Azul

Azul plans more rapid expansion, expects to capture 15% share of Brazilian market by end of 2012

Azul is planning more rapid expansion in 2012 despite the expected slowdown in the growth curve of the overall Brazilian market. The low-cost carrier, which so far this year has launched 14 new destinations while adding 17 aircraft, sees plenty of opportunities to further stimulate demand on secondary domestic routes where there is relatively limited service.

Azul is now Brazil’s third largest domestic carrier after Gol and TAM. Azul accounted for 8.4% of domestic RPKs through the first three quarters of 2011, according to data from Brazilian civil aviation authority ANAC. In 3Q2011, Azul’s share of the Brazilian market exceeded 9% for the first time.

Azul chairman David Neeleman told CAPA along the sidelines of the ALTA Airline Leader Forum in Brazil earlier this month that he expects the carrier will capture 15% of the market by the end of 2012.

Brazil airport privatisation plan comes under attack at ALTA forum

Brazil’s new plan for privatising three of its largest airports has already started to draw criticism from Latin American carriers as well as IATA and the Latin American airline association ALTA. The upcoming privatisation of Brasilia, Sao Paulo Guarulhos and Viracopos-Campinas airports was a hot topic at last week’s ALTA Airline Leaders Forum in Rio de Janeiro.

ALTA, which represents airlines throughout Latin America and the Caribbean, and IATA are concerned the three concessions as currently outlined will result in higher fees and a large chunk of the generated revenues not being reinvested in modernising the airports. But ALTA, IATA and the airlines in the region widely recognise the potential benefits of airport privatisation as Latin America struggles to cope with infrastructure challenges that are now threatening to curtail continued growth.

Sao Paulo dominates Brazil's busiest domestic and international routes

Sao Paulo Guarulhos International Airport is Latin America's busiest international hub, but ranks only 57th in the world by international seats per week (or 24th by ASKs). Guarulhos is also Latin America's biggest domestic hub, ranking 35th in the world by domestic seats per week. Guarulhos is one of seven Brazilian airports among the world's top 100 domestic airports (by seats) but is the only Brazilian airport in the international top 100. This shows Brazil's market still remains very much a domestic-dominated market – similar to China.

Profitability in Brazilian domestic market plummets as yields drop

Intense competition in the Brazilian domestic market led to a sharp drop in yields in 2Q2011 and is expected to have a major impact on profitability throughout the Brazilian airline sector for the remainder of the year. Gol, which is primarily a domestic operator, has particularly been impacted by the suddenly unfavourable market conditions with a BRL359 million (USD221 million) net loss incurred in 2Q2011. TAM also has been impacted but has the benefit of a large profitable international operation, allowing it to remain in the black in 2Q2011.

More rapid growth for Brazil's domestic aviation market

Brazil’s domestic market continues to chalk up impressive growth rates, driven by expansion at both low-cost and full-service carriers. Newly released traffic figures from Brazil’s ANAC shows domestic RPKs were up 21.4% for 1H2011, which follows equally impressive growth of 23.5% in 2010.

Webjet acquisition improves Gol's position in world's fourth largest domestic market

Consolidation in the fast-growing Brazilian market has taken another major step with Gol agreeing to acquire smaller low-cost carrier Webjet for BRL96 million (USD61 million). The deal follows several moves over the last two years by Gol’s archrival TAM as Brazil’s two largest airline groups battle for the distinction of domestic market leader.