Brazil · Aviation
Key Facts
—Higher fares ahead. Abra, the holding that controls Gol and Colombia’s Avianca, expects Brazilian airfares to rise as it passes through soaring jet-fuel costs.
—A direct formula. Abra’s CFO says every $1-per-gallon rise in jet fuel forces about a 10% fare increase, and costs the group roughly $70 million more a month.
—Fuel up about 90%. Jet fuel has climbed roughly 90% in 2026, nearing R$10 ($1.80) per liter, after Petrobras hikes of 54.6% in April and 18% on May 1.
—Now 45% of costs. Jet fuel, once 30% to 36% of airline costs, has risen to about 45%, the carriers’ single biggest expense after payroll.
—Capacity is shrinking. The airline association projects May domestic flights down 3.3%, about 2,225 fewer, as carriers cut supply they cannot fully price in.
—The trigger is Hormuz. The squeeze traces to the Middle East oil shock, with Brent near $110 after disruption at the Strait of Hormuz.
A war thousands of miles away is reaching Brazilian wallets at the boarding gate. With jet fuel up roughly 90% this year, the holding behind Gol has spelled out the arithmetic: fares have to rise, by as much as 20%, and the flights that cannot absorb the cost simply disappear. For an aviation market that just set passenger records, the oil shock is becoming a connectivity problem.
Why are Brazil airfares and jet fuel moving together?
The Rio Times, the Latin American financial news outlet, reports that the link between Brazil airfares and jet fuel has rarely been this direct. Abra, the holding that controls Gol and Avianca, has laid out a simple formula through its finance chief, Manuel Irarrazaval: every $1-per-gallon increase in jet fuel forces fares up about 10% to compensate, and adds roughly $70 million a month to the group’s costs.
The exposure is structural. Jet fuel, known locally as QAV, has risen from 30% to 36% of operating costs to about 45%, the biggest line item after payroll. By one estimate, each $1 rise in oil cuts $100 million to $150 million from the combined annual operating result of Gol and Azul.
How much has fuel actually risen?
Sharply, and in steps. Petrobras raised jet-fuel prices 54.6% in April, the largest increase in its series since 2019, then added 18%, about R$1 ($0.18) per liter, on May 1. Cumulatively, fuel has climbed roughly 90% in 2026, pushing the price toward R$10 ($1.80) per liter.
The pass-through was softened but costly. Petrobras capped the immediate April hike at 18% and let buyers spread the rest over six installments, but the financing carried a charge equal to 108% of the CDI benchmark rate, which carriers and distributors criticized as adding to the squeeze.
What are the airlines doing about it?
Raising prices and cutting flights. Average airfares already rose 17.8% between February and March, from R$617.78 ($111) to R$707.16 ($127). Azul, led by chief executive Abhi Shah, lifted average fares more than 20% over three weeks and is trimming domestic capacity about 1% in the second quarter.
The supply cut is system-wide. The airline association ABEAR projects May domestic flights down 3.3%, about 2,225 fewer than first planned, because the fuel increase cannot be passed fully into fares. LATAM, whose Brazil chief is Jerome Cadier, flagged a $40 million first-quarter hit and lifted its barrel assumption from $90 toward $170.
What is the government doing?
It has stepped in to cushion the sector. The government zeroed the PIS and Cofins taxes on jet fuel and deferred air-navigation fees, while the National Monetary Council approved an R$8 billion ($1.4 billion) credit line for the carriers, drawn from the civil-aviation fund.
More relief is under study. Proposals include cuts to the IOF financial-operations tax and to the levy on aircraft leasing. Brazil’s airports association argues the measures are needed to keep routes open and prevent an even sharper hit to fares.
What should investors and travelers watch next?
- The next Petrobras adjustment: monthly jet-fuel resets at the start of each month are the key swing factor for fares.
- The Brent and Hormuz picture: with crude near $110, any further disruption feeds straight into Brazilian ticket prices.
- Capacity discipline: further flight cuts by Gol, Azul and LATAM would signal demand strain and route losses.
- The relief pipeline: whether the IOF and leasing-tax cuts arrive will shape how much cost reaches passengers.
- The installment cost: the 108%-of-CDI charge on deferred fuel payments is a hidden drag on airline cash.
Frequently Asked Questions
How much will Brazil airfares rise with jet fuel?
Abra, the holding behind Gol, expects fares to climb as it passes through fuel costs, with industry estimates of 15% to 20%. Its CFO says every $1-per-gallon rise in jet fuel forces about a 10% fare increase, and average fares already rose 17.8% between February and March.
How much has jet fuel gone up in Brazil?
Jet fuel has risen roughly 90% in 2026, nearing R$10 ($1.80) per liter, after Petrobras increases of 54.6% in April and 18% on May 1. It now accounts for about 45% of airline operating costs, up from 30% to 36%, the biggest expense after payroll.
What is Abra?
Abra is the holding company that controls Brazilian carrier Gol, traded as GOLL4 in Sao Paulo and GOL in New York, and Colombia’s Avianca. Its finance chief, Manuel Irarrazaval, has set out the link between fuel costs and fares that is driving the current round of price increases.
Why is jet fuel so expensive now?
The increase traces to the Middle East oil shock, with Brent crude near $110 after disruption at the Strait of Hormuz. Petrobras adjusts jet-fuel prices monthly based on global oil and exchange rates, so the war-driven spike has flowed quickly into Brazilian aviation costs.
Are flights being cut?
Yes. The airline association ABEAR projects May domestic flights down 3.3%, about 2,225 fewer than first planned, because carriers cannot fully pass fuel costs into fares. Azul is trimming domestic capacity about 1% in the second quarter, and LATAM is slowing planned expansion.
Connected Coverage
The state response is detailed in our reporting on Brazil’s multi-billion-real lifeline for airlines. The sector’s earnings strain is covered in our piece on LATAM’s first-quarter profit and fuel-driven guidance reset, and the macro driver in our analysis of the Hormuz oil shock hitting Latin America.
Reported by Sofia Gabriela Martinez for The Rio Times — Latin American financial news. Filed May 20, 2026 — 20:30 BRT.
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