Airline group discusses high costs with Brazil officials

By Gabriel Araujo

SAO PAULO (Reuters) – Airline lobby group IATA met with Brazilian government officials this week to discuss the high costs faced by carriers in the country, which they say have hindered President Luiz Inacio Lula da Silva’s efforts to bring down airfares.

Demand for air travel in Latin America’s largest economy has been strong, but airlines complain about operating costs, such as high kerosene prices and excessive litigation, while struggling to increase capacity and deal with supply chain issues.

The government has been keen to find ways to make airfares more affordable as ticket prices hit Brazil’s main consumer inflation index.

Measures so far have included credit lines to fund engine maintenance plans, and the government has previously said it was working to structure a fund of up to 6 billion reais ($1.21 billion) to help finance carriers.

“We need this government to assist the industry,” IATA’s regional vice president for the Americas, Peter Cerda, told Reuters before meeting Vice President Geraldo Alckmin and other cabinet ministers.

“It is critical,” he said, noting that carriers in the United States and Europe have received government support.

Brazil’s main airlines have struggled financially in recent years following the COVID pandemic crisis.

LATAM Airlines (OTC:) 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 tweak the way jet fuel is priced in the country to bring down costs, but 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 the Brazilian market is open for free competition.

($1 = 4.9639 reais)