On November 13, President Michel Temer signed a provisional measure that increases foreign participation limits in Brazilian airlines from 20% to 100%. There is already a bill in course in Congress (PL 7425/2017) that ends this limitation, but the government decided to anticipate and announce a provisional measure, in agreement with the president-elect, Jair Bolsonaro, according to the Federal Government. The decision was made amid Avianca’s judicial recovery process and opens the way for foreign investors interested in taking over operations of the Colombian company in Brazil.
According to attorney Raphael Zaroni, founding partner of Zaroni Advogados, a specialist in assisting foreign companies with business in the country, this government initiative is extremely necessary, but only an initial step. “The possibility of expanding investment by foreign companies in the sector is extremely welcome and necessary, but this alone is probably not enough to generate jobs, reduce ticket prices or increase competitiveness,” he says.
Also according to Zaroni, the concession of more airports or even the entire network of airports managed by Infraero is another fundamental and interrelated step in this segment. “Finally, bureaucracy and taxes like those imposed on aviation fuel, are preponderant factors for the lack of competitiveness and the high price of air tickets”, he says.
The measure has immediate validity and a duration of 60 days (renewable for another 60) and it will be up to the Jair Bolsonaro government to enable voting in the National Congress in 2019.