Brazil - Country Commercial Guide
Defense, Aviation and Security

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-01-21

The Brazilian Defense, Aviation and Security Industries remain one of the most important in the Southern Hemisphere. Brazil is one of only six countries in the world that manufactures commercial jets, and has been one of the top 10 export destinations of U.S. aerospace products over many years.  

The strong relationship developed between Brazil and the U.S. in recent years has contributed for the development of strategic sectors such as defense and space. Currently, there are successful government-to government and industry-to-industry cooperative efforts leading the market to the establishment of joint ventures and bilateral commercial cooperation that leverage corporate synergies in a range of advanced technologies and capabilities. In the security sector. concerns about public security have continued to be  a fundamental problem in Brazil. The problem has gained enormous public and political visibility leading the federal government to create a Public Security Department to coordinate a portfolio of law enforcement agencies throughout the national territory, including the Federal Police Department, National Prison System and the National Public Security Council. 

Opportunities 

There are significant opportunities for U.S. companies to do business and/or become a supplier to the Brazilian defense, aviation and security sectors. There are major subsectors and segments in these industries that U.S. suppliers should focus on, which include but are not limited to the OEMs (original equipment manufacturers), aircraft repair & maintenance, space launch technologies, communication satellites, UAV (unmanned aerial vehicles) and many others. The Brazilian defense sector also offers unique business opportunities in the segment of wheeled and tracked armored vehicles, short range air defense systems, weapon systems, attack helicopters, communication satellites, sensors, radars and systems integration.  

Companies with know-how and technology in these areas are welcome to establish partnerships with local Brazilian companies and are encouraged to participate in future public bids and reverse auctions opened by the Brazilian Government. To succeed in Brazil, U.S. companies must either be established in the country or have a well-informed local representative. Much like in other sectors in Brazil, it is important to have a distributor or system integrator that can offer post-sale and maintenance services, replacement parts, and repairs. Whether introducing a product to the market independently or entering with an existing local partner, it is necessary to have a coherent market entry strategy to penetrate the Brazilian market. 

Leading Sub-Sectors 

Commercial Aviation 

There are three major segments that U.S. suppliers in this industry should focus on, which are the OEMs (original equipment manufacturers), the General Aviation, and the Repair & Maintenance markets.  A fourth niche, still small but growing rapidly, is the UAV (unmanned aerial vehicles) market. 

OEMs – Embraer is a global company headquartered in Brazil with businesses in commercial and executive aviation, as well as in defense and security markets.  Founded in 1969, the company became a leading manufacturer of commercial jets up to 150 seats.  In July 2018, Boeing and Embraer signed a Memorandum of Understanding to establish a strategic partnership.  However, on April 25 2020, Boeing announced that it had terminated its Master Transaction Agreement (MTA) with Embraer, under which the two companies sought to establish a new level of strategic partnership. 

Currently, Embraer imports approximately 56% of its components from North America, mostly from the United States.  Embraer always welcomes the registration of new and qualified companies in its Supplier’s Portal - www.embraersuppliers.com.  Embraer’s selection criteria take into consideration:  technical solutions, product quality, commercial and aftermarket support, supplier’s performance, expertise and financial health, and manufacturing capability.  It requires certifications such as, but not limited to,  AS9100, EN9100, JISQ9100, and NBR15100.  Depending on the type of the product, additional certifications might be required. 

The other major OEM is Helibras, the Brazilian subsidiary of Airbus Helicopters.  In 2019, approximately 36 helicopters were produced in its Brazilian plant, serving the military and civilian markets.  Information on requirements to become a supplier is also available on the Helibras’ website.  

General Aviation 

According to the Brazilian Association of General Aviation (ABAG), a private aviation association, general aviation plays a strategic role in the development of Brazilian transportation and logistics industries by establishing connections with 5,568 municipalities, through 2,567 airport spread across the Brazilian territory, which in 2018 were responsible for more than 600,000 landing and takeoff operations. The general aviation fleet includes approximately 7,800 airplanes and helicopters in service. The detailed breakdown includes 610 jets, 1,130 turboprops, 1,160 helicopters and about 4,900 piston engine aircrafts, which are used by passenger air taxis, air ambulances, private operators and flight instruction providers. 

Cessna, Neiva, Piper, Embraer and Beechcraft together represent 50% of Brazil’s existing fleet. According to a study conducted by the Brazilian General Aviation Association, 40% of the fleet is concentrated in the Southeast region, but in 2018 the South and the Midwest regions registered the highest growth rate of 5.99% and 4.17%, respectively.   

