Government weigh up protecting airlines against “lawsuit industry”

Photo: Thiago B. Trevisan/Shutterstock

Infrastructure Minister Tarcísio de Freitas, during a live broadcast with finance newspaper Valor Econômico, signaled the government’s intentions in creating regulatory measures to shield airlines from excessive lawsuits amid the Covid-19 pandemic.

Mr. Freitas argues that the “industry of lawsuits” could cost air travel companies up to BRL 800 million (USD 155.25 million) per year in settlements paid to customers. According to the minister, the biggest sources of litigation are flight delays and unexpected date changes, which are likelier to happen during the pandemic due to ongoing changes in flight restrictions.

The measure will be aimed at keeping airfares and the offer of flights stable in an attempt to kickstart the recovery of the Brazilian air travel industry. As previously reported by The Brazilian Report, Brazilian airlines were among the earliest sectors of the economy suffering from plummeting stock soon after the first confirmed Covid-19 death in the country.

Mr. Freitas explains that the federal government will not be able to provide the sort of bailouts that airlines have received in Europe and the U.S., hinting at more creative aid solutions such as relaxing airlines’ obligations to customers and allowing the temporary use of military airports. In May, Brazil’s National Development Bank (BNDES) announced an aid package for airlines by way of a BRL 6-billion credit line.

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