On February 2, 2021, the ANP published Public Consultation No. 02/2021 (the “Consultation”) concerning the introduction into the Brazilian market of JET-A aviation kerosene, which is already inserted in the international market. The proposal aims to regulate the transition from JET-A1, the current aviation kerosene used in Brazil, to JET-A.
Brazilian companies would have access to the fuel through its importation, since it is produced in the Gulf of the United States, its main producer and exporter. JET-A may be cheaper than JET-A1, which could impact the reduction of operating costs. The only difference between the two fuels is in the maximum freezing point. While JET-A has a maximum limit of -40 °C (more restrictive), JET-A1 has a limit of -47 °C, which is recommended for transpolar routes, not applicable to Brazil so far.
Because of the lower price of JET-A, the expectation is that the competitiveness of the fuel market will increase, which may have impacts on the reduction of fuel prices and on the quantity to be made available in the market, generating cost reductions for Brazilian airline operators.
Report No. 3/2020/SBQ-CPT-CQC/SBQ-e, published along with the Consultation, brought detailed results of the studies prior to the opening of the Consultation, which we list the main ones below:
(i) According to estimates by the International Air Transport Association (“IATA”) and the Latin American and Caribbean Air Transport Association (“ALTA”), introducing JET-A in Brazil could reduce the price of aviation kerosene by 0.3 to 0.6 cents per U.S. gallon, or up to 0.6 percent of the price. The advantage would be in the expansion of suppliers for imports, since the American market, a producer of JET-A, is opened up, but the international market for JET-A1 is maintained;
(ii) Petrobras currently produces aviation kerosene at almost all its refineries and would have no problem producing JET-A, since it currently produces the fuel with an average freezing point of – 55 °C, with a wide margin in relation to the JET-A1 specification limit (max. – 47 °C) and even wider in relation to the JET-A limit (max. – 40 °C);
(iii) In the opinion of importers, the measure would only be important in reducing costs if access to transport pipelines occurred on equal terms;
(iv) The National Civil Aviation Agency (“ANAC”), which is responsible for certifying engines and aircraft, clarified, according to Official Letter No. 7/2020 /GAB-ANAC, that the list of allowable fuels for a given aircraft should always be indicated in its respective flight manual, in a dedicated section; and
(v ) The Brazilian Airline Association (“ABEAR”) and the Brazilian General Aviation Association (“ABAG”) have recognized the importance of the issue because of the high impact of fuel on the operating costs of airlines (about 30%). But the second, representing smaller companies, has expressed concern about possible aircraft that cannot use JET-A. In this sense, ANAC had already suggested a public consultation to obtain information about aircraft possibly not certified to use JET-A.
The Aeronautical Law team at De Luca, Derenusson, Schuttoff & Advogados – DDSA will continue to monitor and keep its collaborators and partners updated.