Brazil’s Aviation Rebounds but Faces "Lots of Challenges," Say GOL and LATAM Chiefs
GOL and LATAM CEOs, alongside ANAC’s director, detail a market defined by soaring demand, intense competition, and crippling structural costs at the ALTA Airline Leaders Forum.
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Brazil's aviation market is experiencing a robust post-pandemic recovery, marked by "truly solid demand" and growth rates far exceeding global averages. However, this boom is shadowed by immense structural challenges, including crippling costs, high taxes, and regulatory instability, according to a panel of the country's top aviation leaders at the ALTA AGM & Airline Leaders Forum.
The panel, moderated by Gabriel Araujo of Reuters, convened Celso Ferrer, CEO of GOL Linhas Aéreas; Jerome Cadier, CEO of LATAM Brasil; and Luis Ricardo de Souza Nascimento, a director at Brazil's aviation authority, ANAC.
"As we said in the introduction, a very unique market," Araujo began, noting that for years, airline leaders have described Brazil as having "lots of opportunities and lots of challenges". The opportunities are clear: the market grew 12.7% in August, a pace "five times faster than other markets in the world".
Celso Ferrer of GOL confirmed this, calling 2024 "the first year of substantial demand" following the pandemic. He highlighted the market's evolution, noting that when GOL launched, Brazil had 30 million total passengers; today, "GOL flies 30 million passengers".
Emerging from Chapter 11, Ferrer said GOL’s strategy is to "reduce costs, be more competitive, and grow the capacity that we have been shrinking since the pandemic". He pointed to a "very healthy revenue environment" where airlines are successfully "matching supply and demand".
LATAM's Jerome Cadier offered a more sober long-term view, reminding the audience that the market is only now returning to levels seen in 2012, effectively overcoming a "lost decade".
LATAM’s strategy, he explained, is "adding capacity, but always in a rational way, always in a conservative way, making sure that the routes that we operate are sustainable". Cadier’s chief concern is "to grow sustainably" and avoid "building overcapacity".
Warning of potential headwinds from Brazil's fiscal policy post-2026, Cadier stressed the need to "remain flexible". This includes LATAM’s recent order for Embraer E2 jets, which will allow the airline to expand its network into new markets requiring a "smaller gauge" aircraft.
From the regulatory side, ANAC Director Luis Ricardo de Souza Nascimento described the rapid growth as a "sweet problem". He outlined ANAC's two-pillar approach to managing it: first, shifting to a "less prescriptive" and more "responsive regulation" driven by data and operator performance. Second, addressing infrastructure deficits through a new federal program called "Ampliar," designed to "attract more private investors to Brazil, especially in the airports".
The Battle Against "Brazil Cost"
Despite the growth, both CEOs were clear that high structural costs are the primary threat.
"The big challenge" for GOL, Ferrer said, is financing, with 95% of its debt denominated in U.S. dollars while revenue arrives in Brazilian Reais amidst "very high interest rates". He also listed massive expenses from "legal claims" and a volatile tax environment, citing a new withholding tax on leases and a new IOF tax on payments abroad. "This is from one day to the other," he said.
In response, Ferrer stated, "Productivity is number one key". GOL is using AI to find efficiencies, such as shortening flight routes. "We celebrate that we reduced 15 kilometers... every route that we fly," he said.
Cadier said LATAM has been "obsessed about lowering our operating cost," primarily by shrinking overhead and investing heavily in "digitalization". He noted that LATAM continued to fund its IT investments even during its own Chapter 11 process, a move that has paid off in productivity and "ease to do business".
A "Very Competitive" Market
The panelists also pushed back against common perceptions that the Brazilian market, dominated by three carriers, lacks competition.
Ferrer was adamant: "90% of the O&Ds (origin and destinations), we have the three airlines". "I don't know other markets... that have this type of concentration in terms of being very competitive". He added that 45% of GOL's fares are under 400 Reais (approximately $65 USD).
Cadier echoed this, asking, "It is a really competitive market... if it wasn't, how do you explain three companies going into Chapter 11 after the pandemic?". He argued that Brazil is "one of the most open markets to aviation in the world," and the reason new airlines don't enter is because "the three companies that operate there are extremely competitive".
This competitive-but-costly environment has fueled the industry's conflict with the Brazilian Congress over a bill seeking to regulate baggage fees.
Cadier described the unbundled "basic fare" as "giving the customer the option to fly for a cheaper fare without using the bin". He conceded that the airlines "didn't do a very good job in communicating it the right way" but insisted the model "is good for Brazil" and aligns it with "most of the developed markets".
ANAC's Nascimento supported the industry's need for international alignment. He said it is ANAC’s role to "bring this benchmark for the Congress... and explain to them what we have around the world" to protect the sector's competitiveness.
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