ANNOUNCEMENT 01 Jan 2015In January 2015, the government of Brazil announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
Bloomberg. (2014). Brazil Sees $452 Million 2015 Air Subsidy as Gol Mulls Flights. Available at http://www.bloomberg.com/news/2014-07-23/brazil-sees-452-million-2015-air-subsidy-as-gol-mulls-flights.html
Chicago Tribune. (2014). Azul sees gaining most in $428 million Brazil regional air plan. Available at http://www.chicagotribune.com/sns-wp-blm-news-bc-brazil-aviation15-20140915-story.html
On 22 July 2014, the Brazilian Civil Aviation Minister Wellington Moreira Franco announced the creation of a government programme to subsidise the development of Brazilian regional aviation with 1 billion Real (USD 452 million). Its money shall be used to develop Brazil's local airports and incentivise national carriers to integrate the new destinations into their route network. The government goal is to increase the domestic passenger volume to 200 million by 2020. The size of the subsidy will be evaluated annually in order to make domestic flights profitable and affordable for a larger part of Brazilian society.
Currently, Azul Linhas Aéreas Brasileiras SA (Azul) has the strongest domestic market position, but the goal of the government plan is to incentivise the two largest Brazilian carriers Gol Linhas Aéreas Inteligentes SA (GOL) and TAM Linhas Aéreas (TAM) to increase their domestic destination network as well.
The expansion of the domestic market might also help the national aircraft manufacturer Embraer SA. Azul already envisaged buying Embraer aircraft in order to operate their domestic destinations.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.