There are only four months left for IBAS – International Brasil Air Show and the participants of the seminars and conferences that will happen at the event are already starting the discussions on the development of the aviation industry.
Rogério Coimbra, Secretary of Civil Aviation Regulatory Policy, who will participate in the Landings Latin America, gave an exclusive interview on the development of air transportation from the tourism industry, the main theme of the seminar.
How can the tourism industry contribute to the development of air transport?
Tourism and air transport are complementary and strongly dependent on one another. The impacts felt in air transport in recent years – with decreasing demand and reduced number of flights – are naturally observed in the tourism industry, with a decrease in the number of domestic and international tourists.
It is important to emphasize that the periods of greater demand for air transportation are precisely those that coincide with the seasons of school holidays and the holiday season. The development of new tourist products in periods of less demand is fundamental for the increase of the number of passengers in months with less demand. Regional festivals, sporting or musical events, trade fairs and even the provision of products for specific segments of the population – such as retired people – are some examples of products that contribute to a greater demand for air travel during the off-season.
Finally, it is essential that there is not only integration in the marketing of tourism products and air transport, but also the planning and implementation of public policies for both sectors. Joint efforts to promote measures that affect one sector will invariably be beneficial to the other.
How important is the development of the regional aviation plan and how can this contribute to Brazilian connectivity?
Regional aviation is an important factor for the development of the interior of Brazil. In this sense, the Regional Aviation Development Program – PDAR, created by Law 13,097 of 2015, aims to increase the access of the Brazilian population to the air transport system – with priority for the less developed regions of Brazil -, to integrate communities Isolated to the national air network and facilitate access to regions with tourism potential. The law authorizes Union to grant, for this, an economic subsidy for the payment of part of the costs of regional flights.
It is estimated that, in the short term, a PDAR approach in the Legal Amazon region, which has few options for access by land, may present more expressive results in terms of increased air connectivity. The increase in the number of cities served by air transport, as well as the number of frequencies, should contribute to the development of the local economy. This will entail greater integration into the rest of the country, generating jobs and income, reducing poverty and regional inequalities.
How can the air transport industry contribute to the development of tourism in the regions where it is present and how to develop new routes in these regions?
The development of tourism and the increase in the number of routes are closely related to the increased efficiency of air transport companies and the reduction of airfare prices. In order to do so, it is necessary to promote increased competitiveness and enable greater competition in the Brazilian air transport industry.
Low-cost airlines are thus a good alternative to the development of tourism. Traditional companies are forced to adopt some of the practices of these companies, since if they do not, they will not support the competition. It is also worth noting that these low-cost airlines tend to stimulate passenger traffic and create new routes, increasing the number of cities served by air travel. In addition, they attract new users who until then opted for another mode of transport. In this context, the elimination of restrictions on foreign investment also creates an environment conducive to the emergence of low-cost companies in Brazil.
The establishment of air transport companies was considered, for a long time, as an element of national strategy, both in Brazil and in the world. This understanding has even boosted the practice of many countries to have a domestic airline. However, as a trend towards the globalization of air transport services, this concept has been relaxed, to the point that important nations admit the acquisition of their domestic companies by foreigners (as in the acquisition of KLM by Air France)
In the case of Brazil, this scenario does not develop differently. Historically, the legislation has set low limits for foreign participation in the share capital of domestic airlines.
This barrier to entry means, especially in times of financial crisis in the State, a significant prohibition on the inflow of resources that could be used to create new companies, to invest capital in existing companies, and consequently to increase the supply of flights and routes. From another perspective, imposing limits on the inflow of capital increases the access to capital and restricts the possibility of growth in domestic traffic.
In Brazil, foreigners may hold up to 20% (twenty percent) of the voting capital in airlines. According to World Bank information contained in the study “Investing Across Borders” and the Secretariat of Civil Aviation of the Presidency of the Republic – SAC / PR, only countries such as Saudi Arabia, Ethiopia, Haiti and Venezuela appear to be more restrictive to investor participation Foreigners in airlines – in them foreign capital with voting rights is not allowed. On the other hand, South American countries such as Chile, Colombia and Bolivia allow up to 100% (one hundred percent) of share control by foreign investors in national airlines. Such a limit also makes air transport the sector of the Brazilian economy more foreign investment. . In the mining, oil and gas, agriculture, light manufacturing, telecommunications, electricity, banking, insurance, airports, ports and highways, construction, tourism, retail, sanitation and hospitals there are no similar restrictions.
More investment, in any sector, means more supply, more competition, better prices, and more variety of options for passengers, etc. It is a contradiction to want all this and, at the same time, to limit investments. The permanence of limitations to investments in this sector is only positive for those who do not want more competition. Competition, by the way, on an equal footing.
It is important to emphasize that this proposal does not allow the Brazilian domestic market to be exploited by foreign airlines. Companies established in other countries would still be prevented from carrying out the so-called “cabotage” – that is, the air transport of passengers, cargo and mail between points in Brazil. The concession for the operation of scheduled air transport services or authorization for non-scheduled air transportation or for specialized air services shall only be given to the legal entity incorporated under Brazilian laws, with headquarters and administration in Brazil. Thus, in order for a foreign airline to operate public air services in the country, it must establish a subsidiary in Brazilian territory and operate under Brazilian law (labor, commercial, tax, etc.).
Another relevant aspect for the development of regional aviation is associated with the costs of the ICMS tax on Aviation Kerosene – QAv. Since the States and the Federal District are the competent entities for the definition and collection of ICMS tax on fuels, the rate of this specific tax reaches up to 25%. Considering that QAv costs on average 40% of the operating costs of air transport companies, this tax impacts approximately 10% on the operating costs of air transport companies. The reduction of ICMS rates on QAv is, in this context, fundamental for the development of regional aviation, especially in isolated regions.
In addition, it is understood that the conclusion of the review of the general conditions of transport, conducted by the National Civil Aviation Agency – ANAC, will largely allow an alignment with global practices regarding baggage allowance, material assistance to the passenger, in case of Delays and cancellations of flights or missed boarding, and the right of repentance in the purchase of tickets. Better tariff management resulting from these measures may also develop tourism and enable new routes.
Secretary of Regulatory Policy of Civil Aviation talks about the discussions in the Landings Latin America
There are only four months left for IBAS - International Brasil Air Show and the participants of the seminars and conferences that will happen at the event are already starting the discussions on the development of the aviation industry. Rogério Coimbra, Secretary of Civil Aviation Regulatory Policy, who will participate in the Landings Latin America, gave an exclusive interview on the development of air transportation from the tourism industry, the main theme of the seminar. Check below: How can the tourism industry contribute
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