recent years, particularly in the wake of the COVID-19 pandemic. LATAM Airlines exited bankruptcy in 2022, while Gol filed for bankruptcy protection in the U.S. last month. Azul restructured its debt in 2023. IATA had previously urged Brazil's government and oil firm Petrobras to revise the way jet fuel is priced in the country to reduce costs. However, the state-run oil company has resisted the proposal.
Petrobras, which is responsible for most of the country's refining activity, says it has been lowering prices since last year and that the Brazilian market is open for free competition. The discussions between IATA and Brazilian officials highlight the ongoing challenges faced by the airline industry in Brazil and the efforts being made to address them. The outcome of these discussions could have significant implications for the future of air travel in the country.