Ryanair Is Avoiding Brazil Because of Corruption - plus55

Former Ryanair CEO avoiding Brazil because of corruption

The Irish low-cost airline will begin operations in Argentina, but Brazil is not on the company’s plans
Brazil Business

Declan Ryan, one of the founders of Ryanair, has big plans for Latin America. Irelandia, an airline owned by Ryan, already operates in Mexico and Colombia, and will fly in Argentina next year. In fact, he is in negotiations to be present in every Latin America country – except for Brazil.

“There is too much corruption there,” said Declan Ryan, during an interview to Argentinian newspaper La Nación.

The company’s strategy in Argentina relies on taking over a local airline, Andes Líneas Aéreas. According to data shared by Ryanair, 5 to 7% of Argentinians have already flown – and the low-cost airline wishes to triple that. In Colombia, plane travelers represented 2.5% of the population a few years ago – and are now 10%.

But maybe corruption is not the only reason why Ryan’s company is avoiding Brazil. Going through its worst economic recession since the 1930s, Brazil is not exactly the most attractive market at the moment. Experts forecast a retraction in the demand for flight tickets – the first in twelve years. Companies endure five consecutive years of losses.

Also, a weakened currency is another problem. In 2015, the Brazilian Real lost 55% of its value compared to the U.S. Dollar. Since roughly 60% of the airlines’ expenses are paid using the American currency, companies are having problems to break even. While saying that Brazil is too corrupt for Ryan makes good headlines, we believe this business decision is based on other factors.

Update/June 22: Ryanair stated that Declan Ryan’s comments on the matter were related to another company, not Ryanair. “This is untrue. This is a separate company looking to set up in Argentina, not Ryanair.”