Azul Air­lines Mak­ing Brazil Proud

Azul is the fastest grow­ing air­line in Brazil since it com­menced op­er­a­tions in De­cem­ber 2008 and cur­rently has the largest air­line network in the coun­try in terms of cities served, with service to over 100 des­ti­na­tions

SP's Aviation - - TABLE OF CONTENTS - BY R. CHAN­DRAKANTH

BRAZIL­IAN AVI­A­TION SEC­TOR IS quite vi­brant. On the one hand, air­craft man­u­fac­turer Em­braer has carved out a niche for it­self, while on the other, an air­line Azul has shown what it takes to be a leader in the skies. With a 32 per cent de­par­ture share in the Brazil­ian avi­a­tion market, Azul has es­tab­lished it­self as the third largest air­line in the coun­try, af­ter LATAM and Gol. Azul is the fastest grow­ing air­line in Brazil since it com­menced op­er­a­tions in De­cem­ber 2008 and cur­rently has the largest network in the coun­try in terms of cities served, with service to over 100 des­ti­na­tions. It has ex­panded its op­er­a­tions with selected non­stop service to the United States, Europe and South Amer­ica. Azul’s dif­fer­en­ti­ated busi­ness strat­egy, su­pe­rior cus­tomer ex­pe­ri­ence and in­no­va­tive brand­ing are the key driv­ers of con­tin­u­ous growth, as demon­strated by the numbers in the table.

Azul Lin­has Aéreas Brasileiras SA (Azul Brazil­ian Air­lines) or sim­ply Azul, is a low-cost car­rier based in Barueri. The com­pany’s busi­ness model is to stim­u­late de­mand by pro­vid­ing fre­quent and af­ford­able air service to un­der­served mar­kets through­out Brazil. The com­pany was named Azul (Blue in Por­tuguese) af­ter a nam­ing con­test in 2008, where “Samba” was the other pop­u­lar name. It was es­tab­lished on May 5, 2008, by Brazil­ian-born David Neele­man the founder of American low-

cost air­line JetBlue, with a fleet of 76 Em­braer 195 jets. Azul Lin­has Aéreas Brasileiras SA was the fourth air­line launched by JetBlue founder David Neele­man (Mor­ris Air, WestJet, jetBlue, Azul). Azul in­au­gu­rated ser­vices among three cities – Camp­inas, Sal­vador and Porto Ale­gre. It launched op­er­a­tions with three Em­braer 195 and two Em­braer 190 air­craft. An­other three air­craft were added in Jan­uary 2009 to in­tro­duce non-stop service from Camp­inas to both Vi­to­ria and Cu­ritiba.

AC­QUIRES TRIP

On May 28, 2012, Azul an­nounced the ac­qui­si­tion of TRIP Lin­has Aereas, the largest re­gional car­rier in Brazil. Azul and TRIP started com­pre­hen­sive code-shar­ing op­er­a­tions on De­cem­ber 2, 2012, with all flights car­ry­ing only the IATA code of Azul. On March 6, 2013, Brazil­ian au­thor­i­ties gave the fi­nal ap­proval for the merger with a few re­stric­tions re­lated to code-shar­ing with TAM Air­lines and slot use at Rio de JaneiroSan­tos Du­mont air­port. On May 6, 2014, the merger was com­pleted with the fi­nal ap­proval from Brazil­ian au­thor­i­ties. That day the brand TRIP ceased to ex­ist and all TRIP as­sets were trans­ferred to Azul.

Azul has signed a code-share agree­ment with Star Al­liance air­line United Air­lines in Jan­uary 2014, which made it pos­si­ble for MileagePlus mem­bers to earn points when fly­ing with Azul be­gin­ning April 1, 2014. Since 2015, Azul is also an equal part­ner in a Brazil­ian-Por­tuguese joint ven­ture that is the ma­jor­ity owner of TAP Por­tu­gal, an­other Star Al­liance mem­ber. In De­cem­ber 2014, Azul started its first sched­uled in­ter­na­tional flights to Fort Laud­erdale and Or­lando, both in the United States.

In early 2015 it was an­nounced that Azul had signed a pur­chase agree­ment for 35 Air­bus A320­neo air­craft and is to lease an­other 28. In mid-2015, Azul fi­nalised a deal for 30 Em­braer E195-E2 air­craft in­clud­ing 20 op­tions, first an­nounced at the 2014 Farn­bor­ough In­ter­na­tional Air Show. The first de­liv­ery is sched­uled for 2020. On Novem­ber 24, 2015, it was an­nounced that the Chi­nese HNA Group, owner of Hainan Air­lines, would in­vest $450 mil­lion in Azul, be­com­ing the largest sin­gle share­holder of Azul. This fol­lows the $100 mil­lion in­vest­ment of United Air­lines closed in June 2015.

