Virgin’s Richard Branson in negotiations to start a Brazilian airline

Virgin’s Richard Branson, the UK billionaire, is in talks with partners in Brazil to start a Brazilian airline. The proposed airline from Virgin, which will be named something like ‘Virgin Brazil’ will start domestic operations first and will expand later to international flights.

Brazil, Latin America’s biggest country, has a very dynamic market and proper attention has not been given to it, Branson said. “We know there is a lot of room to grow given the country’s size and the need to develop the air transportation system for Brazil’s own growth.”

An announcement on the new airline is expected soon. According to Brazilian law, foreign investment on domestic airlines is limited to 20%.

The main threats for Branson’s Brazilian airline will come from TAM Linhas Aereas and Gol Linhas Aereas. Both the airlines have in total a 90% lion’s share of the Brazilian domestic market. JetBlue has also announced plans to start a new airline in Brazil by early 2009.

The main reasons why foreign players are interested in Brazil are because of Brazil’s booming economy and a double digit growth in air travel.