Brazil’s Senate Wednesday has passed a legislation that will allow foreign airlines to operate domestic flights within the country. This action will now open up Brazil’s air travel market to potential foreign airlines interested in having a domestic presence in this Latin American country.
According to reuteurs.com the Senate passed the bill Wednesday after it was approved by the Chamber Tuesday. It has also been learnt that the legislation requires a clearance from President Jair Bolsonaro before it will become the governing law in Brazil because the Congress it seems has added a provision that would bar the airlines from charging for the first checked-in baggage item, so once the President signs the legislation it will become the abiding law.
The new provision of free check-in of first baggage item may make it difficult for foreign low cost airlines to enter into the Brazil market and even if they did the ticket prices are likely to be higher. But overall the new rules are likely to boost the competition among the participating airlines.
Spain’s Europa becomes the first foreign airline to be granted a preliminary permit by the country’s regulator ANAC for operating domestic flights in this Latin American country.
The decision to open up Brazil’s air travel market to foreign airlines has been in the pipeline from a long time, even before former Brazilian President Michel Temer signed a temporary decree on this in December.
Foreign ownership will increase from the current 20% cap to 100% cap once the legislation becomes a law post Bolsonaro’s signature.
Currently 92% of Brazil’s domestic flights are operated by three major Brazilian airlines- Gol Linhas Aereas Inteligentes, LATAM Airlines Group and Azul SA. With Wednesday’s passing of the legislation foreign airlines can now start domestic operations in the country and global players can increase their stakes in local carriers. Currently Delta has a stake of 9.4% in Gol Linhas Aereas Inteligentes, United has a stake of 8% in Azul and Quatar Airways has a 10% stake in Latam Airlines group.
