The government of Río Grande do Sul will establish an incentive program for airlines that launch new international flights to Salgado Filho Airport in Porto Alegre.
This measure comes after the state, and particularly the area of its capital, suffered devastating floods between April and May of this year, which caused the airport, one of the most important in Brazil, to remain closed since then.
Starting January 1, 2025, the state will grant a reduction of the Goods and Services Circulation Tax (ICMS) for routes that connect Porto Alegre with cities abroad and also with the states of Santa Catarina, and additionally for cargo-only flights to cities in South America, Europe, and the United States. In this way, the ICMS could drop from 4% to 2%, according to our associated media in Brazil, Aeroin.
The ICMS reduction is a measure that other Brazilian states commonly take to promote air connectivity. Currently, it is in effect in São Paulo, Minas Gerais, the Federal District, Bahia, and Pernambuco, among others.
“The measure is linked to the Rio Grande Plan, which operates on three fronts to address the effects of the floods: emergency actions, reconstruction actions, and the future of Río Grande. The operation and expansion of Salgado Filho Airport are vital for the economic recovery of our state and for Rio Grande do Sul to continue on the path of growth, which was interrupted due to the May floods, forcing the government to recalculate the route and think of measures that accelerate the restoration of normalcy and encourage innovation and the expansion of essential services and infrastructures,” said Finance Secretary Pricilla Santana.
The government will further reward airlines that establish a regional aviation network connecting interior cities with Porto Alegre, and from there link to destinations in the United States or Europe with wide-body aircraft, in which case the tax burden could reach 0%.
Airport closed
Responsible for over 90% of air traffic in Río Grande do Sul, the Salgado Filho Airport was completely closed from May 3, when floodwaters submerged the runways and passenger terminal, until mid-July, when passenger boarding and disembarking resumed. Even today, passengers are still being transported to the Canoas Air Base, about ten kilometers away, where planes continue to land and take off. Regular commercial flights are expected to resume by the end of October.
According to Fraport, the airport’s concessionaire, the airport’s “rehabilitation” works are progressing according to the schedule agreed with the federal government. Part of the milling and repaving of the runways damaged by the floodwaters has already been completed, and an asphalt plant is even being built inside the airport to speed up the work.
Despite this, the concessionaire requested an extraordinary review of the airport infrastructure concession contract from the federal government, arguing that, with the interruption of activities and the need to repair the flood damage, it suffered a significant financial impact. It is estimated that the reconstruction of Salgado Filho alone will require around R$ 1 billion (~ USD 181 million).
Until its closure, the international network of Porto Alegre Airport included Buenos Aires/AEP (Aerolíneas Argentinas), Lima (LATAM), Lisbon (TAP Air Portugal), Montevideo (Azul), Panama (Copa Airlines), and Santiago de Chile (LATAM).