In a subcategory sector within the general aviation industry, the aerial agricultural sector has never had a negative year in fleet growth.  According to the National Agricultural Aviation Companies Union, in 2018, 79 aircraft were added (5 helicopters and 74 aircraft) totaling 2,115 aircraft.  

Repair & Maintenance  

According to the Brazilian National Civil Aviation Agency (ANAC), the total Brazilian fleet consists of 22,219 aircraft composed of commercial aircraft, general/business aircraft, and experimental aircraft.  Due to the political and economic disruptions going on in the country, demand for new aircraft has slowed down over the last couple of years, but the demand for replacement parts will likely continue growing over the next few years.  

In 2018, the market for aircraft repair and maintenance was estimated at US$730 million with an estimated annual growth rate of approximately 5% over the next 5 years.  The relatively strong market for repair and maintenance is driven by the fact that more than 40% of the general aviation fleet is composed of one or two-engine piston-powered aircraft with more than 30 years of use. The average age of the general aviation fleet is currently 30 years, while the commercial aviation fleet has an average age of six years.  To provide repair and maintenance services in Brazil, the company needs a Maintenance Organization Certificate (COM) issued by  ANAC.  There are 522 maintenance bases currently in Brazil with a valid COM. The importation of parts and components for the aeronautical industry amounted US$9.2 billion in 2018. Around 36% of the imports have their unit value in the range of $10k to $100k dollars. 

UAVs  

There is no precise official data on the size of the UAV market in Brazil, but it is estimated to be approximately US$80 million.  ANAC, which regulates the sector, recognizes 70,000 portable drones registered in its system, and of these, 35% are registered for professional use. According to Drone and Engineering Brazil Magazine, following a worldwide trend, the market should grow rapidly over the next few years, mainly in the agricultural and inspection segments. In May 2017, ANAC approved the special regulation for the commercial use of unmanned aerial vehicles (UAV) throughout the Brazilian territory. UAV operations in Brazil must follow the ANAC regulations as well as the regulations established by the Brazilian Air Space Control Department (DECEA) and the National Telecommunications Agency (ANATEL).  According to ANAC, there are currently around 2,400 companies registered for drone operation in Brazil. 

The services provided by drones have increased in recent years, as demonstrated by the increase in the number of drones used for professional reasons. The main activities are agricultural mapping, mainly used in the ethanol production. In 2019, most drones (64%) were used for recreational reasons and the owner’s registries are mainly individuals. According to consultancy PwC, Brazil follows global trends and its drone market is divided among sectors including infrastructure (41%), agriculture (26%), logistics (10%), safety (8%), entertainment (7%), insurance (5%) and mining (3%). 

Opportunities 

Better integration is expected in areas of supply chain and procurement, composites and metallic structures, automation technology, connectivity and MRO. The industry welcomes competitors and development of the existing supply chain within the aerospace sector to respond to the challenges imposed by the COVID- 19 in the aviation industry in Brazil. 

Brazil offers excellent opportunities for general aviation aircraft suppliers. According to the Brazilian Association of General Aviation (ABAG), Brazil has the second largest executive aircraft fleet and remains stable among the second largest helicopter fleet in the world, with approximately 610 jets and 1160 helicopters. As Brazil’s aviation market resumes its activities after COVID-19, importation of parts and components should represent good business opportunity for aircraft suppliers.  

The Drone Show in Sao Paulo in 2019 helped define the Brazilian drone market. As a result, opportunities exist in the areas of mapping, agriculture, entertainment, security, infrastructure, environment, emergency services, risk mitigation, city management, and mining.  

 Airlines 

In 2019, Brazil passenger volume reached 107 million passengers which represented 1.2% increase versus the previous year.

There are 11 air transport domestic companies certified to operate in the country, concentrated in 5 Brazilian states: São Paulo, Paraná, Amazônia, Goiás and Rio de Janeiro. Besides the domestic airline companies, ANAC has certified 72 foreign companies to operate regularly in the country. The United States hosts most of these companies, followed by Argentina and Colombia, with 7, 5 and 4 companies, respectively. 

In 2018/2019, the highest concentration of operations was made by Azul (29%), followed by GOL (27%) and LATAM (24%). Although Azul has the most operations in 2018/2019, it is not the biggest company in terms of transported passengers. Azul uses mainly narrow-bodied aircrafts and primarily connects smaller airports in Brazil. The most widely used aircraft in the Brazilian commercial aviation market are the Airbus A320 (20%) and the Boeing 737 (22%). 

Opportunities 

Domestic and international passenger traffic plunged in 2020 due to the pandemic.  The three major carriers reported operations at between 70-80 percent of  pre-pandemic level in the fourth quarter of 2020, and industry observers expect domestic traffic to return to 2019 levels by mid-2021.  International air traffic will likely be slower to recover.

