After several postponements on the subject, a mixed commission of the National Congress authorized this Thursday (25/04) that the capital of airlines operating and ed in Brazil may have 100% foreign ownership, until then this number was limited to 20% of the company's shares.
After being approved by the committee, the proposed law that came from an MP (Provisional Measure) promulgated by Michel Temer, will still through the plenary of the Chamber and the Senate before becoming law.
The new proposal already includes an amendment that specifies the hiring of employees and crew at airlines, all of which must have Brazilian employees and crew. In this new project there is a huge restriction on hiring foreigners.
The approved text provides for at least 2/3 of Brazilian crew on international flights operated by Brazilian airlines. The employment contract will be governed by Brazilian law.
Currently in Brazil practically all companies have some participation of foreign capital. LATAM Brasil is part of the multi-national LATAM Group, GOL has investments from Bank of American, Delta and Air -KLM, while Azul has a stake in United Airlines, but also shares in TAP Portugal.
Together with the release of Total Foreign Capital in airlines, the Bill (PL) prohibits the charging of checked baggage of up to 23 kg, as a counterpart for the new measure.
On aircraft with 21 to 30 seats, this allowance may be 18 kg, and for small aircraft with 20 seats or less, the allowance is 10 kg. ing, this is now mandatory, so all companies should only charge for additional baggage, from when the Bill is sanctioned by the President of the Republic, Jair Bolsonaro.
The rapporteur's text prohibits the use of the baggage allowance for the transport of live animals. The sum total of the weight of enger luggage cannot exceed the limits contained in the aircraft's flight manual. On connecting flights, the baggage allowance for the smaller aircraft must prevail.
Another counterpart required by the rapporteur is that companies operate at least 5% of their flights on regional routes for at least two years. In case of non-compliance with the rule, the aeronautical authority must impose a fine of BRL 10 per regional flight not carried out and, if there is a recurrence, revoke the concession or authorization.
First MP and History
The release of the air market for foreigners was already debated by Congress in 2016. In March of that year, then-president Dilma Rousseff signed a provisional measure that, among other points, raised foreign capital in airline companies to 49% (MP 714/16) .
During discussion in the Chamber, the percentage rose to 100%. Dilma signed the MP a month before being removed by the Chamber in the impeachment process.
Facing the risk of defeat in the Senate, where the liberalization of the air market was not well received, President Michel Temer reached an agreement to veto the part about the increase in foreign capital.
The solution was an alternative to save the provisional measure, which contained other important points for the government, such as the forgiveness of Infraero's debts with the Union.
In a note, ANAC said:
“ANAC is concerned about the approval of the amendments to MP 863/2018, approved today (25/04) by the t Committee of the Senate. The Agency understands that the alterations may jeopardize the opening of the market and the increase in competition in the Brazilian airline industry by interfering with the environment for the entry of new foreign airlines, especially at this time when one of the national airlines is in the process of judicial recovery and significantly reducing the number of flights in the country. In addition, the changes prevent consumers from having access to new services provided by companies that already operate with complete freedom abroad and that have shown an interest in operating in Brazil.”
