The Brazilian airline sector is experiencing a paradoxical situation. On the one hand, there is a huge complaint from consumers regarding the services provided by companies. Delays, cancellations, crowded flights and difficulties in obtaining refunds are some of the problems that take people to court against airlines and have turned Brazil into a world champion of judicialization. On the other hand, the sector says that this excess of processes harms the companies’ operations, makes tickets more expensive, reduces the airline network and drives away new competitors – which could force an improvement in services.
According to the International Air Transport Association (IATA)based on information reported by companies to National Civil Aviation Agency (Anac), the cost of lawsuits filed by passengers exceeds R$1 billion per year. Despite the sector having many problems and the service leaving consumers to be desired, Brazilian numbers are well above the world average.
“Obviously, this is passed on to the ticket price”, says the general director of IATA in Brazil, Dany Oliveira. He calculates that the expense represents between R$10 and R$12 of the value of each ticket sold, taking into account that around 100 million passengers are transported annually in the country.
A survey carried out by Latam shows that Brazil, which represents almost half of the entire group’s operations, accounts for more than 98% of legal proceedings filed by customers against the company. The company operates in Brazil, Chile, Colombia, Ecuador and Peru, and has international flights within Latin America and to Europe, Oceania, the United States and the Caribbean.
In a note, Latam says that the data “demonstrates the magnitude of this phenomenon in Brazil”. “Despite being recognized as the second most punctual company in the world in 2023, according to the Official Airlines Guide (OAG) ranking, there was an increase of almost 33% in the number of legal actions in Brazil from 2022 to 2023.” For 2024, the company expects to spend more than R$350 million on judicialization costs in the country alone.
“Latam’s data is compatible with the market and the problem could be even bigger”, says Ricardo Bernardi, specialist in Aeronautical Law at Bernardi&Schnapp and legal consultant for IATA in Brazil.
He considers that there are no general numbers on judicialization. However, a survey carried out by the IATA consultant reinforces that Brazil occupies the podium of countries with the highest number of lawsuits filed by customers against airlines.
In the United States, for example, in 2019 one lawsuit was filed for every 1.2 million passengers transported. In the same period, the proportion in Brazil was much higher: one share for every 227 passengers. The survey considered data from three main airlines operating between Brazil and the United States.
This discrepancy is repeated when comparing the Brazilian market with other Latin American countries. Considering companies that operate in the country and in Mexico, for example, in 2019, one lawsuit was filed for every 522 passengers transported in Brazil. In Mexico, this ratio was one share for almost 27 thousand passengers.
In addition to the pressure on fares, excessive judicialization creates a barrier to the entry of new companies interested in flying in the country. They see this large volume of processes as a risk to their operation.
The IATA director recalls that, in recent interviews, executives from two low-cost companies, the JetSmartbased in Chile, and Flybondi, in Argentina, reported the great concern about the costs of legal action in Brazil. “Not only because of the cost, which is already very high, but because it brings a lot of legal uncertainty to the business, postponing the enormous potential (market) to be unlocked”, says Oliveira.
This large volume of processes also complicates the lives of companies already established in the country. Goalfor example, which filed for judicial recovery in the United States in January this year, reduced the supply of seats in the State of Rondônia by 48% in July last year compared to May 2023.
Furthermore, the company canceled flights from Porto Velho (RO) to Manaus (AM). The decisive factor for this cut in the airline network was the legalization faced in Rondônia, the company informs in a note.
A Blue says, in a note, that “judicialization is a critical problem in Brazil, and excesses have important consequences for the airline sector. The impacts range from an increase in costs and air tickets, a reduction in the supply of flights and can even lead to the economic unviability of companies”.
Why is the country at the top of the judicialization ranking?
Although the common citizen perceives a gradual loss of quality in the services provided by the companies and increases in fares – two points vehemently refuted by the airlines –, the real cause of the advance of judicialization, according to Bernardi, “is an inadequate interpretation by the courts regarding the appropriateness of of the presumed moral damage in the event of delayed flight cancellation, or even problems with baggage”.
