The Death of Brazilian Airlines

An in-depth, detailed, and analytically journalistic article suitable for a blog or magazine.

For decades, Brazil has seen airlines born, grow, dominate markets, and then suddenly vanish amid financial crises, unpayable debts, regulatory changes, and profound transformations in the aviation sector. The popular perception is that “all airlines go bankrupt in Brazil,” and while that is not entirely accurate, history shows that surviving in the Brazilian airspace has been a monumental challenge—and many companies have succumbed.

This article delves into the timeline of Brazilian commercial aviation, explains why so many airlines have disappeared, analyzes the structural factors, reveals management errors, points out market transformations, and discusses whether there is still room for new companies to survive.

1. Brazilian Aviation: A Brief History of Ascents and Falls

Brazil is one of the world's largest aviation markets, with continental dimensions and a strong reliance on air transport. However, since the 1990s, the number of operating airlines has drastically decreased, leading to market concentration and increased fares during certain periods.

Among the carriers that have ceased to exist, we can mention:

• Varig – Bankruptcy in 2006

• VASP – Ceased operations in 2005

• Transbrasil – End in 2001

• Webjet – Absorbed in 2012

• Avianca Brasil – Collapse in 2019

• Cruzeiro, BRA, Pantanal, TAM Regional, among many others

In the early 2000s, Brazil had more than 10 mid-sized carriers. Today, LATAM, GOL, and Azul dominate practically 100% of the market.

2. Why Do So Many Airlines Fail in Brazil?

There are structural, economic, regulatory, and geographical factors that make the Brazilian market one of the most difficult in the world for airline survival.

2.1. Jet Fuel Price – A Historical Villain

Aviation kerosene ($QAV$) accounts for 30% to 40% of an airline's total costs. In Brazil, $QAV$ is:

• One of the most expensive in the Americas.

• Priced in U.S. Dollars (USD).

• Highly taxed.

• Dependent on the international oil price.

In times of a rising dollar, Brazilian aviation suffers instantly.

2.2. Suffocating Taxation and Bureaucracy

The air sector in Brazil faces:

• ICMS (State VAT) varying by state.

• Rigid labor laws.

• High airport fees.

• High maintenance costs.

• Regulatory requirements that increase expenses.

This combination makes operating aircraft much more expensive here than in most parts of the world.

2.3. The Gigantic Geography of Brazil

The continental dimension of the country demands long routes, which means:

• More fuel.

• More aircraft wear and tear.

• Lower utilization of regional aircraft.

• Need for maintenance bases spread across the country.

In the U.S. and Europe, companies can operate short routes with more predictable margins. In Brazil, few routes are genuinely profitable.

2.4. Unstable and Crisis-Sensitive Economy

The air sector is extremely vulnerable to:

• Currency crises.

• Inflation.

• Recessions.

• GDP fluctuations.

• A drop in household income.

When a crisis hits, demand plummets brutally—and companies without cash reserves collapse.

2.5. Poor Management and Irresponsible Expansion

Beyond external factors, many cases involve:

• Poor administration.

• Lack of corporate governance.

• Unplanned aircraft purchases.

• Growth beyond financial capacity.

• Political use of the companies (Varig and VASP cases).

• Predatory competition without cash reserves.

History shows that internal errors accelerated inevitable bankruptcies.

3. Emblematic Cases of Airline Failure

Here are the most famous and instructive examples.

3.1. Varig – The Colossus that Fell

Varig, the national symbol for decades, faced:

• Billion-dollar debts.

• Poor management.

• Government dependence.

• Loss of competitiveness.

• Market opening after decades of protectionism.

Its end was traumatic: thousands of layoffs and the loss of a historic brand.

3.2. VASP – Destroyed by Corruption and Mismanagement

A state-owned company until 1990, VASP collapsed due to:

• Lack of investment.

• Dubious management.

• Gigantic tax debts.

It was grounded in 2005.

3.3. Transbrasil – Victim of Economic Crises and Debts

The company could not withstand the high-interest rates of the 1990s and the drop in demand.

3.4. Avianca Brasil – Too-Fast Growth

Between 2014 and 2017, Avianca grew aggressively:

• Purchased aircraft beyond capacity.

• Focused on heavily contested routes.

• Suffered from a high dollar rate.

• Accumulated leasing debts.

In 2019, it lost all operations.

4. Current Concentration: The LATAM–GOL–Azul Triad

The market today is extremely concentrated:

• LATAM → Greater network reach and international routes.

• GOL → Focus on efficiency and the Boeing 737 fleet.

• Azul → Dominance of smaller cities with regional aircraft.

This concentration has effects:

• Positive

  • Operational stability

  • Greater professionalization

  • Modern fleet

• Negative

  • Higher fares in regional monopolies

  • Less competition

  • Difficult entry for new companies

5. Why is it so Difficult to Launch a New Airline in Brazil?

Entering the market requires:

• Hundreds of millions of dollars.

• Minimum fleet.

• Complex ANAC (National Civil Aviation Agency) certifications.

• Access to slots at saturated airports.

• Expensive fuel.

• Unstable market.

Because of this, new carriers are rare—and many start small as regional operators.

6. The Pandemic's Impact and the Sector's Repositioning

The COVID-19 pandemic was the worst moment in modern aviation history. In Brazil:

• Demand plummeted.

• Borders closed.

• Companies accumulated debt.

• Routes were reduced.

The survival of the major players was only possible thanks to:

• Leasing renegotiation.

• Cost cutting.

• Fleet reorientation.

• Concentrated increase in fares after the crisis.

Today, the sector is recovering but remains fragile.

7. The Future of Brazilian Aviation: Is There Hope?

The future may bring new aircraft, new technologies, more efficient routes, and perhaps new competitors, but the “cemetery of Brazilian airlines” still haunts the sector.

Conclusion: Why So Many Carriers Fall—and What Brazil Can Do?

The death of Brazilian airlines is not the result of a single factor. It is the result of:

• A hostile tax system.

• High costs.

• Unstable economy.

• Limited infrastructure.

• Flawed management.

• Complex regulation.

• Uneven competition.

If Brazil wants to have a vibrant air sector, with multiple players and more competitive fares, it will be necessary to:

• Reduce taxes on $QAV$ (Jet Fuel).

• Improve regional infrastructure.

• Streamline regulations.

• Incentivize new companies.

• Increase healthy competition.

Until then, the Brazilian sky will continue to be a high-risk environment—where only giants can survive, and where history shows that no company is big enough to be eternal.