September Aviation Jurisdictional Updates

September Jurisdictional Update, Brazil

ANAC is trying to simplify rules for the airlines to encourage business in Brazil. They are working with other authorities abroad, trying to standardize the certification of aircraft and simplify processes and procedures. They have issued temporary rules for reimbursements and rescheduling flights. Even before the pandemic, ANAC started the digitizing processes and now everything is online except inspections.???

There is even a new system for registering drones. They can be registered from abroad and if approved by the FAA, they are automatically approved in Brazil, unless there is a special case that needs separate approval.???

Banks, financing, and imports are making a comeback in Brazil. There has been some restructuring of airlines, but this marketing is the only segment that saw growth during the summer months, and it was even better than before the pandemic.???

September Jurisdictional Update, Colombia

Colombia is facing unprecedented times, says Jose Elias with Del Hierro Abogados in Bogota, Colombia.? There is a new president, Gustavo Petro who is a former guerrilla fighter who, at 17, joined the 19th of April Movement, which later became the M-19 Democratic Alliance. He was purportedly involved in the Palace of Justice Siege in November 1985, where more than 100 people died, including 11 of the country’s 21 Supreme Court Justices.???

As a far-left candidate, he has a new tax law that will increase taxes on everything, including income tax and more, which will make it hard for foreign investment to succeed in Colombia. He has the majority in congress, so it is likely his agenda will succeed.???

There are also two different laws affecting the airlines. One involves an increase in fees for passenger rights, and the other is an open skies agreement that allows any airline that wants to fly into Colombia.? There is no more cabotage, and we are left with several redundant laws. Furthermore, there are no slots available to allow for the open skies agreement they are trying to implement. There are no less than three airlines trying to fly into Colombia, but no slots to accommodate them.???

In addition, Avianca and Viva (a subsidiary of Ryanair) are merging, but Avianca’s financials are not good, so there is a chance the merger will have a negative effect on Viva Air. Ryanair’s board president will become the president of Avianca’s board, and the combined companies will have 65% of the slots in Colombia. If the merger does not go well, most of the slots will be controlled by a failing airline, so the next six months will be interesting to watch.???

September Jurisdictional Update, Germany

The pandemic hit the German market very hard. The number of grounded flights led to skyrocketing passenger claims, resulting in thousands of claims in the short span of a couple of months.???

80% of these cases made it to court, so the airlines are obliged to respond to them. Arnecke Sibeth Dabelstein had to hire eight new attorneys to handle the increased workload.???

Some countries passed temporary laws during the pandemic to regulate passenger claims. The German politicians discussed doing the same, but in the end, it was a difficult law to pass and would have been political suicide to do so, so there were no government regulations to manage the number of passenger claims that occurred during this time.???

Furthermore, there are fears that the Ukrainian/Russian war will affect energy prices in Europe this winter. All this could lead to inflations and much higher travel costs in the future.?

September Jurisdictional Update, United States (Miami)

Business aviation continues to be strong. Third quarter numbers are still very strong, and Andrea Villa with Harper Meyer is looking to a very busy fourth quarter. Struggles in the commercial market are helping business aviation stay strong.?

There is a trend for charter rates to decrease as people move out of the charter market and into ownership. The number of first-time buyers is not dropping off as some predicted, so demand for aircraft has not decreased. There are still buyers who are closing on an aircraft without an inspection.? So, business aviation is still strong.?

Nonetheless, this segment still faces the challenges of pilot shortages and expensive fuels. Rising fuel costs historically have a stronger effect on the owner-flown market, while the business jet market is more immune to increased operational costs. Pilot shortages can have the opposite effect. Pilot shortages can ground the business jet market, while the owner-flown market can still fly itself.???