The Provisional Measure of the airline sector from the antitrust point of view



After a swift approval of Provisional Measure No. 863/2018 (PM) by the Congress, the bill authorizing entry of airline companies fully held by foreign capital awaits President Jair Bolsonaro’s sanction to be converted into a law.

However, the Administrative Council for Economic Defense (CADE) and the National Agency for Civil Aviation (ANAC) have expressed opposition to one of the bill’s provisions: free baggage of up to 23 kilos on aircraft with more than 31 seats. According to the agencies, this provision was not included in the original text of the PM and could harm competition by affecting the business model of low cost companies that would be the main parties interested in investing in the Brazilian market. Therefore, this would harm consumers, who would not be benefitting from a competitive environment able to offer cheaper flights or flight arrangements that would suit varied needs.

The reversion of the baggage allowance goes against the global trend, and emphasizes, at a national level, the concern of a growing concentration in the market, since Avianca announced its judicial recovery plan and cease of activities. So far, only companies already consolidated in the Brazilian airline sector are interested in buying these assets.

Alongside the veto recommendation of this provision, CADE requested its admission as amicus curiae before the responsible court of Avianca’s judicial recovery, and initiated an investigation to determine the possible competitive impacts of the operation (Administrative Inquiry Preparatory Procedure No. 08700.002069/2019-19).

The President’s decision on the sanction or veto of the bill must be taken by June 17.