Airline Bankruptcy, Brazilian Style

While Brazilian domestic air transport is a fast-growing and potentially very lucrative market, it has not reached its full potential. This article identifies the primary reasons for this failure as a lack of competition, market consolidation, and a regulatory burden that has been maintained for decades. An enormous consequence has been a large number of airline failures; notable among them is Avianca Brazil. The 2018 bankruptcy of Avianca, once one of the country’s highest-growth airlines, calls into question the sustainability of the Brazilian airline market. Focusing on Brazil’s airline landscape, and Avianca in particular, the article discusses the nature of airline bankruptcy in Brazil and the many questions raised regarding the deficiencies of the Brazilian system and the Brazilian judiciary’s understanding of the aviation market. Of concern is a perceived split among judges regarding passenger rights versus airline economics. Other particularly vexing problems are the legal barriers preventing troubled airlines from selling their slots and the Brazilian government’s failure to step in to avoid market concentration as, for instance, the Italian government did with Alitalia. Finally, the article raises questions regarding the consequences of the more recent LATAM bankruptcy in Brazil and its potentially enormous impact on air fares. The author posits whether, in this case, the Brazilian government will intervene to save LATAM, or if LATAM will go down a similar path as Avianca.

Language

  • English

Media Info

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Filing Info

  • Accession Number: 01831731
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Dec 28 2021 9:33AM