Brazil’s Biggest Airlines Prepare for US-Brazil Open Skies Agreement

By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Despite the political and economic uncertainty swirling around Brazil at the moment, the country’s biggest airlines, Gol, Azul, as well as Chilean-based LATAM, are jockeying for position to prepare for the much-anticipated ratification of the U.S.-Brazil Open Skies agreement. 

In March, Brazil’s Senate approved the agreement, which dates back to 2010, but, as of this writing, the bill still awaits the signature of Brazil President Michel Temer. The agreement is expected to pave the way for more flights between the two countries and greater competition among airlines.

“Within two years of Open Skies, the airlines in Brazil will have joint ventures with U.S. airlines,” exclaimed Paulo Sergio Kakinoff, CEO of Gol, Brazil’s most popular domestic airline, in a recent interview with Bloomberg.

Kakinoff added that with the U.S.-Brazil Open Skies agreement on the horizon the company would soon be adding flights from Fortaleza and Brasilia to Orlando and Miami.

Brazilian airline, Azul, has also strengthened its ties with the U.S. in recent weeks. Earlier this month, United Airlines purchased additional shares in the carrier from China’s Hainan Airlines, doubling United’s stake in Azul from 3.7 percent to 8 percent. 

“Following our initial investment [in Azul] in 2015, connecting traffic between our airlines is at an all-time high, significantly benefiting our customers traveling between the US and Brazil,” explained United Airlines Vice President, Andrew Levy.

“Azul’s strong network in Brazil, unique business model and exceptional customer service make this transaction a good long-term investment,” he added.

Despite the enthusiasm among Brazil’s airlines, the Open Skies agreement has yet to receive presidential endorsement and is still not officially ratified. LATAM Airlines, Brazil’s largest international carrier, remains optimistic despite the delay.

“It’s more of a bureaucratic process,” explained Roberto Alvo, senior vice-president of LATAM on a recent earnings call. “Once that happens, we will file with the [U.S.] DOT for a joint venture between LATAM and American [Airlines]…we have passed most of the milestones.”

According the Brazilian airline association, ABEAR, among Brazilian airlines, Gol tops the domestic market with 34 percent market share, with LATAM a close second at 33 percent.

For international travel, LATAM leads the way with a 68 percent market share, followed by Azul at fifteen percent, and Gol at twelve percent.