On June 17, the Brazilian Congress enacted the Federal Law No. 13,842/2019, banning the limit to foreign ownership in Brazilian-based airlines. Before this law, foreign capital was limited to only 20%.
The law results from the conversion of the Provisional Measure No. 863/2018 and amends Sections 181, 182, 184, 185 and 186 of the Brazilian Aeronautics Code (Federal Law No. 7,565/1986). In addition to eliminating the limit to foreign capital in Brazilian airlines, the new law revoked provisions requiring approval of airlines’ bylaws and their management to be composed solely by Brazilian citizens.
In the negotiation for the conversion of the Provisional Measure No. 863/2018 into law, a hard topic was the proposed amendment granting passengers the right to take one piece of luggage of up to 18 or 23 kg, depending on the size of the aircraft, without additional charges in domestic flights. However, in sanctioning the law approved by the Congress, the President vetoed this amendment, and thus the law goes back to Congress in order to validate or not the veto within 30 days.
The law is not yet in force as the President vetoed a provision that was inserted by the Congress in the process of converting the provisional measure into law, granting the right to passengers to take luggage at no charge under certain conditions.
The Federal Law No. 13,842/2019 concludes a discussion that has been going on for years in Brazil. With no limits for foreign capital in Brazilian airlines, the Government expects to foster competition in the Brazilian regional market, increasing the offer of flights and developing new hubs, thus creating new opportunities for new airport infrastructure development.
Our specialized team is at your disposal to discuss opportunities that may arise from this new law.
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