Government eliminates taxes on aviation fuel: what could happen to airline tickets?

Government announces package of measures to try to curb rise in fuel prices
The federal government launched this Monday (6/4) a package of measures to try to cushion the impacts of the war in Iran on fuel, including specific relief initiatives for the airline sector.
For this segment, the measures announced are the exemption from federal taxes (PIS and Cofins) for aviation kerosene (QAV) - generating savings of R$0.07 per liter of fuel -, two lines of credit worth R$9 billion for the sector, and extension, to December, of the Brazilian Air Force navigation fees for the months of April, May and June.
The package, signed by President Luiz Inácio Lula da Silva (PT), created a new subsidy for the import and production of biodiesel, which will be added to the subsidy announced at the beginning of March, and also for gas.
At the beginning of the month, Petrobras had announced a 54.6% increase in the price of aviation kerosene. Accumulated since the start of the war, in February, the increase is 64%.
According to Petrobras, there will be an 18% increase in April. The remainder will be paid in six months, with the first installment scheduled for July. The measure comes to ensure the "smooth functioning of the market", according to the company.
Avião da Latam
LATAM/Disclosure
The impacts of the crisis are global, but for the Brazilian passenger, the scenario is that of a "perfect storm": the rise meets costs that are normally already high and a sector already depressed. Even before Petrobras' announcement, air tickets were already rising. The March inflation preview (the IPCA-15) showed an increase of 5.94%.
With the new measures announced this Monday, the expectation is that the impacts will be cushioned.
Experts interviewed by BBC News Brasil explain why the country is particularly vulnerable to this shock and what consumers should consider before buying their tickets.
Why are aviation kerosene prices rising?
The impact of the conflict between Iran and the US on plane fuel prices is because the Middle Eastern country has control of the Strait of Hormuz, an area between the Gulf of Oman and the Persian Gulf.
Roughly a fifth of all air travel passes through it. oil consumed in the world, according to the International Energy Agency (IEA). This happens because the strait is the only maritime outlet for oil for major exporters, such as Saudi Arabia, Iraq and Iran itself.
Strait of Hormuz
Arte/g1
With the conflict, the risks surrounding oil transportation have increased. This was reflected in the rise in Brent prices, which is a reference in the market. One day before the North American invasion, the price of a barrel of Brent closed at US$71.32. But, throughout the conflict, the value already surpassed the US$115 per barrel mark.
As QAV is a direct derivative of oil, its price is linked to these fluctuations - as already seen, even if with less intensity, in other conflict situations, such as the invasion of Ukraine by Russia in 2022.
More expensive fuel
In Brazil, this vulnerability is amplified by the Import Price Parity (PPI) policy, according to Dany Oliveira, former director of the International Air Transport Association (IATA) in Brazil.
This pricing model defines the value of fuels in Brazil not by the real cost of extraction and national refining, but by how much it would cost for an importer to bring that same product from abroad.
In practice, Petrobras calculates the price by adding the international price of oil (such as Brent, in the case of QAV) and the variation in the dollar to "hypothetical costs" of transportation, such as sea freight and port fees, as if the fuel were crossing the ocean in a tanker.
Thus, it doesn't matter what surrounds that 90% of the aircraft used in Brazil are produced in the country - its price will follow the international market.
Price of aviation kerosene in Brazil follows international prices
Getty Images via BBC
According to Oliveira, in normal times, aviation fuel represents around 40% of the total cost of Brazilian airlines, while the global average is around 27%.
According to a note sent by the Brazilian Association of Airlines (Abear) told the BBC, fuel now accounts for 45% of companies' total costs after the last adjustment.
In addition, with the war, "companies need to divert areas precisely because of security", explains Oliveira.
"These deviations can lengthen the flight time by up to an hour and a half. This is even more time consuming kerosene."
Is it worth buying tickets in advance?
For Diego Endrigo, financial planner at Planejar, it may be worth getting ahead and buying tickets for trips for the rest of the year.
