The Law and Regulation of Airspace Liberalisation in Brazil: What is the Way Forward?

The book starts from the premise that the current aviation framework, in Brazil, cannot sustain a full liberalisation in the long run. While the competition rules in place offer a strong framework, which only requires small modifications, these rules are not "enough" to foster a "healthy" liberalisation. In fact, until recently, Brazilian airlines were operating in a homogenous market, where competition was artificial. This artificial competition, obtained through the imposition of a legal obligation to provide water and a snack and grant a 23kg bag allowance, has resulted in a highly concentrated domestic market with very few players. Compared to other same size markets, such as China or India, Brazil is far behind in terms of airlines operating at national level. Consequently, the opening of the domestic market must be closely regulated to avoid national carriers suffocating under external pressure. For this reason, state intervention during the liberalisation process is crucial. State intervention is also with regard to the protection of passengers. The other major problem is the protection framework for passengers which is much too uncertain and burdensome. In a sense, it is detrimental to the domestic market and passengers. Indeed, there is no harmonisation of passenger compensation leading to contradictory judgments and possible high moral damages which hinders legal certainty for airlines. Compared to the situation in the EU, in Brazil, airlines have a limited range of defences, which are often dismissed by courts. This book, therefore, critically analyses the policies and regulations in place by mainly comparing the Brazilian framework to the European one. This choice has been motivated by the fact that European liberalisation is considered the best so far, and as Brazil is starting this process much later, it could benefit from the European experience. This book will be of particular interest to scholars and practitioners interested in the Brazilian system.

Table of Contents:
CHAPTER 1 – Setting up the scene The Brazilian aviation landscape until 2019 The two major challenges Liberalisation benefits for Brazil The role of the State in aviation Legitimatcy of state intervention and the Rule of law The thin line between regulation and competition Market failure in aviation and its liberalisation/deregulation Market failure and Natural monopolies Airports: natural monopolies or not? Concluding remarks PART I- European liberalisation CHAPTER 2 – Historical Perspective on Liberalisation of the Aviation Sector The changes in international aviation law: the road to liberalisation The European liberalisation The First Waves of Liberalisation in Europe An Integrated System: The Single European Sky (SES) Other models of liberalisation and their influence on the European model The US deregulation Comparison EU-US The US- EU Open Aviation Area The Asian liberalisation The ASEAN- EU Agreement The influence on Australia Concluding Remarks CHAPTER 3 – The repercussions of the EU liberalisation The repercussions of the EU liberalisation Positive impacts Negative impacts The case of Alitalia (AZ) Competition advantages and (possible) problems Overview of competition rules applying under the EU system Airline companies More competition, yes, but not to the detriment of the security of passengers Consumer protection: Regulation 261/2004 The problematic Regulation 261/2004 Compensation for cancelled flights. Compensation for long delays. ‘Extraordinary circumstances’: the secret weapon of airlines Resolution 261 and international law Concluding Remarks PART II- Brazil liberalisation CHAPTER 4 – The Brazilian legal system Brief Overview of the legal system: hierarchy of norms The main organs in aviation The Brazilian legal system on aviation Laws applicable to aviation General aviation liability regulation Liability in case of collisions Consumer Protection: The Codigo de Proteçao e Defesa do Consumidor (CDC) vs the Montreal Convention The promising Projeto de Lei (PL) 6960 de 2010 Lei 14.034/20 de 2020 Consumer protection: ANAC Resolution 141/2010 Cancellation Delay Extraordinary Circumstances Resolution 400/2016 Competition law Concluding remarks CHAPTER 5–The Brazilian national ‘liberalisation’ Why liberalisation and not deregulation? ANAC’s perspective vs international understanding Why liberalise the Brazilian market? Bilateral agreements: an outdated concept? Concluding remarks Chapter 6- Liberalisation of the national market: possible changes The current aspects of the Brazilian market: brief overview Economic effect Evolution of supply Changes in demand The routes Airline companies Hubbing New business models Low-Cost Carriers (LCCs) as game changers The need for product differentiation Higher risk of bankruptcy Airline privatisation Consolidated market and Avianca’s ‘bankruptcy’ Airports Airport charges Increase in competition and airport saturation Major gain for regional airports Slots allocation The Role of the State Regional changes: Mercosur Concluding remarks CHAPTER 7 – State intervention State intervention is still necessary State intervention after the potential liberalisation in Brazil Bilateralism and liberalisation Avianca’s tragedy and the role of the judiciary Market Regulation and State intervention Natural monopolies State aid Abuse of dominant position Codesharing and cartel formation Public interest element Consumers Self-regulation and Private ordering The GATT approach Concluding remarks CHAPTER 8– Consumer protection Existing a solution The problems with the current system: irreconcilable judgments Theory vs Practice It is always the airline’s fault Brazil exorbitant jurisdiction: The NYE case The outrageous case: Valentine’s Day Lunch The totally irreconcilable judgments Two separate contracts? Make it just one Consumidor.com.gv The necessity to adapt the existing system and the use of Online Dispute Resolution (ODR) as a way forward Why Online Dispute Resolution? Collective redress and ODR Public authority rather than private actors Concluding remarks Chapter 9- Conclusion