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Battle about the Brazilian skies

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Brazil have a large reputation problem in it’s aviation sector. Both the security record and the punctuality have been heavily criticized over the last years. Wikipedia even have it’s own article about “2006–2007 Brazilian aviation crisis“.

Congonhas airport in south zone of São Paulo is best known for the terrible TAM Flight 3054 crash in July 2007, where 199 people were killed. But it’s also the most busy airport in Brazil with 205,130 aircraft movements in 2007. There are already 7 airlines operating from Congonhas (Gol, OceanAir, Pantanal, TAM, TRIP and Varig), and from January the new airline Azul will start flying between the major cities in Brazil. Azul will probably be the 8th airline operating from Congonhas at some point.

The new airline Azul headed by David Neeleman is facing difficulties on getting slots at the most popular Brazilian airports. Folha de São Paulo reports that Azul will start operating between Campinas, Curitiba and Rio de Janeiro from 15th December 2008.

Campinas airport is located about 100km outside São Paulo city. It’s a major cargo hub and the main airport in the city of Campinas. Lately the Campinas airport been used to offload domestic traffic from the far more popular Congonhas airport. By operating only out of Campinas airport will Azul most likely not be the preferred airline for business travelers to and from São Paulo city.

Speculation are now speared about a possible merge between Azul and Gol.

Gol, in the other hand, has been facing financial problems and lost over 80% of their market value in the past year. GOL has been growing rapidly since the company began operations in January 2001 and filled its six Boeing 737 planes to 50% capacity that first month. By June Gol had flown its first million passengers, and they turned a profit 13 months after its launch.

Gol is often consider a Low cost carrier and listed as the main LCC in Brazil. Their focus back in 2001 was to be a moderate LCC but lost it’s focus by the time they weren’t able to continue as a LCC.

  • Gol never operated on Secondary Airports in fact (they pay the same fees other carriers pay)
  • Gol fuel costs are the same as Tam, OceanAir or WebJet
  • Gol HQ is on a very nice building on the most expensive business district of São Paulo
  • Gol pays commission to Travel Agents on all flights
  • Gol check-in ratio at internet is less than 15%

In March 2007 Gol purchased Brazil’s former leading international airline VARIG who faced commercial bankruptcy less then two years earlier. However VARIG has been a financial burden for Gol.

TAM appears to be taking advantage of Gol’s recent problems by increasing its market share of the Brazilian domestic market to over 50%.

Some people even speculate that Southwest could be the start of an alliance among low-cost carriers in the Western hemisphere, perhaps including a low-cost South American carrier such as Brazil’s Gol. David Neeleman the founder of Azul has sold his first airline Morris Air to Southwest and held a position in Southwest for a while after the sale.

A merge between Gol, Varig and Azul would be an interesting partner for any foreign airline looking for a Brazilian partner and a strong competitor to TAM.