Brazil’s Aviation Overhaul: Azul and GOL’s Merger to Command Skies

Brazil’s aviation sector is poised for a major transformation with the proposed merger between Azul and GOL Airlines.

This strategic move could lead to a combined control of about 60% of domestic passenger traffic.

In March 2024, Azul proactively engaged two financial advisory banks to evaluate the acquisition of GOL, which has been in judicial recovery since January 2024.

The merger holds significant potential due to GOL’s strong presence in major national airports and Azul’s dominance in regional routes.

Experts believe that the Brazilian Administrative Council for Economic Defense (Cade) will scrutinize this merger closely due to the concentrated market structure.

Such scrutiny aims to ensure the merger does not negatively impact competition or service quality.

Cade is likely to approve the merger but with conditions such as asset sales and the release of some airport slots.

The regulatory body will conduct an in-depth analysis including market definition, the combined market share, potential dominance concerns, and the effects on new market entrants.

Internationally, similar mergers like those forming LATAM, and the unions of United with Continental, and American Airlines with US Airlines, provide precedents.

These show that regulatory bodies generally approve such deals under stringent conditions to avoid monopolistic outcomes.

Brazil’s Aviation Overhaul: Azul and GOL’s Merger to Command Skies

If realized, this merger would significantly reshape Brazil’s aviation landscape and mark a pivotal moment in its history.

According to February data from the National Civil Aviation Agency (Anac), Azul and GOL accounted for nearly 60% of domestic and 12% of international passenger volumes.

This contrasts with LATAM, which still maintains a larger share of international flights and had a strong performance last year.

In 2023, LATAM markedly boosted Brazil’s aviation sector, elevating its passenger count from 32 million to 39 million across both domestic and international flights.

The National Civil Aviation Agency of Brazil (ANAC) reports that 54% of the aviation industry’s growth in 2023 can be credited to Chile-based Latam.

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