June 17, 2019 / 9:40 PM / 6 months ago

UPDATE 1-Brazil leader signs law allowing foreign carriers to operate domestic flights

(Adds details of new law, adds company and industry background)

BRASILIA, June 17 (Reuters) - Brazilian President Jair Bolsonaro on Monday signed a bill into law allowing foreign airlines to operate domestic flights in Latin America’s largest air market, a move that could usher in new competition or lead foreign carriers to buy up the local players.

The bill had started as an executive order issued by former President Michel Temer in the last days of his tenure in late 2018. Brazil’s Congress made the measure permanent last month, but included some changes that required a presidential signature.

On Monday, Bolsonaro signed the bill into law but vetoed a section of the bill that would have banned carriers from charging customers certain baggage fees. The proposed measure had been opposed by the airline industry, as well as by Brazil’s antitrust regulator, CADE.

Brazil’s domestic air market is dominated by three carriers: Gol Linhas Aereas Inteligentes, LATAM Airlines Group and Azul SA. Together they control more than 90% of the domestic market.

A financial crisis with airline Avianca Brasil, which has not operated flights in several weeks but was once the country’s No. 4 airline, has raised additional concerns about market concentration.

Spain’s Globalia, which operates the Air Europa brand, has already expressed interest in operating domestic flights in Brazil. (Reporting by Ricardo Brito in Brasilia Writing by Marcelo Rochabrun Editing by Leslie Adler and Matthew Lewis)

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