Ground Service Providers (GSP) 

Ground Service Providers (GSP) play a key role to bolster the aviation sector in Brazil. Currently, GSPs account for 40% of all the services at Brazilian airports. According to the International Air Transport Association (IATA).  The world-wide average is closer to 50%,  showing there is still exsts room for GSPs to grow as Brazil continues to develop towards reaching world GSP service standards. Between May 2016 and December 2018, there was a 30% growth in the segment. Brazil has 120 GSPs which are responsible for generating 42,000 direct jobs.  

Opportunities 

As the GSP sector continues to develop, there will be demand for services like baggage transport, aircraft cleaning, safety inspections, check-in, aircraft fueling, surface transport for crew and passengers, X-ray for hand luggage and checked luggage, and air cargo handling. 

Safety and Security Industries 

Public security remains a fundamental problem with enormous public and political visibility, leading the federal government to create a Public Security Department to coordinate a portfolio of law enforcement agencies throughout the national territory, including the Federal Police Department, National Prison System and the National Public Security Council.  

The Brazilian National Bank for Economic and Social Development (BNDES) approved the creation of a program to support investments in public security for the acquisition of equipment for state and municipal police forces. Implemented in 2019, the plan is to invest US$30 billion within the next 4 years as Brazilian officials upgrade public security agencies with new equipment such as vehicles, ballistic vests, holographic sights, and stun guns.  

Opportunities 

Opportunities for security suppliers will be enhanced, as the government continues to focus on infrastructure concessions to address public security problems. Local analysts anticipate that the market for security technologies across a wide range of critical national infrastructure segments will continue to grow as the country continues its internal development.  This in turn has increased the security opportunities available to system and technology providers in the country. Concession investments should take place in mass transport systems, with money being spent on both roads and airports to increase their efficiency, security, and capacity.  

The largest clients in the security market are the Government of Brazil (GOB), and financial and commercial institutions.  The large investments in the police modernization program are key drivers in the Brazilian security market. 

Over the next decade the Brazilian government security program aims to strengthen border control, combat organized crime, improve the prison system, create a  National Information System for the Public Security agencies, and combat drug trafficking.  

At the state level, public security secretariats are also investing in the acquisition of new technologies to respond to the public outcry against crime across the country. Command and Control centers have become widely used by state police agencies and will need to be modernized to improve interoperability and data analysis capabilities as modern law enforcement methods are implemented.   

Below are the areas that currently present the best prospects in the Security market.  

 

Surveillance Equipment 

Access Control 

Security Systems 

Detection Devices (thermal cameras, drug, fire, metal) 

Unmanned Aerial Vehicles 

Cyber Security (hardware, software) 

Personal 

Personal security, access control, alarm systems and surveillance circuits 

Residential Buildings 

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Home Security 

 

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Commercial 

Personal security, access control, alarm systems and surveillance circuits 

Airport Security 

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Banking Institutions 

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Public Safety & Security 

Surveillance equipment e.g. UAVs, emergency response integrators and professional training 

Mass Transportation 

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Government 

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 Defense & Space 

 In 2019 the United States of America officially designated Brazil as a Major Non-NATO Ally (MNNA). The MNNA designation is a unilateral U.S. decision that identifies its top, strategic defense partnerships.  Brazil is only the second country to receive MNNA designation in the Western Hemisphere and it reflects the strong bilateral defense relationship between the two countries.  The MNNA helps support the collaboration on the development of defense technologies; privileged access to the U.S. defense industry; increased joint military exchanges, exercises, and training , as well as special access to military equipment financing. 

In March 2020, the United States of America and Brazil signed  a bilateral agreement on Research Development, Test and Evaluation  (RDT&E) that will expand opportunities for both countries to collaborate and share information on the development of new defense capabilities and pave the way for potential future cooperation on applied research, development of emerging technologies, analysis, operational studies, demonstrations and testing and evaluation prototypes. Before it can enter into force, the Brazilian Congress needs to ratify this agreement.   

Opportunities 

Brazil’s 2020 federal budget proposal for the defense sector is approximately $USD 397.5 billion * (Using 5.49 exchange rate).  The National Defense Strategy  (NDS) continues to be the guide for the medium and long-term planning for the defense sector in Brazil. The three strategic sectors highlighted in the NDS are: nuclear, cyber, and space, as well as promoting the development and strengthening of the Brazilian defense industry. Major Brazilian Defense Strategic projects include: the Submarine Development Program (PROSUB) and the Navy Nuclear Program (PNM) coordinated by the Brazilian Navy; the Guarani Armored wheeled vehicles, the Integrated Border Monitoring System (SISFRON) and Cyber Defense coordinated by the Brazilian Army; and the KC-390 aircraft, the Gripen AM-X aircraft modernization, and Space System Strategic Program coordinated by the Brazilian Air Force. 

