The airline industry asks to be seen as an essential activity

How long do we need to lose connectivity to believe? By José Ricardo Botelho, CEO of the Latin American and Caribbean Air Transport Association - ALTA 

(Source: ALTA)

In the current scenario, the Brazilian airline industry shows clear signs that it needs oxygen to guarantee its sustainability. In this immense country, the sector faces significant adversities that transcend a single company, encompassing fundamental issues that affect not only established airlines, but also those that wish to enter the market and the population itself.

From 2010 to 2022, airlines in Brazil accumulated a significant loss of 54 billion reais, with only three years of net profit (2010, 2017 and 2019). According to the National Civil Aviation Agency (ANAC), figures for the period from January to September 2023 indicate a loss of 1.5 billion reais. We are facing a reality that requires immediate actions to reverse the situation. And they all send the same warning signals: operating costs, judicialization, legal security for investments and lack of strategic vision for an essential public service in a continental country like Brazil.

The operational challenges of aviation, particularly fuel, which represents 40% of these costs, have been a determining factor in the economic unviability of companies. It is intriguing to note that, when pricing QAV (aviation kerosene), the PPI formula is used for 100% of the fuel distributed, although 92% is produced domestically in Brazil. How long will millions of Brazilians continue to be sacrificed for this? Why not analyze the problem in a real way and find an appropriate solution? This disparity requires in-depth analysis, especially when considering the direct impact on airline operating costs. It is not just about business trips, but tourism in the country also fails to develop its full potential. A beautiful country, with diverse and unique natural wealth, ends up preventing all of this from being just a flight away.

In 2020, the promulgation of Law 14,034 brought important measures, including the introduction of article 251-A in the Brazilian Aeronautical Code. This legislation stipulated the obligation to prove moral damage in situations of contractual breach in transport. However, questions remain about how long judicial decisions will fail to apply this legislation consistently. The existence of legal uncertainty in the country is undeniable. In reality, this instability has become an obstacle to the entry of new foreign companies into the Brazilian market, which could bring important investments and boost the airline sector. As for the domestic impact, the question remains: how long will domestic companies be blamed for alleged non-existent causal links, citing "business risk"? Holding these companies responsible for events such as rains, storms and airspace closures does not make sense, especially when the decision not to fly is made with the objective of preserving lives. Something is wrong when Brazil leads the number of judicial actions in the world and an industry of "vulture websites" is encouraged to promote litigation, although national companies are recognized among the most punctual on the planet. This goes against the basic principles of law.

It is essential that the judicial system adopts an approach consistent with Law 14,034. This will not only strengthen legal certainty, but will also ease the burden on the judicial system, bringing benefits to society as a whole. Ultimately, it is perpetuating an injustice that harms the very society it seeks to protect. How long will we continue to neglect a systemic vision of the problem on a national scale? Until when will it be understood that applying the law without an economic analysis and without foreseeing the social impact it is causing will not be condemning millions to the absence of flights in their localities.

During the pandemic, while other nations invested in their aviation, there was no financial aid in Brazil. And, let's be clear, no one was asking for donations, but rather market measures that could allow the survival of a vital sector for the country. Brazil needs to recognize the importance of connectivity for its development. The signs are evident and it is imperative to become aware of the need for urgent measures. Fighting the facts is not productive. The complexity of the situation increases every day and unilaterally blaming one party is not fair. Passivity can compromise the entire system, and history teaches us that last-minute measures do not always have the rationality that a capital-intensive sector needs.

Without robust air infrastructure, economic growth and ideal living conditions become unattainable. It is time to face these challenges head-on, moving away from populism and empty promises, as the lack of support for the sector affects everyone. Paying to see will not be good for Brazilian society. We are not looking for magic solutions or a panacea, but it is time to make a collective effort to look proudly at the sky, admiring the legacy of Santos Dumont. This is not mere rhetoric, just observe the value attributed by the country of the Wright brothers, where even the legislation related to judicial recovery is safer than the Brazilian one and is sought by everyone. What is missing from this country, which has almost the same GDP as France, Italy, Russia, larger than Australia, Spain, among others, to have the same connectivity? Let's think? Why do only 0.5% of Brazilians access air transport? Let's think?

A healthy airline industry is an essential engine for progress. Even in the face of difficulties, aviation plays a crucial role for Brazilian tourism, contributing to the 7.8% of GDP that this sector represents. It also plays an important social role, exemplified by the free transportation of 5,820 items for transplants (organs, tissues, equipment and materials, among others) in 2023, according to data from the National Transplant Center (CNT). We need to work together: government, productive chain and companies to overcome obstacles, ensuring that Brazil flies even higher. It is recommended that the sound of this engine be heard before the country's connectivity is unsustainably compromised.

© Copyright 2022.
950 Brickell Bay Drive, suite 1811, Miami, FL, 33131. USA | Ph: +1 305 432-4388