On December 30, 2021, the Federal Government released Provisory Measure nr. 1,089, with the purpose of reforming the Brazilian Aeronautical Code (‘CBA’) which was enacted in 1986, as well as other related federal laws.  Although several modifications have been implemented, the most relevant changes relate to: i) revocation of several articles of the CBA, which are inconsistent with rules already in place; ii) modification of requirements and processes related to authorization for foreign airlines to operate in Brazil, iii) rules about activities of the Aeronautical Registry (RAB), certification, registration and operation of aircraft; and iv) restructuring of rules on airport operation and aeronautical/airport fees.

The modifications implemented under the Provisory Measure are clearly intended to remove from the Law certain concepts and definitions and defer to the Civil Aviation Agency (ANAC) the authority to regulate these matters according to smart regulation principles. 

Among the most relevant changes driven by inconsistency with rules already in place, enacted after the CBA, the Provisory Measure nr. 1,089 provides that air transportation services no longer require a concession or authorization from the Federal Government as a public service, meaning that domestic airlines will not need to enter into a concession agreement with the Federal Government to operate. The new concept of air transportation is of a regulated economic activity of public interest. In the same line, ANAC´s mandatory approval of airline´s corporate documents have been revoked.

Most of the rules of the CBA dealing with bankruptcy and liquidation of air carriers, as well as the intervention of the federal government in situations of airline´s financial or operational distress, have been revoked.  It is interesting to note that many of the rules of the CBA on this matter had already been derogated after the implementation of the Brazilian Federal law nr. 11.101 in year 2005 – which restructured the judicial reorganization and bankruptcy legal framework in Brazil – so the modifications implemented at this time will not severally affect the way a judicial reorganization or bankruptcy process of air carriers would be processed.

ANAC will have a general authorization to regulate scheduled and non-scheduled air transportation services, as long as the applicable bilateral treaties are observed. Furthermore, mandatory prior approval by the aviation authority of agreements that result in the formation of consortiums, pools, connections, mergers, among others, between airlines have been revoked.  However, such agreements will need to comply with ANAC’s regulations, which ultimately may require the prior approval from the Agency. 

As another significant development, the law as amended by Provisory Measure nr. 1,089, no longer expressly compels air carriers to inform ticket fares, but deferred to ANAC the authority to demand such information. The modification carried out authorizes ANAC to regulate in more detail airlines’ obligation to disclose ticket fares charged from passengers and create exceptions to such obligation, if the Agency deems appropriate.  However, the requirement consisting in disclosing fares, currently set forth in ANAC’s regulation, remains in force.

As indicated in the introductory part of this article, certain requirements and processes related to authorization for foreign airlines to operate in Brazil have been updated as well. In this sense, the rules regarding the dual process to start operations in Brazil – i.e., request of authorization before ANAC to open branch followed by request for authorization to operate – will no longer apply.  Designation by the regulatory authority of the country where the foreign airline is established will no longer be required either.  The provisions of the CBA have been simplified to state only that foreign airlines will need to submit to ANAC one request for obtaining authorization to operate in Brazil and comply with other legal requirements applicable to foreign companies in Brazil. On the other hand, the proposed regulation does not release foreign entities which intend to operate in Brazil from obtaining previous authorization from the Federal Government and registering a subsidiary/branch with the commercial registry, since this is a legal requirement provided by the Civil Code. Therefore, the dual process will still apply, with the difference that ANAC will only handle the second part of the process. This structure is compatible with the public consultation nr. 18/2021 launched by ANAC back in October of 2021.

It is always important to note that air carriage between points within the Brazilian territory (cabotage) is reserved to domestic airlines, incorporated under the laws of Brazil and having principal place of business and management in Brazil.

Significant updates also took place on rules about activities of the Aeronautical Registry (RAB), certification, registration, and operation of aircraft. Although the general obligation to register aircrafts with the RAB has not been modified, the CBA now authorizes ANAC to create exceptions to this rule.

The rules which required certification of imported aircraft and related equipment by the Brazilian civil aviation authority, have been revoked.  ANAC will regulate this requirement and related process, if applicable, to seek local certification for aircraft and related equipment imported and certified by a civil aviation authority abroad.  This is considered an important modification that will allow ANAC to create a more flexible environment for the certification and registration of aircraft and related equipment manufactured and certified abroad.  Although ANAC would still need to regulate this matter in more detail, the underlying intention associated with the removal of this provision is to allow ANAC to accept certification already granted by foreign civil aviation authorities, to avoid the need to carry out an extensive certification process locally.

Several provisions applicable to the activities of the Brazilian Aeronautical Registry (‘RAB’) and registration of aircrafts and related instruments/agreements have been modified to remove procedural rules previously included in the law and, therefore, allow ANAC to have more flexibility to regulate these matters.  In this line, to mitigate the bureaucracy associated with the operation of aircraft, the Provisory Measure revoked the provisions of the CBA that required local operators to certify logbooks with the RAB.

It is interesting to note that rules that expressly regulated aircraft finance leases have been revoked, but this modification does not prevent finance leases in Brazil. There are other provisions included in the CBA that generally authorize ANAC to register transactions commonly used by the aviation industry, which would encompass finance leases, based on the Agency’s regulation.  Since the finance lease is a contractual structure extensively used in several economic sectors, one can understand that the removal of the chapter from the CBA should not be seen as an attempt to discontinue the utilization of this structure, but only as another initiative to exclude from law certain matters which could be better and more efficiently regulated by ANAC.

It is also worth to mention that the rules that generally prevented the confiscation of aircraft utilized for public air transportation services have been revoked.  The revocation of this provision increases risks of interruption of air transportation services in the event of confiscation of aircraft ordered by local authorities.

Rules on airport operation and aeronautical/airport fees have also been reformed. The authority to regulate all fees applicable to the utilization of airport infrastructure has been expressly granted to ANAC.  The definition and scope of the airport fees – including boarding, landing, connection and storage fees, among others – have been removed from the Federal Law nr. 6,009/73. The elimination of these concepts from the law will grant more flexibility for ANAC to implement changes in the legal framework and the way airport fees are structured and collected in Brazil.

Provisory Measure nr. 1,089 introduced new rules on payment deficiencies of airport and air navigation fees. Past due airport fees unpaid for more than 30 days will be subject to monetary adjustment and late fees of 1% per month.  Also, airport operators will be authorized to pursue payment of fees in advance, before utilization of the airport infrastructure and suspend the utilization of the airport services, including its equipment and facilities.  The conditions for the suspension of the authorization to utilize airport services will be regulated by ANAC.  Penalties for lack of payment of air navigation fees have been changed.  In case the delay exceeds (a) 30 days, the debt will be monetarily adjusted and subject to late fees of 1% per month; (b) 120 days, the right to register flight plans will be suspended until payment of the debt.  Other penalties have been excluded from the Federal Law nr. 6,009/73.

This article is not intended to cover all changes implemented by Provisory Measure nr. 1,089, but just focus on the most relevant issues.  There are other modifications implemented throughout such Provisory Measure – with respect to the operation and regulation of airports, flying clubs, experimental aircrafts, licenses for crew members, collection of fees by ANAC, among others – which have not been covered by this text.

Finally, it is important to mention that the Provisional Measure is effective immediately as of its date of publication (December 30th 2021), except for the modification of the fees collected by ANAC, which will become effective within 90 days counted as of the release of the Provisional Measure.  The Congress will have to ratify this legislation in 60 days, extendable for another 60 days, otherwise it will lose its effects.