Brazil & Southern Cone - August 2026

Travellers seeking to fly between South American countries often find only few and expensive options, sometimes with cumbersome connections. It wasn’t that long ago when travelling to a neighbouring country was fastest by flying north via Miami and back down again. In part that has to do with the historic lack of integration in the region. On 14 July aviation authorities from Brazil, Argentina, Chile, and Paraguay gathered in Asunción to do something about it. They signed a memorandum of understanding called Acuerdo de Liberalización Aérea Sudamericana (Alas), which aims to deregulate the South American aviation industry.

The agreement commits the four countries to draft common aviation rules over the next 12 months and then gradually loosen the restrictions that currently keep airlines boxed into their home markets. Uruguay and Bolivia joined on 22 July, and the idea is for other regional players to join the initiative successively.

The framework is explicitly modelled on the single aviation market in Europe, where a carrier based in one country can operate freely across other signatory countries of European common aviation agreements. It creates a working group tasked with harmonising technical and regulatory standards and eventually expanding the so-called ‘freedoms of the air’, including the ambitious idea of letting an airline fly between two foreign countries without ever touching its home base.

“We took a first step so that we can connect more cities in South America,” Brazil’s minister for ports and airports, Tomé Franca, said after the signing of the memorandum. “This will also strengthen the economic, social, and cultural integration of Latin America, bringing our peoples closer together and making our region more competitive on the international stage.”

The push for integration comes after most of the region’s major carriers have recovered from the financial difficulties stemming from the coronavirus (Covid-19) pandemic. The Chile-headquartered Latam Airlines Group, which emerged from Chapter 11 bankruptcy protection in 2022, saw net income rise 50% in 2025 to US$1.5bn. Brazil’s Azul, which recovered from its own Chapter 11 restructuring only in February 2026, has cut its losses substantially with a leaner fleet focused on more profitable markets.

Cost is the central grievance driving the push for change. Industry groups have long flagged Latin America as an outlier when it comes to the price of flying. For example, a roundtrip airfare between São Paulo in Brazil and Córdoba in Argentina, which takes roughly three hours, could cost over US$350, whereas a return ticket between Edinburgh in Scotland and Málaga in Spain, which takes about the same time, could cost under US$100.

Industry lobbies such as the International Air Transport Association (Iata) and the Latin American and Caribbean Air Transport Association (Alta) blame high taxes and airport fees as the main culprits for stiff ticket prices. In addition, airlines operating in the region contend with higher borrowing costs, heavy litigation exposure, currency volatility that inflates leasing costs priced in dollars, higher fuel prices, and a patchwork of national regulations that makes it expensive to run cross-border networks efficiently.

Add in comparatively thin competition on certain long-haul city pairs – with fewer carriers serving fewer daily frequencies than, say, transatlantic or US-Caribbean routes – and the combination drives up round-trip fares from the US into South America. Indeed, the market is dominated by a handful of carriers. Latam Airlines controls close to 40% of scheduled seats between Brazil, Argentina, Chile, and Paraguay, with JetSmart, Gol, Aerolíneas Argentinas, and Sky Airline rounding out a group that collectively accounts for about 85% of international passengers between the four countries.

That concentration is itself part of the problem the agreement is trying to solve. Unlike Europe, where liberalisation decades ago opened the door to a wave of low-cost entrants, South America’s national governments have generally kept tight control over who can fly domestic and cross-border routes, limiting the competitive pressure that tends to push fares down.

In 2011, Brazil and the European Union (EU) negotiated an agreement that allowed airlines from either side to fly to any point in the other’s jurisdiction, but it was never ratified by Brazil. A less ambitious agreement reached with the EU in 2019 provided existing operators more legal security and flexibility in shifting routes. That same year, restrictions on foreign ownership of airlines in Brazil was removed, prompting the entrance of a few discount airlines. Deregulation has also advanced in countries like Chile, Peru, Ecuador, and Argentina in recent years.

Limited progress

All that has helped boost the number of seats and routes on offer, leading new carriers such as JetSmart to offer direct routes from Santiago in Chile to tourist destinations such as Fortaleza or Foz do Iguaçu in Brazil. But progress has been limited, and the cost of flying within and to South America is still relatively high.

In the summer of 2025, 42 airlines offered more than 40m one-way seats between Europe and North America, according to Cirium data and analytics, an aviation data company. Meanwhile, Europe-South America routes are dominated by a smaller number of major airlines, with Iberia as the market leader for flights from Spain to South American capitals and TAP Air Portugal being the main carrier for flights between Europe and Brazil.

Ongoing mergers and acquisitions, such as the incorporation of Chile’s Sky Airline by the Abra group, which owns Avianca and Gol, were trumpeted as ways to improve efficiency and help reduce costs, but they could also further concentrate market power and achieve the opposite.

Negotiators have up to a year to hammer out common technical and regulatory standards before any of the deeper freedoms, such as reciprocal market access and open competition on routes within the bloc, can take effect. Negotiations will focus on topics such as regulatory harmonisation, mutual recognition of certificates and licences, aviation security, air transport facilitation, passenger rights, and airport and air navigation infrastructure.

Separately, the working groups will prepare a series of reports that are to inform decision-makers as to the best policy options. The studies will cover topics such as environmental sustainability, economic regulation, competition, and other aspects necessary to inform future decisions by the signatory countries.

Critics argue that previous attempts to forge a more integrated regional aviation market have run aground on nationalistic sentiment, as well as not unsubstantial bureaucratic and judicial inertia. Bolivia’s more limited open-skies arrangements signed with Panama and Paraguay earlier this year show how incremental, rather than sweeping, this kind of change tends to be in practice.

Another regional agreement

The Consenso de Brasília regional integration mechanism, consisting of 12 South American countries, announced on 16 July a technical-level agreement for an aviation initiative for South American air transport integration (Itas). The foreign ministry of Uruguay, which holds the group’s rotating presidency, stated that the Itas agreement “recognises the need to expand aerial connectivity and flows of trade and people” and its implementation will be carried out in a “planned, gradual, and progressive way, in coordination with the industry”, with the future goal of giving international flights the “same treatment” as domestic flights.

Iberia

On the same day the Alas agreement was signed, Paraguay’s President Santiago Peña held a meeting with the global sales director of the Spanish airline Iberia, Víctor Moneo. On 14 July Peña posted on social media that he and Moneo discussed the potential “new connections between Paraguay and the world's major cities” and said that Paraguay was positioning itself as a “key centre” for business travel and meetings, incentives, conferences, and exhibitions (Mice) tourism.