Brazilian Airline Azul Avoids Brazil’s Busiest Route

Christiana Sciaudone and Jessica Brice – Bloomberg Businessweek, 8/7/2014

Ask David Neeleman, majority owner of Brazilian airline Azul and founder of JetBlue Airways (JBLU), and he’ll say Brazil’s busiest route is just that: too busy. With more than 280 daily flights, the 45-minute trip between São Paulo and Rio de Janeiro is already the world’s most-served route. But while aviation disrupters such as Richard Branson’s Virgin Atlantic Airways grew by going wing-to-wing against incumbents between major cities, Neeleman says his Azul Linhas Aéreas Brasileiras will likely use slots it wins at São Paulo’s domestic airport to strengthen its hold on small cities other airlines don’t fly to.

The popular São Paulo-to-Rio de Janeiro run is dominated by rivals Gol Linhas Aéreas Inteligentes and Tam, which is controlled by Santiago-based Latam Airlines Group (LAN:CI). Azul has been locked out of offering weekday flights to and from São Paulo’s Congonhas airport until now. The government will soon award new takeoff and landing times, and Neeleman estimates Azul will get 14 to 16 slots a day, making it the biggest winner. Still, he says that’s too few to make a big difference flying to Rio. “Do you want to go into a gunfight with a peashooter?” he asks. “If you only have 12 or 14 departures, 16 departures, whatever, it just doesn’t give you enough.”

Currently, Azul has only one slot per week at Congonhas, on Saturday afternoon, which it uses to fly to Rio. It would need many more on the route to threaten Tam’s and Gol’s dominance, says Raymond James Financial analyst Savanthi Syth. “There’s going to be a little more overlap here in the domestic market,” she says. The two leading carriers now have more than 200 Congonhas slots a day each. Avianca Brazil has 12 on weekdays.

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