Thursday, August 20, 2009

Moving Brazilian Aviation Forward

The International Air Transport Association recently set out an agenda to help move Brazil's aviation sector forward "to improve [its] competitiveness and deliver broad economic benefits."  See Press Release, IATA, Strengthening the Foundations of Brazilian Aviation, No. 23 (Aug. 20, 2009) (available here); see also Giovanni Bisignani, General Director & CEO, IATA, Remarks to the British Chamber of Commerce, Sao Paulo, Brazil (Aug. 20, 2009) (available here).  On the topic of air transport liberalization, IATA's CEO had the following to say:

I would like to spend some time on liberalization. Brazil is the 10th largest economy in the world but has only 13 million international air passengers. That is only a third of what markets like Thailand and Singapore have annually with much smaller economies and populations. As a result you are not maximizing the economic benefits of air transport. Part of the problem is the very traditional protectionist policy approach of the bilateral system.

Unlike any other industry, airlines need a government treaty to sell its product and airline mergers are limited by archaic foreign ownership restrictions. Late last year, Brazil took two historic leadership steps. First, it accepted our invitation to join IATA’s Agenda for Freedom meeting in Istanbul. The 15 invited governments focused on finding a way to give airlines the commercial freedoms that every other industry takes for granted. We are now working on a multi-lateral statement of policy principles to promote a more normal approach for aviation. CONAC’s recent proposal to increase foreign ownership possibilities to 49% would be a step in the right direction and I hope that Brazil will be one of the first signatories when the group plans to meet again in November.

The second action was almost immediately after the summit when Brazil signed a very liberal agreement with Chile. The sky has not fallen but opportunities for travel between Chile and Brazil have expanded.

IATA recently studied the potential impact of further liberalization. Liberalization of ownership and market access could generate 400,000 jobs in Brazil and add 24 billion Reais to Brazil’s economy. The stakes are high! I hope that Brazil, as the region’s largest economy, can take leadership to promote liberalization in Latin America and globally.

Currently, Brazil does not have an open skies agreement with the United States.  Cf. Agreement Between the Government of the United States of America and the Government of the Federative Republic of Brazil on Air Transport, 3 Av. L. Rep. ¶26,231 et seq.  This is also true of Brazil's aviation relationship with the European Community, though both sides have publicly committed to working toward a horizontal Brazil/EC Air Transport Agreement.  See European Commission, Brazil-European Union Strategic Partnership Joint Action Plan, at 7 (Dec. 22, 2008) (available here).

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