Brazil Bizav Sees Long Recovery, but Also Opportunity

 - May 27, 2020, 5:49 PM
The impact of Covid-19 on business aviation activity in Brazil has varied with some predicting a buyer's market after the pandemic. (Photo: David McIntosh/AIN)

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

Business aviation activity rates in Brazil are varying significantly among different groups of travelers as the country struggles to deal with the Covid-19 pandemic, according to speakers at a recent industry webinar. Participants agreed that a full recovery is several years away, but they also saw opportunities as shrinkage of airline routes enhances business aviation’s value for reaching far-flung destinations already underserved by the airlines.

For instance, in Brazil’s Central-West region, the large agricultural sector is still generating high levels of flight activity. “[Farmers] are flying a lot. They’re leaving the family in quarantine on the ranch, not in the city," explained ABAG technical director Raul Marinho. "But in the artistic segment, it’s a climate of terror, with country-western singers putting aircraft up for sale.”

According to Marinho, “The air taxi segment needs more that a consumer can charter without technical knowledge.” That’s a problem ABAG, the Brazilian business aviation association, is addressing with an app, dubbed Adam, that links consumers to charter firms.

Meanwhile, purchases of new business jets have been “less a financial difficulty than a delivery difficulty because of assembly line delays,” aviation lawyer Felipe Bonsenso told webinar attendees. But he’s seen some business jet sales affected as “some sellers in Brazil have suffered because of the commercial legal code’s recognition of ‘acts of God,’” while some sellers have pulled listings because with the pandemic they see “a greater need for safety, for the ability to travel.”

As the value of aircraft has dropped in the crisis, he noted that in some existing contracts lenders have asked for additional guarantees. But for new purchases, Bonsenso added, “We have seen no drop in appetite to loans on the part of foreign banks.”

Fabio Rebello of Pilatus distributor Synerjet said that his company still has plenty of opportunities to talk to sales prospects across Latin America. Synerjet has done some scheduled deliveries and spoken with customers who have decided to cut costs by substituting smaller aircraft for larger ones. “Chaos always brings opportunities, and we’ve put our foot on the accelerator,” he said.

Brazilian Aviation Institute president Francisco Lyra said that “all crises transform the market into a buyers’ market,” predicting that it will be an “excellent opportunity to enter [business aviation]...when the market melts down—maybe not yet, but when the news starts coming off a drop in GDP, etcetera, there will be opportunities…bargains.” 

Fractional ownership was discussed as an idea whose time is ripe, but for which legislative structures are still inadequate. In fact, Brazil's new civil aviation code RBAC 91 has, under the relevant Subpart K section, merely the word “reserved,” requiring hand-crafted solutions to such issues as avoiding joint liability.

Paul Malicki said the crisis has pushed his flight-sharing app Flapper to explore new markets, such as developing an air freight app expected to launch in the coming weeks and the largest charter flight booked to date, which brought medical supplies from China. Among the obstacles to reaching a broader public is a cultural bias against single-engine airplanes, which caused the higher-cost King Air twin turboprop to be preferred over the Pilatus PC-12 on a test São Paulo-Rio route. He sees potential for a boutique airline, as “88 percent of all general aviation flights in Brazil are within around a thousand kilometers of São Paulo.” Electric aircraft have the potential to reduce costs and rates by half, he said, which would open private flying to the middle class.

The webinar—conducted completely in Portuguese and now archived on YouTube—is one of a series organized by organizers of the Airport Infra Expo show, scheduled for October 6 to 8 in São Paulo. The city had been due to host ABAG's annual LABACE trade exhibition in August, but this has been postponed