Brazilian aviation: Avianca Brazil’s decline; assets for grabs

There is no doubt that the shrinking of Avianca Brazil has altered market dynamics in Brazil's domestic market, and the country's three largest airlines believe Avianca Brazil's bankruptcy will create opportunities for the country's remaining carriers.

GOL, LATAM Airlines Brazil and Azul have all been vying for Avianca Brazil's assets but the government suspended an asset auction, including airport slots, and now the fate of Avianca Brazil is anyone's guess. While the government drags its feet on rescheduling an auction or some other form of asset dispersal, Avianca Brazil continues to languish with Brazilian operators suspending the airline's operations.

As the uncertainty over the fate of Avianca Brazil shows no signs of disappearing in the near future, Brazil's airlines maintain a reasonably positive view of the domestic market, despite headwinds created by rising fuel prices and currency devaluation.