International Finance

Spanish airline Air Europa enters Brazil aviation market, to hire locally

Spanish airline enters Brazil aviation market
The government welcomes Air Europa’move as it seeks to fill the void left by Avianca’s collapse

Spanish airline Air Europa has decided to launch a domestic carrier in Brazil’s aviation market which will hire locally, Brazil’s infrastructure minister was reported as saying. The aviation market in Brazil has been in the doldrums and the development is certainly good news for travellers and the industry.

Brazilian airline Avianca Brasil, which was one of the four largest airlines operating in the country, is in judicial recovery. Creditors have seized most of its aircraft and the airline has retrenched most of its staff.

Spain’s Air Europa’s entry creates a sense of relief in the Brazil aviation market as it is filling a void left by a major carrier. The Brazilian government has defended the entry of new airline operators in the Brazilian market as fundamental for the rebalancing of flights and the lowering of ticket prices.

“It is important to note that it will be the first company to operate in the Brazilian (domestic) market due to (executive decree) MP [863/18] that opened foreign capital in domestic companies. Obtaining the authorization, it will hire Brazilian pilots and crew, generating jobs, competition in the sector, and new investments in the country,” added Tarcisio Gomes de Freitas, Brazil’s infrastructure minister

The new Brazilian government of President Jair Bolsonaro seeks to make significant changes in the way the country, known for red tape and bureaucratic delay of projects, does business. Part of this agenda is to reform the economy and the aviation industry. Analysts believe that if President Bolsonaro succeeds in his strategy, this might reduce the dollar exchange rate and costs for airlines. In turn, lower ticket prices are expected to boost demand for air travel.

Early this year, the government had announced the possibility of allowing foreign airlines to hold 100 percent equity in Brazilian airlines. Brazil also announced plans to privatise 12 airports adding to the 10 large private airports.

Last year three foreign low-cost airlines had sought permission from the Brazilian authorities to fly to Brazil from international locations. One of them, Norwegian Air already operates non-stop flights between Gatwick in London and Rio de Janeiro airport four times a week. Chile’s Sky Airlines and Argentina’s Flybondi have also sought permission to operate flights to Brazil from Chile and Argentina.

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