Unlike the exchange rate, where it is possible to buy dollars little by little to make an "average price", air service tends to suffer transfers abrupt.
In addition, "people can and should buy tickets in advance, as there is a possibility, with the war, of reducing the number of flights", says Endrigo.
"And then, if you reduce the number of flights, we have the famous rule of supply and demand. And price inflation occurs precisely because of this."
With less available flight supply and equal passenger demand for travel, ticket prices rise.
Travelers should also pay extra attention to travel insurance, often offered by credit card companies themselves, which can offer protection and assistance against unforeseen events, from medical emergencies to flight cancellations.
The uncertainties brought by Geopolitical conflicts can also bring lasting lessons about personal planning, says Diego.
"In addition to all the tragedy, citizens pay a lot economically for a war", he says. "To prepare for emergency situations, we can diversify, in addition to assets, we can diversify country risk. Today we have many accessible options for international accounts, which allow you to have assets in various locations."
Change in the STF froze passenger actions against airlines
The purchase decision also comes up against an issue beyond finances: the rights of passengers in the event of cancellations.
This is because, in November, Minister Dias Toffoli, of the Federal Supreme Court (STF), suspended proceedings against airlines that deal with delays, changes or cancellations of flights resulting from "external fortuitous circumstances" or force majeure, as defined in the Brazilian Aeronautics Code (CBA).
In practice, this means that processes motivated by events beyond the companies' control (such as adverse weather conditions, airport closures, restrictions imposed by civil aviation authorities or pandemic situations) must be paralyzed until the court makes a definitive decision on the controversy.
The dispute is which set of rules should prevail in these situations: whether it is the Consumer Protection Code (CDC), which offers greater protection and reparation to the passenger, or the CBA, which has more restrictive rules.
Thus, depending on what the STF decides, it is possible that war situations like the one happening in Iran will be read as "external fortuitous" and, therefore, passengers affected by a cancellation under these conditions will not have the right to complain against companies.
For Walter Moura, lawyer at the Brazilian Institute of Consumer Protection (Idec), a "war that lasts more than three weeks is not like a tornado, which It happens out of nowhere." Therefore, he argues that conflicts like the one in Iran should not be classified as "external fortuitous events". Consumers should prepare themselves to buy airline tickets in the same way as buying lottery tickets. The chances of losing money are increasingly greater."
Anac said in a note that Brazilian rules "do not provide specific guidance for a war situation", but understands that "the text must be expanded to this type of circumstance". it may have a small positive point in the long term: boosting the search for alternatives to the AAV, which has fossil origins.
"The moment shows a very high dependence on a single polluting input, and we need to reduce this dependence", says Dany de Oliveira.
One of the options is Sustainable Aviation Fuel (SAF), a biofuel produced from waste such as cooking oil, animal fat and sugar cane biomass. Current aircraft engines are already compatible with. the SAF.
Historically, SAF is 3 to 5 times more expensive than common kerosene. However, with the price of Brent rising with the war, this economic distance decreases.
Sustainable fuel (SAF) is 3 to 5 times more expensive than common kerosene, but the difference could fall with the rise in Brent
Getty Images
"Brazil has everything it needs to be the 'Saudi Arabia of SAF'", says Oliveira. the largest biomass reserve in the world, Brazil already has decades of experience with Proálcool and the biodiesel blend, with adequate infrastructure for biofuels.
In addition, the SAF can bring geopolitical independence: a fuel produced from sugar cane or animal fat on Brazilian soil does not depend on the Strait of Hormuz.
With this in mind, the SAF is part of the Future Fuel Law, approved in 2024, which regulates the steps of the transition energy in Brazil. It defines that, from 2027, airlines need to use a small percentage of SAF. Companies like LATAM have already started using biofuel in certain operations.
"The regulatory framework helps, but we still lack an investment portfolio to accelerate these SAF projects. What we have today is potential", says Oliveira. "May this moment be a lever for these projects to become more robust and be able to be accelerated."
* With reporting by Marina Rossi

Source: G1