There is specific legislation in the sector that requires proof of moral damage. In fact, according to the consultant, there are STJ positions in actions involving air transport, reporting that, in the case of delay, for example, the passenger needs to prove the reason why moral damage is alleged.
However, these principles, according to Bernardi, were never applied in Brazil. We began to follow the rules of the Consumer Protection Code (CDC) extremely widely and inappropriately in air transport. Flights are often delayed or canceled due to meteorological and safety reasons and, even so, moral damage is applied to the actions.
The president of Brazilian Association of Airlines (Abear), Jurema Monteiro, also attributes the excessive judicialization in the airline sector to the Court’s interpretation of moral damage without proof. In this case, the values increase a lot. Compensation for a ticket of R$200, R$300 can reach R$20,000 in the case of moral damage. And this puts a burden on the entire sector, he notes.
“Our companies are very competitive and provide a good service”, highlights the executive, citing data from international rankings. Flight regularity in Brazil, for example, is 98%, an indicator similar to that in the United States and Europe, she says. As for punctuality, in Brazil it is 82%, ahead of the USA (74%) and Europe (80%).
Although other countries have worse indicators compared to Brazil, the volume of processes is lower because the regulatory environment makes this type of action a little more difficult, he argues.
Both the president of Abear and the general director of IATA in Brazil point to companies that encourage litigation, which they call “vulture sites”, as another factor that helps boost the volume of actions against airlines.
These sites, according to executives, approach passengers who have had problems and offer litigation services. Jurema says that there are law firms located inside airports monitoring delayed flights to identify passengers who have suffered losses and encourage them to take legal action, before even contacting the airline to obtain an administrative solution.
According to IATA’s director of external relations, Marcelo Pedroso, some websites buy credit rights. Others obtain power of attorney from the passenger, go to court and charge a percentage of the value of the case won.
Pedroso says that 65 websites were identified acting in this way and the Brazilian Bar Association (OAB) managed to block 40, on the grounds that lawyers cannot encourage litigation for their own benefit.
Luciano Barreto, general director of the company AirHelp, the world’s leading air passenger rights platform, however, disputes these accusations. “Airlines have a habit of saying that companies like AirHelp carry out this predatory judicialization, but this is not true”, he says. He says that in all cases that the company tries to resolve directly, without intervention from the Courts, airlines in Brazil prefer to postpone the process and do not open a direct negotiation channel. “The companies (aerial) are the main drivers of this large number of processes”, says the executive.
The startup’s job, which does not reveal revenue, number of customers served or Brazil’s position among the other countries where it operates, is to identify the rights of passengers who have had a problem and refer them to partner law firms, says Barreto. “AirHelp works to try to be that facilitator,” he says. Initially, a screening is carried out to check whether a compensation claim is appropriate. Barreto says that the company rejects more than 80% of cases. Even so, before starting the legal process, direct negotiation with the airline is attempted. Founded in 2013 in Denmark, AirHelp is present in 35 countries and has been operating in Brazil since 2021.
The president of Abear, in turn, says that the airline sector was the first to sign with the National Consumer Secretariat (Senacon), of Justice ministrya commitment to use the platform consumer.gov.br as a mediation instrument. And the rates obtained have been very good, highlights the executive.
From 2022 to 2023, there was a 30% reduction in the number of complaints registered on the platform and a 10% increase in the problem resolution rate. And the score given by users who registered a complaint about the sector was 3.82, the best since the start of the historical series on the consumer.gov.br platform, in the first quarter of 2017. The score varies between 1 and 5.
Data from Procon Foundation of São Paulo show that in the first quarter of this year, 2,134 complaints were registered against the airline sector, a volume almost 4% lower compared to the same period last year and a quarter of what was in the first quarter of 2022.
Despite the drop, data from the consumer.gov.br platform shows that since 2022 the airline sector has been the second most complained about, behind only credit cards. In 2020, it occupied fifth place in the ranking of most complained about topics and, in the following year, it rose to third place.
The president of Abear emphasizes that the sector has never opposed the passenger’s right to access justice and the company itself, if the contract is not fulfilled. “This is a right that must be maintained.” But she emphasizes that it is necessary to improve the regulatory environment to reduce the cost of judicialization.
