Contributor - South America

Richard Pedicini

Exhibitor space is nearly sold out for LABACE, the Latin American Business Aviation Conference and Exhibition, taking place from August 13 to 15 at São Paulo's Congonhas airport in Brazil. Several of last year's innovations will be kept and expanded, including a tented area for rotary-wing static display. While Gulfstream closed its Sorocaba MRO facility in February, it's still exhibiting aircraft at LABACE. Most of the major business and GA manufacturers are expected to exhibit. And <a href="https://www.ainonline.com/aviation-news/business-aviation/2017-08-14/maga-bus-brazils-first-mobile-bombardier-service-facility">Bombardier's authorized maintenance facility Maga</a> should again bring its customized bus with customer lounge in front and hoist capable of removing an engine at the back.&nbsp;

 


The political and economic stability expected when President Jair Bolsonaro was elected has so far remained just a promise, and investors are waiting for its fulfillment. In its first six months, the administration has been unable to pass a reform of the perpetually deficit-ridden public pension system, one of the structural causes of astonishingly expensive credit, and a barrier to growth. Several key officials have left or been pushed out. The World Bank's forecast annual GDP growth for Brazil was cut in June to 1.5 percent, from 2.2 percent&nbsp;in January.

 


Despite political turbulence, there are strong structural factors that have led Brazil to building the world's second largest civil aviation fleet. The country and the aviation market have pockets of prosperity, such as agricultural producers whose products are priced in dollars&nbsp;and whose need for transportation from distant farms remains unchanged. Regulator ANAC, which aviation veterans have berated since its creation for its staff's inexperience (hardly surprising in a newly created agency), has shown greater maturity and sensitivity. In an April meeting across from Congonhas Airport,&nbsp;industry representatives were asked not only how the agency could smooth importation of aircraft and parts, but how it could coordinate with other agencies, such as customs, that are involved in the process. Bureaucratic fiefdoms working at cross-purposes are a long-standing ill. For example, parts of the vast and, in part, roadless Amazon region rely&nbsp;on river and air transport, and air-taxi firms have been paid by health authorities for medical evacuations from uncertified airstrips; and then fined by aviation authorities for doing so.&nbsp;Congress and airspace control authorities have now made plans to improve&nbsp;radar and&nbsp;navigational aids; and to certify&nbsp;more airports in the region.

 


Another cloud on the political horizon is that the fight against corruption, symbolized by judge Sergio Moro, who cleared Bolsonaro's path to the presidency by jailing his chief rival, and was then made Minister of Justice, is being corroded by Glenn Greenwald (of the Snowden leaks). He continues to publish&nbsp;increasingly embarrassingly promiscuous messages between prosecutors and the then-judge that challenge Moro's impartiality. The Brazilian real remains weak, and dollar-priced products, including aircraft, remain expensive. The country's fourth-largest airline, <a href="https://www.ainonline.com/aviation-news/air-transport/2018-12-12/avianca-brasil-files-bankruptcy">Avianca Brasil, was driven into bankruptcy</a> by rising dollar-valued costs, a poorly timed international expansion, problems in its controllers' other businesses, and weakened market demand.

 


Uncertainty faces the Brazilian aviation industry, with Embraer's regional aircraft operations becoming Boeing Brasil Commercial by year-end. That leaves&nbsp;a smaller Embraer made up of&nbsp;the defense, business jet, agricultural, and service operations, along with the "disruptive"&nbsp;Embraer-X. Embraer is leaving a market it had conquered and where it is just launching the last member of its E2 family. It's also leaving behind the facilities in São José dos Campos where it was founded but was running out of space, and is phasing out the Legacy family of business jets, adapted from regional jets. Business jet finishing is going to Melbourne, Florida; heavy manufacturing of the Phenom is already upstate in Botucatu, and the more highly roboticized Praetor line is moving to join the KC-390 and the future Gripen production in partnership with Saab. The established, more labor-intensive Super Tucano, at Embraer's Gavião Peixoto plant, has unrestricted room to grow. It also has the Western Hemisphere's longest paved runway, perhaps a sign that Embraer retains unrestricted room to dream.

 


LABACE&nbsp;also faces inevitable changes. Moving the fair from Congonhas is discussed almost annually, both because of the cramped and crumbling facilities of the former VASP base&nbsp;and the annual contract negotiations with airport administrator Infraero, which invariably encounter some snag that leaves too little planning time for fair manager ABAG and for exhibitors. The real estate the fair used to occupy has now been leased out for retail development, so LABACE&nbsp;must move. Among other possibilities, ABAG had explored a five-year contract at Campo de Marte airport, closer to the city center than Congonhas, but farther from the fashionable business district, and probably requiring a change of hotels for exhibitors.

 


The business aviation market may gravitate toward the agricultural Central-West and embrace a more welcoming Amazon&nbsp;and may tilt toward&nbsp;more utilitarian aircraft, and LABACE may move across town. The market remains one of the world's largest, and while decisions may be waiting on the political weather, the national climate has always been optimistic. The weak real means visitors' dollars go further, and the Bolsonaro administration has dropped the need for a visa for U.S. visitors.&nbsp;

Industry Remains Optimistic About the Future of LABACE

While the political climate continues to present some challenges, industry remains optimistic about the show's future, although its focus may shift.

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