Brazil Aviation Minister Fighting to Save Funding Amid Austerity

Brazil’s aviation minister vowed to resist efforts to cut subsidies for regional air service even as the government’s austerity program forces a pullback in federal spending.

“Politically, I will fight in every way possible to maintain our funding,” Aviation Minister Eliseu Padilha said in an interview in Brasilia Tuesday. Trimming support for the aviation industry is “not politically justifiable, even if economically adjustments are very important.”

The regional aviation fund, made up of fees charged at privatized airports, is projected to reach 4.4 billion reais ($1.4 billion) this year, Padilha said. Brazil Finance Minister Joaquim Levy has been increasing taxes and cutting social programs, including unemployment benefits and college loans, as he seeks to reverse last year’s budget deficit and post a surplus. Those actions have stoked fears that the aviation fund, which will in part go to subsidize existing flights to smaller cities, could be re-appropriated.

“This industry has guaranteed growth for the next 20 years,” Padilha said. “We can’t endanger our programs.”

One of the biggest beneficiaries of the regional aviation program is Azul SA, created by JetBlue Airways Corp. founder David Neeleman.

Azul is the carrier that flies the most regional routes on Embraer SA jets and ATR turboprops. Latam Airlines Group SA’s Tam unit, Gol Linhas Aereas Inteligentes SA and Avianca Brasil have said they are looking into buying Embraer jets that would better meet seat limits for subsidies on those regional routes.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE