Brazil’s Aviation Rebounds Despite Structural Costs, Say GOL and LATAM

(BRAZIL) Brazil’s airline market is bouncing back fast in a post-pandemic recovery, yet LATAM and GOL leadership warn that high, unpredictable costs could stall the momentum. The two chief executives say demand is running far ahead of global trends, but the system still carries heavy financial and legal burdens. They point to tax volatility, dollar-denominated debts, and looming reform risks that could push fares higher and slow growth just as travelers return in large numbers.

Brazilian aviation has surged with demand growing five times faster than the global average. In August 2025, the market posted 12.7% growth, reflecting a broad return to air travel across the country. LATAM Brasil reached 41.5% domestic market share in August, its strongest position in more than ten years. Yet LATAM CEO Jerome Cadier cautions that, even with this rise, the sector is only now climbing back to 2012 levels—essentially a lost decade.

GOL CEO Celso Ferrer calls 2024 “the first year of substantial demand” since the pandemic. He notes how far the market has changed: when GOL started, Brazil logged about 30 million total passengers in a year; today, GOL alone carries roughly that number. Still, capacity has not fully recovered. Brazil had 238 million seats in 2024, which is 9% below the 2015 peak of 261.4 million. Total domestic and international passengers in 2023 reached 112.6 million, a base that shows recovery but leaves room to grow.

Costs and tax pressures threaten momentum

Both airline heads say the largest risk to sustainable growth is the “Brazil cost”—a stack of structural expenses that are hard to plan for and even harder to control.

• For GOL, financing is the dominant issue:
  • About 95% of its debt is in U.S. dollars, while most revenue comes in Brazilian Reais.
  • High interest rates and currency mismatch make exchange-rate and rate moves painful to absorb.
• Ferrer highlights rising legal claims and sudden tax moves that hit cash flow, including withholding taxes on aircraft leases and IOF taxes on payments abroad that can appear “from one day to the other.”

These unplanned shocks make long-term planning hard and can delay new routes, fleet upgrades, and hiring. In an industry with thin margins, such surprises add up quickly.

LATAM has spent years cutting operating costs. Cadier says the carrier kept investing in digital tools and reducing overhead even while moving through Chapter 11. GOL is using AI to sharpen daily operations, including saving an average 15 kilometers on every route flown. Those savings matter when fuel, currency, and interest costs all work against airlines.

A proposed overhaul of Brazil’s tax system poses a fresh risk. The plan would replace sector-specific breaks with a dual VAT (value-added tax) model. LATAM warns this change could lift fares by as much as 25%, which would likely cool demand—especially on price-sensitive domestic trips. For many families who only recently returned to flying, a double-digit fare jump could put air travel out of reach again.

Competition and capacity strategies

Despite concerns that three large airlines dominate the market, LATAM and GOL argue competition is intense.

• Ferrer says 90% of origin–destination pairs in Brazil see all three airlines—LATAM, GOL, and Azul—competing on the same routes.
• 45% of GOL’s fares are under 400 Reais (about $65 USD), indicating persistent price pressure.

Cadier asks a pointed question: if the market were not competitive, how did all three main carriers wind up in Chapter 11 after the pandemic? His view: Brazil is “one of the most open markets to aviation in the world,” and new entrants avoid it because current players fight hard for every passenger.

The high-frequency CGH–SDU shuttle between São Paulo and Rio de Janeiro underscores the intensity:

• Averages 51 daily flights, more than the busiest domestic routes in the United States and China.
• Second only to Tokyo’s HND–CTS corridor in frequency.

Market share (domestic):

Financial restructuring has shaped today’s map:

• LATAM finished its court process in 2022 and has since expanded.
• GOL exited Chapter 11 in mid-2025, flies a fleet of 138 aircraft, plans to add five more 737-8s this year, and aims to have its entire fleet fully active by Q1 2026.
• Azul entered Chapter 11 in May 2025 and is preparing a 35% cut in future fleet size—likely affecting service to smaller cities and shifting focus to higher-yield routes.

Capacity discipline is top of mind:

1. GOL’s post-bankruptcy plan centers on:
   • Lowering costs
   • Sharpening competitiveness
   • Rebuilding capacity shrunk after 2020
2. LATAM’s approach:
   • Add seats “always in a rational way” to protect route sustainability
   • Avoid overcapacity

For the summer peak, LATAM plans 2,000 extra flights between December 15, 2025 and February 8, 2026, aiming to carry more than 400,000 passengers during that period.

Analysts value Brazil’s commercial aviation market at USD 3.6 billion in 2024, with forecasts reaching USD 6.7 billion by 2033—a 6.20% annual growth rate from 2025–2033. Momentum comes from strong domestic travel demand, new airport investments, and steady fleet renewal. But the same tax, financing, and regulatory questions that have long tested airlines remain.

Regulators target infrastructure and rules

Brazil’s civil aviation agency, ANAC, calls today’s rapid traffic rebound a “sweet problem.” Director Luis Ricardo de Souza Nascimento says the agency is moving toward less prescriptive, more data-driven rules, and is working to close infrastructure gaps through a federal program named “Ampliar.”

• The goal of Ampliar is to pull more private capital—especially for airports—so the system can handle more flights and keep delays in check.
• Readers can track regulatory updates directly through ANAC (Brazil’s civil aviation regulator).

Better terminals and runways matter not just for comfort but for making the math work. When airports run smoother, airlines:

• Turn planes faster
• Carry more passengers on time
• Burn less fuel in ground delays

That helps offset currency moves and interest costs airlines can’t control. It also supports jobs across the travel chain, from airport staff to hotels and small businesses that depend on visitors.

Policy choices will shape the next phase

As the post-pandemic recovery deepens, policy choices will determine the outcome.

• If tax reform lifts costs sharply or court claims keep rising, price-sensitive travelers may cut back again.
• If financing stays expensive while revenue comes in Reais, airlines’ balance sheets will remain tight, limiting expansion in midsize cities that want more flights.
• If the government keeps pushing smarter rules and airports see fresh investment, the system can absorb growth without pushing fares up as much.

For migrant families, students, and workers who rely on domestic links to catch international legs, reliable schedules are more than a convenience—they connect people to jobs, reunions, and paperwork appointments. According to analysis by VisaVerge.com, travelers often plan flights around entry and policy timelines, and stable airline networks make that planning easier during peak seasons.

The story of Brazilian aviation right now is not a straight line. It’s a blend of sharp demand, hard costs, and tight competition.

GOL’s focus on productivity (including route-by-route fuel savings and the return to a fully active fleet by early 2026) aims to unlock more seats while holding down unit costs. LATAM’s route-by-route checks and steady expansion align with a belief that overbuilding rarely pays. Azul’s planned shrink-to-strength approach suggests a network shaped around markets that can fill planes at fares that cover costs.

The market’s recent history shows how exposed airlines are to sudden shocks. All three major carriers entered Chapter 11 through the brutal pandemic period and its aftermath. Now, with travel back, they are trying to build buffers—lower unit costs, more predictable taxes, better financing terms—so the next shock does less damage.

If they can keep fares within reach while covering their higher costs, the recovery can spread beyond core business corridors into secondary cities and remote regions. For now, the data points to a climb that’s still underway:

• 12.7% growth in August
• 41.5% domestic share for LATAM in August
• Market still 9% shy of its 2015 seat peak
• Airlines shifting fleets to match demand

Passengers will feel the outcome in simple ways: how many daily departures appear on key routes, how often flights run on time, and the price at checkout. If tax policy keeps costs steady and airports add capacity through programs like Ampliar, the gap between what travelers want and what airlines can provide will narrow.

If costs jump by up to 25% because of new VAT rules, some families will likely swap plane trips for long bus rides, and airlines will shift capacity to routes that can still carry the higher fares.

Brazilian aviation has proven its appetite for growth. The question is whether policy and financing can match that appetite. For now, LATAM and GOL leadership are clear: keep costs in check, keep rules stable, and build capacity carefully. If those pieces fall into place, the post-pandemic recovery can mature into durable growth that carries more people, more often, at prices they can afford.