New Airline Democratizes Brazil's Skies ; Discounter Gol Airlines to Expand across South America

Article excerpt

In an age when airlines are going bankrupt faster than you can say Chapter 11, some might say that starting one in a developing nation like Brazil was a brave decision.

But since taking off in January 2001 with just six planes and seven destination cities, Gol Airlines has proven itself a worthy successor to the US and British discounters that founder Constantino de Oliveira Jr. used as templates. The youthful Mr. Oliveira sought to create affordable travel by "taking a bit of Southwest, a bit of Ryanair, a bit of JetBlue, and Easyjet and tropicalizing them for the Brazilian market," he says.

Just don't expect the stewardesses to dress up like Carmen Miranda.

The result has been nothing short of the democratization of Brazil's friendly skies, helped out by a partnership with US aircraft-maker Boeing - the first of its kind for a Latin American carrier. "Around 10, 11 percent of our passengers are flying on planes for the first time in their life," says Oliveira, a former race-car driver and onetime head of one of Brazil's largest bus companies. "People think a low-cost airline is for poor people, but it isn't; it's for people who have an eye for competitive prices," he says.

The company whose name means "goal" now boasts 31 planes, travels to 41 destinations, and has 22 percent of Brazil's domestic passenger market. It turned a profit of $145 million last year.

In a nation where even the 50-minute flight from Rio de Janeiro to Sao Paulo on the major carriers costs more than the country's $120 monthly minimum wage, Gol charges just $79.

Gol was fortunate to start operating when regulatory conditions were favorable, the price of modern telecommunications equipment was falling, and a large number of experienced workers were looking for employment. But the Sao Paulo-based company also aggressively cut costs, swapping steak dinners and booze for sandwiches and soft drinks, and allowing tickets to be booked over the Internet.

But Oliveira says no decision was more important than building a partnership with Boeing. Bucking the conventional wisdom that said budget airlines fly budget planes, Oliveira signed a deal to secure brand new Boeing 737-700s and 737-800s. Developed in the mid-1990s, the new-generation Boeings are among the most modern and economical jets on the market; their reliability helps Gol keep each plane in the air an average of 14.3 hours a day, a good three hours more than its closest rival.

Gol's enthusiastic embrace of Boeing's phased maintenance program - in which engineers repair and review planes every time they touch down rather than at the end of set periods - has helped slash maintenance costs. Gol will add 26 new Boeings by 2009 and has options to buy another 37. Each with its distinctive orange fuselage will come built to the company's own specifications - the first time Boeing has agreed to purpose-build planes for a Latin American airline. The jets, for example, are adapted to take off and land at Rio's Santos Dumont Airport, which has a short runway. …