The LAAD 2021 Defense & Security– International Defense and Security Fair is the largest defense trade show in Latin America. It has the institutional support of the Brazil Ministry of Defense, the Armed Forces, the Ministry of Justice and the Brazilian Public Security structure. The exhibition brings together key military leaders and civilian industrial manufacturers and suppliers of technology from Brazil, the United States, and around the world. The show is an excellent place to meet with Government authorities and expand your network as well as meet and establish new partners. For additional information please visit www.laadexpo.com.br 

Space  

The strategic relationship between Brazil and U.S. in the space sector has been rapidly growing in recent years with several foundational agreements signed, such as the Space Situational Awareness Agreement, the CubeSat Agreement to Study Solar Physics, Scintillation Prediction Observations Research Task - SPORT, and the Peaceful Uses of Outer Space Cooperation Agreement. Most recently, in March 2019, Brazil and the U.S. signed a technology safeguards agreement (TSA) which was ratified by the Brazilian Congress and entered into force in December 2019. The TSA allows the use of U.S. technology in space launches from Brazil, specifically the Alcantara Space Launch Center.  

Opportunities 

Recently, the Brazilian Space Agency published a public call to identify companies, national or foreign, that were interested in carrying out suborbital and orbital launch operations using the Alcantara Space Center (CEA), as well as providing information on the contractual process, including licensing processes and authorization for space launch. The TSA is helping unlock bilateral commercial cooperation in a range of advanced technologies related to space. According to Brazil’s Strategic Program for Space Systems (PESE),  priorities for the space sector include development in the following areas: satellite constellations, launch vehicles, a space launch center (Alcantara), and a space operations center.  

In October 2020, the Brazilian Space Agency will host the fourth edition of the Brazilian Space Industry Forum in a virtual format. The Forum’s theme for this year event is “Space Applications” with the objective to explore the development of several applications through space technology and to demonstrate that the sector is present in the daily life of society. For more information please visit www.aeb.gov.br

 Import Requirements & Documentation 

As in most industries, having a local office or a trusted and well-respected local representative with extensive contacts and a solid sales record is a critical business practice to succeed in Brazil and is required.  

Some of aerospace, defense, and space technology might be subject to ITAR regulation. U.S. companies should contact the State Department to learn about regulations and restrictions before engaging in any business transactions. 

Selling to the Government 

To conduct business with the Brazilian government, U.S. companies must be prepared for a long and complex engagement. In addition to the ever-present desire for offsets, U.S. firms must be prepared to transfer technology (subject to pertinent export control regulations) and oftentimes engage in a long-term partnership with the Brazilian aerospace and defense industry for the co-development and local production of components, parts, and assembly.  All government acquisitions are published at  https://www.gov.br/compras/pt-br/


Pricing - how price sensitive is your sector/subsector?  

Most Armed Forces acquisitions are done through public bids. Generally, bids are evaluated on the basis of technical specifications, price and availability with an emphasis on lowest price.  The company that presents the lowest price and complies with all technical requirements and documents requested in the bid wins the contract.  Foreign Military Sales (FMS)* are an important and well used government-to-government acquisition mechanism. Sole source procurement  is rare and generally only on national security basis.  More information about the FMS program can be found at https://www.dsca.mil/foreign-military-sales-faq(*)

Principal Business Associations 

ABIMDE – Brazilian Defense and Security Industries Association – www.abimde.org.br   

AIAB – Aerospace Industries Association of Brazil – www.aiab.org.br   

COMDEFESA/ FIESP – Department of Defense and Security / State of Sao Paulo Industry Federation – www.fiesp.com.br   

ABAG – Brazilian Association of General Aviation – www.abag.org.br   

ABEAR – Brazilian Airlines Association – www.abear.com.br   

IBA – Brazilian Aviation Institute – www.institutoaviacao.org   

ABESE - Brazilian Association of Electronic Security Equipment (http://www.abese.org.br/ )  

ABSEG – Brazilian Association of Security Professionals (http://www.abseg.com.br/   

FENAVIST – National Federation of Security Companies (http://www.fenavist.org.br/ )  

Limitations on Selling US Products and Services 

Aeronautical products must have a certification issued by  ANAC – National Civil Aviation Agency, responsible for the regulation, inspection, and safety of civil aviation activities, aeronautical products, and airport infrastructure.   

Distribution & Sales Channels

Brazil is a geographically large country.  Aircraft part suppliers without local representation may find it difficult to build relationships, get timely information, and gain access to decision-makers.