MERCOSUR is a regional economic bloc comprising Argentina, Brazil, Paraguay, and Uruguay. The bloc has a population of over 270 million and a GDP of over $2 trillion. MERCOSUR’s aviation sector is considered one of the most developed in the world and is a major contributor to the economy of MERCOSUR countries. The bloc’s airlines account for around 20% of all international air traffic.
MERCOSUR’s aviation sector possesses a number of advantages:
- the bloc has a large population and GDP, which gives its airlines a large market to serve.
- MERCOSUR is located in close proximity to North America and Europe, which gives its airlines easy access to these markets
- MERCOSUR has a developed manufacturing sector, which gives its airlines and aircraft manufacturers a competitive advantage in terms of cost
- MERCOSUR has strong trade ties with key aviation partners such as China and the United States, which gives its airlines access to important markets and brings opportunities for collaboration.
- Brazil
Brazil possesses a large commercial aviation market and ranks 5th globally in terms of annual domestic flight passengers with 92 million passengers transported in 2019.
The aviation sector in Brazil is a major contributor to the country’s economy, with a market share of around 12 percent. The sector employs around 1.5 million people and has an annual turnover of $60 billion. The biggest players in Brazil’s aviation sector are Embraer, Gol Airlines, Azul Airlines, and Latam Airlines Group. All are major players in global aviation markets. Boeing, Airbus, and Bombardier have established operations in the country as well.
Brazil boasts one of the most open economies in the world, with few restrictions on foreign investment or trade. This makes it easy for aviation companies to do business in Brazil and tap into its growing market. In recent years, the Brazilian government has been working to open up the aviation sector to foreign investment and joint ventures. Back in 2016, the government allowed 100 percent foreign ownership of airlines operating in Brazil. This led to a number of foreign airline companies setting up operations in Brazil, including Delta Airlines, LATAM Airlines, and United Airlines.
The Brazilian aviation sector is mainly attractive due to the country’s vast manufacturing capabilities, large and generally skilled labor force, and abundance of metals and minerals.
Embraer is a global company headquartered in Sao Paulo with businesses in commercial and executive aviation, as well as in defense and security markets. Founded in 1969, the company became a leading manufacturer of commercial jets with up to 150 seats. Currently, Embraer imports approximately 56% of its components from North America.
The other major OEM is Helibras, the Brazilian subsidiary of Airbus Helicopters. In 2019, approximately 36 helicopters were produced in its Brazilian plant, serving the military and civilian markets.
Brazil’s aviation sector is rapidly adopting new technologies, and many companies are investing in research and development programs to stay ahead of the competition. This has led to a number of innovative products being developed in Brazil, including the A-29 Super Tucano light attack aircraft and the KC-390 military transport jet.
- Argentina
The Argentinian aviation sector is highly incentivized and regulated by the government, which has helped to create a strong domestic market share. Argentina’s market share for aviation is estimated at around 10%, with a specialization in regional aviation. The main areas of specialization are commercial and passenger transport, although there is some manufacturing of aircraft components and other related products. The main market access issues are the need for an FAA certificate and regulations that restrict exports. Manufacturing processes are generally up to date, with new technologies being adopted where possible. The top national airline companies are Aerolineas Argentinas, Copa Airlines, LATAM Airlines, and Avianca Holdings. Foreign investment is welcomed and frequently takes the form of joint ventures or partnerships. The main competitors in the Argentine aviation sector are Brazil, Chile, and Mexico, notably Brazilian companies Embraer and Gol Linhas Aereas Inteligentes.
Argentina is a key player in the manufacturing of aviation components and equipment. The country’s metalworking and engineering industries are world-renowned, and its firms are leaders in the supply of advanced technologies to the global aviation sector.
The Argentine labor force is skilled and experienced in the manufacture of aviation components and equipment. Many workers in the sector are bilingual and have expertise in both European and American production techniques.
Argentina is a leading producer of metals used in aviation manufacturing. The country has large reserves of high-quality steel, aluminum, and other metals, which it exports to markets all over the world.
Argentina is a major supplier of advanced aviation equipment to airlines and aircraft manufacturers worldwide. The country’s firms are experts in the design and production of passenger seats, cabin interiors, landing gear, and other critical parts and systems.
There are three major segments that suppliers in this industry should focus on: OEMs, general aviation, and repair & maintenance. A fourth niche, which is growing rapidly, is the drone and UAV (unmanned aerial vehicles) market. The demand of the industry also lies in the following subsectors:
- engines, avionics, landing gear, and other components
- engineering software and design tools
- supply chain management
- skilled labor
- funding for research and development
- 3D printing and advanced composites manufacturing
- infrastructure development
Canadian aircraft manufacturers Bombardier, CAE, Pratt & Whitney Canada, and Magellan Aerospace have been operating in Brazil and Argentina for many years. They have formed partnerships, and joint ventures, and made significant investments in these countries. Their future plans include continuing to supply aircraft and components to the Latin American market, providing support for existing programs, and pursuing new opportunities in both countries. In particular, Bombardier, CAE, and Pratt & Whitney Canada are collaborating on a new FADECAS (Full Authority Digital Engine Control) system for Embraer’s KC-390 military transport aircraft.
Business Associations in Brazil:
- ABIMDE – Brazilian Defense and Security Industries Association
- AIAB – Aerospace Industries Association of Brazil
- COMDEFESA/ FIESP – Department of Defense and Security / State of Sao Paulo Industry Federation
- ABAG – Brazilian Association of General Aviation
- ABEAR – Brazilian Airlines Association
- IBA – Brazilian Aviation Institut
- ABESE – Brazilian Association of Electronic Security Equipment
- ABSEG – Brazilian Association of Security Professionals
- FENAVIST – National Federation of Security Companies