The International Air Transport Association (IATA) has urged the Federal Government of Brazil and state-owned oil company Petrobas to review the pricing mechanism of ‘excessively high’ jet fuel costs in the country.
Jet fuel currently represents around 40% of the total costs of national airlines in Brazil, around 10% higher than the world average, clarified Peter Cerda, IATA’s regional vice president of the Americas. “The monopoly position of Petrobas and the additional administrative costs charged by the supplier result in artificially inflated jet fuel prices,” he elaborated, noting that excessive fuel prices are further compounded by a government-imposed “heavy tax burden on fuel for domestic flights, which further negatively impacts the sector’s competitiveness”.
Cerda added that despite the Brazilian aviation industry contributing USD $27.5 billion to the country’s GDP in 2022, the nation has a very low number of flights per capital at just 0.4 trips a year. “With a population of over 200 million, the potential to allow more Brazilians to fly is there byt the high cost of jet fuel makes air travel too costly,” he concluded.
IATA notes it is ‘ready to engage with the relevant stakeholders and offer its expertise and support' to help Brazil adopt best practices to boost its aviation sector.