In this post you will:
- Read a few facts that Danish companies should know about the Brazilian Aviation Market
- Get a picture of the main Brazilian carriers ( airline players)
- Have an understanding about the opportunities and challenges within the Brazilian Aviation Sector
“The Brazilian aircraft manufacturer and main competitor of the Canadian aerospace company, Bombardier, has recorded it’s purchase order of number 330 for the E-Jet model. According to an executive from Embraer, the United States remain as main the buyer market and are the main target market for the E-Jet aircrafts. The same executive further added that there is a potential to sell roughly 400 aircrafts within the next 2/3 years to North American companies.
The E-jet family is a series of narrow-body, medium range,twin-engine jet, produced by Embraer, the Brazilian aerospace company This aircraft model was first annouced during Paris Air Show in 1999 in rapidly turned out to be a sales sucess.”
Adapted from Valor Economico
Facts Danes should know upfront about the aviation sector in Brazil
Brazil is a country of huge dimmensions, measuring 8.515.767,049 sq meters, thus, air transportation is very important for the people in the country.
Air travel in Brazil increases at a high pace. As Brazil has been having success over the past few years by implementing inclusive social policies more people started to fly. Brazil has been growing on average 4% per year. This growth led to a higher disposable income for individuals which, instead of using buses as a transportation modal, started to use more air transportation more often Credit has also played an important role as it is possible in Brazil to pay for a flight ticket in several monthly installments.
The regulatory body of the aviation sector is called ANAC and the name stands for Agência Nacional de Aviação Civil, whose principal responsability is to supervise the civil aviation activity in Brazil, both in what regards to economic and technical security aspects within the sector.
You should know that airports in Brazil are controlled by a public capital company named Infraero The name stands for Empresa Brasileira de Infraestrutura Aeroportuária.Infraero is the company responsible for the management of the Brazilian airports.
ANAC claims that since 2002 the domestic air traffic in Brazil has nearly tripled its demmand for domestic flights. Moreover, the utilization rate of the domestic aircrafts went from 56,65% in 2002 to 70,2% in 2011. Within the same period the domestic flight fares shrank almost by half, going from 485,75 BRL to 276,25 BRL in real values untill December of 2011.
The main factors for the facts mentioned above can be highlighted as:
- Economic growth of Brazil
- More Credit to the population
- Better income distribution among Brazilians ( Also inclusion of more people in the “middle class”)
- Higher Competition within the sector, more carriers offering flights
ANAC also claims that untill 2012 the Brazilian aviation market has moved 193 million passengers. Out of this total Galeão ( Rio de Janeiro) was responsible for 9%, while the airport of Guarulhos ( São Paulo) responded with 16% of all traffic. The two airports together are responsible for 25% of all domestic flights in Brazil.
Who are the main Brazilian Domestic carriers?
Opportunities in the aviation sector in Brazil for danish companies
The aviation industry in Brazil is led by Embraer. Embraer is the third largest producers of aircrafts of the world, and Embraer produces commercial,military and executive aircrafts.Another important player in the Brazilian aerospace industry is the helicopter industry Helibras. Helibras is the subsidiary of Eurocopter in Brazil.
The aviation industry in Brazil is led by Embraer, the world third largest aircraft manufacturer. Despite Embraer´s leadership as a local manufacturer, it is possible to find great oportunities within the aviation/aerospace sector, given the presence of other smaller aircraft manufacturer but mainly given the presence of several suppliers part of the aerospace ecosystem.
According to ABAG, the Brazilian Association of General Aviation the Brazilian aircraft fleet grew 6,7% in 2012 in comparison to the previous year, reaching a total of 13.965 aircrafts.Moreover ABAG claims that Brazil has the 2nd largest fleet of executive aircrafts and the third largest fleet of helicopters in the world
Below you can see a figure from ABAG’s yearly report containing the Composition in value of the General Aviation Fleet by Aircraft type in Brazil.
The air transportation demmand in Brazil has changed tremendously and is estimated to keep rising at a very high rate.The figure below show the change in the demmand for air transportation services in Brazil over the last decade.
The usage categories of the general aviation fleet in 2012 are splitted as it follows in the figure
Source: ABAG Yearly Book 2013
The segment that most grows in Brazil is the segment of Private Air Services and Instruction.The Private Air service grows at high pace, and one of the reasons is wealth creation within the country. As the number of millionaires and billionaires in Brazil rises, the Private air services in Brazil, also keeps pace with the growth of wealthy people in Brazil. In regard to the Instruction segment, Brazil will soon be hosting the Olympics and the World Cup. Additionally more people are able to fly in Brazil nowadays, given the positive results of the Brazilian Economy in the last decade. This demmands more pilots. This way Instruction schools in Brazil, have been purchasing more aircrafts to use during practice and to graduate new pilots.
If your are interested in supplying to original equipment manufacturers your company will go through a a strict qualification process where your product, company and technology are going to be evaluated. If approved then there are great opportunities to tap in.
There are two ways to get into this market in Brazil. The first is by having a local agent who already have an establishednetwork and can grant you acess to the right decision makers or by connecting the different tier suppliers.
Challenges of entering in the Brazilian aviation Market
- Complex regulation for the importation of parts
- Skilled Labor Force