Dr. Leila Halawi
WW Campus for Central & South America
This study compared the tax costs between on-board sales and airport cafeterias of a mix of twenty-five products composed of beverages, fresh food and snacks in the amount that would be boarded on domestic flights between São Paulo, SP, Rio de Janeiro, RJ and Brasília, DF. The study showed that airlines are paying three times more in taxes than the airport cafeterias. The study suggested that states stop charging taxes for the transfer of unsold products on board, reducing 67% of the fees paid by airlines that practice buy on board (BoB) and guarantee a revenue gain between USD $ 800,000 and USD $ 1,000,000 per year. This revenue gain could reach USD $ 2,000,000 with the use of improved sales techniques. This improvement not only extinguishes loss of revenue for airlines, but it also may increase onboard sales related revenues. BoB operations in Brazil are associated with complex and bureaucratic tax regulations, at the federal and state levels, causing airlines and the government a loss of revenue. Additionally, the airlines’ customers are also hampered by a limited and expensive offer of services and products. This study, in partnership with the Brazilian Airlines Association (ABEAR), recommends modifications and/or changes to the Brazilian taxation laws that could make BoB a greater revenue generator, such as the recovery of ICMS and the application of sale techniques to increase sales.
Embry-Riddle Aeronautical University
Sao Paulo, Brazil
Scholarly Commons Citation
Altom, G., Campos, F., de Lima, H., Medina, R., & Moraes, A. (2017). An Evaluation of Tax Structure and Practices of on Board Sales in Brazil. , (). Retrieved from https://commons.erau.edu/brazil-graduate-works/6
This Capstone Project was prepared and approved under the direction of the Group’s Capstone Project Chair, Dr. Peter E. O’Reilly. It was submitted to Embry-Riddle Aeronautical University in partial fulfillment of the requirements for the Aviation Management Certificate Program.