Aviation
Commercial /
Brazil
on the consumer's back
Possible union of Azul and Latam worries analysts
Ken Yam/Unsplah
Rafael Ramos
6/13/2021
One less airline in the country can mean greater concentration of the market in a single company can mean higher costs for final consumers, since competitiveness is reduced.
Gol, Latam and Azul together have 98.7% of domestic flight operations in the country, according to data from Anac. On Tuesday, the 8th, Gol acquired Map, concentrating more regional operations. Azul has even bigger plans, as it signals that it intends to acquire Latam Brasil.
Josue Isai Ramos Figueroa
Azul argues that the acquisition of the rival would be beneficial for the sector to recover from the crisis in which it finds itself. It has also said that there are few overlapping routes with Latam Brasil, an argument that was accepted by Cade when the agency approved the codeshare between the two companies, which was undone at the end of last month.
Although the strategy is well regarded by investors, the Brazilian antitrust agency, Cade, may bar this acquisition, since a duopoly of this magnitude would tend to generate price increases.
"It is an operation that does not deserve to be approved by Cade, for the consumer, the concentration of the market, which is already an oligopoly, is not advantageous", say specialists on this subject.
Airbus A330-900
CC BY S.A 4.0, via wikimedia commons
The lawyer points out that the overlap of flights between the two is small, however, competition in the Brazilian air sector is also small and there is difficult access to the most demanded airports, which function as hubs for operations and slots (landing and take-off times) .
Furthermore, the tendency is for a concentration in the market to worsen the services offered. For the expert, the entry of foreign players in the country has barriers. The operator would have exchange problems, concentration on fuel supply, which today is a monopoly, high country risk and few slots at major airports.
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Rafael Ramos
Aviation enthusiast from an early age, he had his first contacts with the area developing that good old habit of spending dozens of hours in front of the screens of Micrsoft Flight Simulator and other simulators. With a solid background in various technological areas, including engineering and chemistry, Rafael has rejoined aviation as editor and author of articles and materials on our portal, providing invaluable help to the dynamics and expansion of the website and the aeronautical community, bringing us the news and updates so indispensable for us to remain current in our area of operation.
   
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