The proposed merger between Brazilian airlines Gol and Azul has received a significant endorsement from Brazil’s Minister of Ports and Airports, Silvio Costa Filho. In a recent interview, the minister expressed his belief that the consolidation would bolster the aviation sector, prevent potential company failures, and ultimately benefit the Brazilian economy. This move could reshape the landscape of Latin American air travel.
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A Dominant Force in Brazilian Aviation
The merger of Gol and Azul would create a leading airline in Brazil, commanding approximately 60% of the domestic market share. This would surpass LATAM Airlines’ current 40% share, raising concerns regarding competition and potential airfare increases. LATAM’s Brazil head, Jerome Cadier, has publicly stated that such a merger would necessitate “serious mitigation measures” from Brazil’s antitrust regulator, CADE (Administrative Council for Economic Defense). Former CADE head Gesner Oliveira echoed these concerns, stating that Brazil requires increased competition, not consolidation. He argued that consumers would ultimately bear the brunt of reduced competition.
Minister Highlights Benefits Amidst Competition Concerns
Despite these concerns, Minister Costa Filho maintains that the merger would be a positive development for the Brazilian aviation industry. He argues that a combined entity would enhance the survival of both airlines, safeguard jobs, facilitate access to lower credit costs, and expand connectivity within the country. He emphasized the government’s commitment to preserving the aviation sector and ensuring job security. Costa Filho contends that the merger’s benefits outweigh the potential risks, stating he doesn’t anticipate a negative impact on airfare prices.
Navigating Regulatory Scrutiny and Economic Realities
The COVID-19 pandemic significantly impacted Latin American airlines, resulting in high debt levels, widespread restructuring, and several bankruptcies. Gol has been operating under Chapter 11 bankruptcy protection in the United States since early 2024, while Azul recently negotiated an agreement with lessors to reduce debt obligations in exchange for equity. LATAM successfully emerged from Chapter 11 in 2022. This challenging economic environment provides a backdrop to the proposed merger.
The proposed merger faces a rigorous review process by CADE, with a potential decision expected by early 2026. CADE Superintendent Alexandre Souza confirmed that the regulator will conduct a thorough examination of the competitive landscape. Minister Costa Filho revealed that potential price increases have been a topic of discussion with both Gol and Azul. He relayed assurances from the airlines that their strategy centers on increasing profits through higher volume, not increased fares. The minister suggested that a stronger, more efficient airline could potentially even lower fares through increased capacity, optimized regional networks, and improved management. The success of the merger hinges on convincing CADE of its overall benefit to the Brazilian economy and consumers.
