Public Law, Project Finance and Regulatory
BNamericas

Brazil’s air traffic on course to reach pre-pandemic levels

The number of passengers using Brazilian airports is climbing back to pre-pandemic levels, and industry players expect the sector to recover in full this year.

Passengers on domestic flights reached 7.37mn in November, up 7.6% from the same month of 2022, according to Brazil’s civil aviation authority Anac.

That figure is the highest for the month since 2019, when it reached 8.09mn, before the pandemic hit the industry, demonstrating that the rebound is well underway.

“| believe that in 2023 we will return to pre-pandemic levels. The recovery was already expected and there will likely be an increase in travel in the coming years. It’s clear that fuel prices are playing a decisive role in the recovery, but the expectation is that a breakeven point will be reached,” Paulo Dantas, an infrastructure and project finance specialist at law firm Castro Barros Advogados, told BNamericas.

Meanwhile, the number of passengers on international flights, which were even more severely impacted by the pandemic, also increased in November, reaching 1.48mn passengers, more than double the 733,000 seen in November 2021. By comparison, in November 2019, the volume of passengers on international flights totaled 1.8mn.

Concessions

 While the sector continues to recover, it remains uncertain if there will be more airport concessions, as ports and airports minister Marcio Franca, who took office earlier this month, said that the ministry will assess the details of planned concessions for the major airports in Rio de Janeiro state — Santos Dumont and Galeão — before those processes can move forward.

Despite the announced review, market observers do not believe that the airport concession model will be suspended and the minister’s speech merely suggests that the new administration wants to carry out a detailed evaluation of the few airports that are still under government control, since the same model was also used during previous governments led by the workers party (PT).

“| believe that the [concession] processes will be reviewed, but not terminated. Santos Dumont and Galeão need some coordinated plan in order to succeed in a new concession,” said Dantas.

Brazil’s airport sector is now mostly run by private sector firms, following in the footsteps of the country’s telecom and electric power industries.

In August 2022 the government concluded a concession auction for 15 airports, meaning that private sector companies now handle 91.6% of national air passenger transport.

https://www.bnamericas.com/en/news/spotlight-the-state-of-brazils-airport-sector