Embraer, a Brazilian aircraft manufacturer, has delivered more than 8,000 aircraft since it was founded in 1969. According to the company, more than 90% of its production is exported, with the United States and Europe being the main destinations.
But why does a Brazilian company have these results and more sales abroad? This occurs, according to experts consulted by the CNN, because Brazil does not have a regional aviation market like the European countries or the USA.
On shorter domestic routes – common over there – the ideal is smaller aircraft, such as those manufactured by the Brazilian company, which do not have a domestic consumer market precisely because the country does not have a wide regional air network.
The cost of these aircraft is also higher, another point that favors foreign buyers.
In Brazil, the main buyer is Azul, which stated to CNN having received 60 aircraft in all last year.
The airlines GOL and Latam do not have Embraer aircraft in their fleet. The first relies on a single Boeing 737 fleet, while the second relies on both Airbus and Boeing aircraft.
“Everything starts with demand. When analyzing the routes, it is important to verify that the routes of GOL and Latam are larger, which generally also depend on larger aircraft to carry out the route. With Azul, it is different, and that is why the company uses Embraer ships more”, explained Cleveland Prates, professor at the FGV Law School (Fundação Getulio Vargas).
The expert pointed out that it is necessary to consider the business model of each airline, in addition to the technical issues of contracted aircraft and preferences for the cost of the models that will be used.
“It’s no use, for example, wanting to put a Boeing on a very short route, because its performance will not be as good. The altitude of this type of aircraft is higher, so it would not be the most suitable model, ”he said.
André Castellini, a partner at consulting firm Bain & Company and an aviation specialist, pointed out that, as Embraer ships are generally smaller, the cost per seat they generate for companies is higher. And that’s where the demand comes in to make trips on smaller regional routes possible and the company’s disposition according to its size.
“In less developed, price-sensitive markets, this type of travel is complicated. In Europe, there are more planes the size of those produced by Embraer because there is a richer market that is historically more used to regional travel. But regional aviation is more expensive because it has a higher cost per passenger due to limited seats”, he pointed out.
In the United States, one of Embraer’s main sales destinations, as well as Europe, there are subsidies for this type of local air travel, which encourages the aviation market and enables more purchases of aircraft by American companies, explained Castellini.
Experts illustrate these types of regional trips that occur more frequently abroad as if here in Brazil there were routes from Ribeirão Preto (SP) to Cascavel (PR). And more – as if the demand for this type of air travel is high.
For Marcus Quintella, director of FGV Transportes, the combination of these factors makes it more advantageous for Embraer to export its products, since the international market has a greater appetite for consuming them.
“The airlines want to know the cost, as they have to present a financial result per seat. So, naturally, Embraer ends up exporting more,” he said.
According to him, this business model may change in the medium and long term, if Azul maintains a growth trajectory and there is an expansion of civil aviation for regional travel, with more demand for this type of internal air transport.
Source: CNN Brasil
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.
