Authors: Leonardo A. F. Palhares e Larissa da Costa Andrade
Foreigners will be able to hold 100% of Brazilian airlines, opening the possibilities of foreign investment in the Brazilian air market.
On Monday (17) Law No. 13.842/19 (“Law”) was sanctioned, substituting the Provisional Measure 863/18 (“MP”).
The main highlight of the MP – maintained by the Law – is the amendment to the Brazilian Aeronautics Code, allowing foreigners to hold a stake in Brazilian airlines up to 100%. Before the MP was published, only 20% of Brazilian airlines could be held by a foreigner, limiting overseas investment in the Brazilian aviation market.
However, it is worth mentioning that, even if totally held by foreign stakeholders, the airline will only be allowed to operate if it complies with Brazilian laws and has its headquarters and office in the country. Another highlight is that the officer of a Brazilian airline can now be a foreigner, which until then was prohibited.
Market opening
The movement caused by the MP, now transformed into Law, has started to bring results with regard to foreign investment in the Brazilian air market.
On May 17, 2019, according to the information of the Ministry of Tourism, the Spanish Air Europa enrolled with the Board of Trade of the State of São Paulo, the first step to start its activities in Brazil.
Moreover, other low cost foreign airlines have also started to include Brazil in their route maps, as authorized by the Civil Aviation National Agency (Anac).
Economic Potential
The Brazilian aviation market has showed great growth potential.
According to recent studies by the “Brazilian Airlines Companies Association” (Abear), the demand for national flights has raised 4,44% last year, in comparison with 2017. According to Anac, 103 million passengers were flown in national and international flights during the year of 2018, again another raise of more than 4% when compared to 2017.
Anac has also shown that, in 2018, national cargo transport raised 11,8%. International cargo transport, on the other hand, grew 24,62%
With the market opening brought by Law No. 13.842/19, numbers are predicted to continue growing.