As of March 31, 2017, Azul had a to­tal op­er­at­ing fleet of 122 air­craft con­sist­ing of 71 E-jets, 39 ATRs, seven A320­neos, and five A330s with an av­er­age age of 5.0 years. The com­pany’s con­trac­tual fleet, which in­cludes 15 air­craft sub­leased to TAP, to­talled 142 air­craft, of which 37 were un­der fi­nance lease and 105 un­der op­er­at­ing lease. The 20 air­craft not in­cluded in the op­er­at­ing fleet con­sisted of 15 air­craft sub­leased, four E-Jets that were in the process of being trans­ferred to TAP and one ATR.

SERVES MORE THAN 100 DES­TI­NA­TIONS

Azul serves 107 des­ti­na­tions in Brazil, Ar­gentina, Bo­livia, French Guiana, Por­tu­gal, the United States and Uruguay plus some other ad­di­tional lo­ca­tions by means of ded­i­cated ex­ec­u­tive bus ser­vices to the near­est air­ports. Azul has in­ter­line agree­ments with Aero­lin­eas Ar­genti­nas (SkyTeam); Air Europa;

Copa Air­lines; Eti­had Air­ways; Hahn Air; Hainan Air­lines and Lufthansa. It has code-share agree­ment with JetBlue Air­ways/ United Air­lines and TAP Por­tu­gal.

Azul also op­er­ates two Pi­la­tus PC-12/45 for lo­gis­tics and main­te­nance sup­port. With such an im­pres­sive fleet in such a short time, Azul has 784 daily de­par­tures serv­ing 107 des­ti­na­tions, cre­at­ing an un­par­alled network of 203 non-stop routes as of De­cem­ber 31, 2016. Its con­nec­tiv­ity at large hubs allows it to con­sol­i­date traf­fic, serv­ing larger and medium-sized mar­kets as well as smaller cities that do not gen­er­ate suf­fi­cient de­mand for point-to-point service. As of De­cem­ber 31, 2016, Azul served 96 des­ti­na­tions within Brazil, com­pared to 52 by Gol and 44 by LATAM. In ad­di­tion, Azul was the sole air­line on 70 per cent of its routes and 34 of the des­ti­na­tions that were served and the lead­ing player in 66 cities as of De­cem­ber 31, 2016. By comparison, Gol and LATAM were lead­ing car­ri­ers in only 13 and four cities re­spec­tively, as of De­cem­ber 31, 2016. Fur­ther­more, as of De­cem­ber 31, 2016, 22 per cent and 16 per cent of our do­mes­tic network over­lapped with that of Gol’s and LATAM’s, re­spec­tively, while Gol’s and LATAM’s net­works had an over­lap of more than 80 per cent be­tween them.

OP­TI­MIS­ING AIR­CRAFT TO DIF­FER­ENT MAR­KETS

Azul states that its fleet strat­egy is based on op­ti­mis­ing the type of air­craft for the dif­fer­ent mar­kets it serves. “Our diversified fleet of ATR, E-Jets and Air­bus air­craft en­ables us to serve mar­kets that we be­lieve our main com­peti­tors, who only fly larger nar­row-body air­craft, can­not serve prof­itably. We be­lieve our cur­rent fleet of air­craft allows us to match ca­pac­ity to de­mand, achieve high load fac­tors, pro­vide greater con­ve­nience and fre­quency and serve low and medium den­sity routes and mar­kets in Brazil that are not served by our main com­peti­tors. Ac­cord­ing to ANAC, 67 per cent of the flights in Brazil car­ried fewer than 120 pas­sen­gers in 2015. Our do­mes­tic fleet con­sists of mod­ern Em­braer E-Jets which seat up to 118 pas­sen­gers, fuel-ef­fi­cient ATR air­craft which seat up to 70 pas­sen­gers and next-gen­er­a­tion Air­bus A320­neos which seat up to 174 pas­sen­gers, while all the nar­row-body air­craft used by Gol and LATAM in Brazil have

LION'S SHARE: AZUL HAS BEEN THE LAUNCH CUS­TOMER OF EM­BRAER SERIES OF JETS. THEY OP­ER­ATE CLOSE TO 80 AIR­CRAFT IN AD­DI­TION TO AIR­BUS AND ATRS.

ATR 72-600

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