Since the ratification of the Provisory Measure by the Brazilian Parliament in May, a policy that allows airline companies with 100% foreign capital to operate in Brazil, the shift of international players towards the country has been growing. In a span of three months, five low-cost airlines were already authorized to operate in Brazil.
Flybondi, Sky, and Norwegian Airlines are companies that arrived with the intention of dominating international low-cost flights in the country. And they now have a new competitor: the Chilean JetSmart has been authorized last week by ANAC (National Civil Aviation Agency) to operate in Brazil, only days after its request. Air Europa, airline company of the Globalia tourism group, is currently awaiting the approval of ANAC to operate domestic flights.
“All of them [Flybondi, Sky, and Norwegian Airlines] have their own fidelity programs and are not part of the primary alliances that fly from here to there. This is interesting in terms of establishing the final price for the client,” said Ilan Arbetman, analyst of Ativa Investimentos, in an interview with LABS.
“We are still in an incipient moment concerning the process, where the low-cost routes do not have a strong showing, compared to the international network of flights, but certainly the new companies are an option for clients that look for economy in the flight service.”
Contrary to the “semi-oligopoly” that dominates domestic flights in Brazil, the international scenario has a slightly different panorama. “We see a dominance of Latam, but there is competition. We perceive at least 15 companies competing in the international market of the country.”

Looking at a public that differs from that of traditional airlines—letting go of checked bagged, meals onboard, and other benefits—the low-cost companies promise to make the sector more dynamic, especially for that part of customers that are sensitive to price.
In the case of Air Europa, Arbetman believes that the market effect will be smaller. Aiming at the main connections in the country (flights connecting SP and Rio, for instance), the Spanish company also operates in some international destinations here, especially in São Paulo and the Northeast of Brazil, where their flights connect with Europe. Given that the total fleet of the company has nowadays 52 planes operating globally, its impact on domestic flights will hardly disturb the giants of the sector.
ALSO READ: After Avianca’s crisis, Brazilian airlines register better results in second quarter
“For the consumer it is extremely interesting [the entry of new companies] […] It is necessary that the government become involved, improve the infrastructure of airports, reconsider the policy of the QAV [aviation fuel] and, more importantly, the issue of baggage, already vetoed by president Bolsonaro in [Provisory Measure] 863, but nothing stops new attempts from being made,” explained Arbetman.
The payment exemption for checked in baggage was annulled in 2016 and became the target of the president’s veto in June, after being included by members of Congress in the text of the same Provisory Measure that allowed foreign airlines to operate in Brazil.
The return of the free, compulsory baggage check in, both for domestic and international flights, could affect the entry of new low-cost players in the country. Congress still needs to analyze Bolsonaro’s veto, so as to finish drafting the proposal.
Action and reaction: How are local leaders preparing for foreign competition?
To tackle competition with these new players, local companies are betting on other benefits for their customers. “The national trend is for current companies that aren’t low-cost to invest more and more in loyalty to deal with this new wave,” explains Arbetman.
Last Thursday (29th) the president of Azul John Rodgerson said to Brazlilian newspaper Valor Econômico that the company will invest $ 1.5 billion in 30 new planes this year. “The rise of the dollar is forcing us to try and anticipate the purchase of planes, which are more economical,” said the executive. In addition to the investment, Azul also commented on their offer of new destinations—from six to eight per year—to be launched in the next five years.
Regarding the investment of $ 250 million announced by Latam to overhaul aircraft in Brazil, Rodgerson considered it a reaction to the entry of Azul in the flight connection between São Paulo and Rio. “I believe that they are looking to improve the service because of our competition. Everybody’s quality will improve because of Azul,” he declared.
Azul, the airline that best performed during the second quarter in terms of profits, also took advantage of the market’s positive swing with the redistribution of Avianca’s slots (arrival and departure schedules provided by ANAC for airlines) in Congonhas airport. The company, which had 26 slots allotted for arrivals and departures at the airport, received another 15 in the new distribution.
Arbetman suggests that the suspension of Avianca’s operations had, actually, a large impact in the results, not only of Azul, but also of the other main airlines in Brazil during the second quarter. “Both Gol and Azul surfed like never before the market, where the was less competition,” said Arbetman in an interview with LABS.
All the companies, even Avianca itself, increased prices this last quarter. Metrics such as load factor and RASK increased strongly.
Ilan Arbetman, analyst of Ativa Investimentos

But for the expert, even with the redistribution of flight slots left vacant by Avianca in Congonhas and apparent more competition between the three main companies, there won’t be a long-term reduction for customers, only an immediate drop in prices.
Latam and Gol operate together in 470 slots in Congonhas. Which means more than 87% of flights in the terminal. Since the route Rio-São Paulo is the most premium in the country, certainly the giants regret not having been able to expand their presence in the airport,” suggested Arbetman. “But I don’t believe that this new distribution could cause a revolution in the prices of the terminal. Azul’s brand new route started with promotional prices, but I believe that with the passing of time, prices will converge in the market, and I don’t see a strong pressure on the margins of current major airlines.
Congonhas is the most disputed Brazilian airport, and the redistribution of Avianca’s slots in the terminal also distracted the attention—redirecting efforts—of other Brazilian companies. In the last few weeks, the airline Passaredo acquired 100% of shares from another player in the segment, MAP Airlines, expanding its presence in the disputed airport of São Paulo.
For the expert, “The purchase of MAP by Passaredo, in fact, makes sense, since MAP would not be able to operate in the 12 slots that their smaller planes acquired […] I see it as interesting, the entry of new players, especially the expansion of Azul’s flights, but I don’t believe that the reduction of prices will remain in the long-term.”
We have an enormous potential, but this potential needs to be better explored. Both the collaboration of political forces as well as less divergence among airlines are necessary.
A sector that behaves aggressively in the country, setting the stage for intense competition among local players—and now between foreign low-cost airlines—the airline industry still has much space for growth in Brazil.
“Evidently, the profile of Brazilians did not change and the fact that the traveler is not aware of those companies, makes the process a bit slower. But we have seen success in the operations [of low-cost companies] and an interesting demand,” explains Arbetman. “I believe that, with time and the entry of new players, this market will become even more dynamic and then we will be able to see the more significant changes in flight prices in the whole.”