Jet fuel will become 17 percent more expensive, Brazilian oil and gas giant Petrobras announced Thursday. The move comes amid discussions between airlines and the government — the company’s controlling shareholder — over how to calculate the price of aviation kerosene (QAV).
Fuel prices are adjusted monthly to reduce volatility for airlines. As with other fuels, changes are based on international prices and foreign exchange rates in an effort to “reach a balance with international markets.”
The move could lead to higher airfares. In a statement, Brazilian airline association Abear noted that jet fuel prices have risen 37.8 percent since February 2022. Last December, the average price of jet fuel purchased in the country was nearly 45 percent more expensive than in the U.S.
The association reiterated that fuel costs account for about 40 percent of airlines’ total costs, and that exchange rate volatility is also a concern. More than half of costs are dollarized. In 2022, airfare inflation in Brazil approached 24 percent — well above the overall inflation rate (5.79 percent).
In the first weeks of the new government, Abear and airline executives met with cabinet ministers and the president of the Brazilian tourism board Embratur, Marcelo Freixo, to present the sector’s demands to Petrobras’ new CEO Jean Paul Prates and Mines and Energy Minister Alexandre Silveira.
Mr. Prates has already indicated his intention to review the state-owned company’s pricing policy, against market criticism on the topic.
Also taking into account its pricing policy, Petrobras announced an average 11-percent reduction in the price of natural gas to distributors. However, the reduction applies to gas transported and distributed through pipelines, and not to cooking gas canisters — which use natural gas as a reference value, but are not determined solely by the company’s selling price.
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