Azul Linhas Aereas, the Brazilian low-cost carrier, last week launched its new regional operator Azul Conecta. Simple Flying spoke with Marcelo Bento Ribeiro, Network Planning, Alliances, and Azul Viagens director, about the process of having a new airline during the worst crisis the industry has faced. He said it was a no brainer. Let’s investigate further.
Why launching Azul Conecta?
Last week, Azul presented its regional carrier Azul Conecta. The origins of this story trace back to January when Azul bought TwoFlex. The deal had a value of US$22.6 million. Azul received 17 Cessna Caravan and 14 valuable daily departure and arrival slots at Congonhas International Airport in Sao Paulo. But why did the airline launch this regional operator?
“We bought TwoFlex before the pandemic. It was not something we could go back on. We bought it, but we don’t regret it. The reason we had to buy it was that infrastructure is a big issue in Brazil, and it is still valid,” said Bento Ribeiro.
Brazil is a big country with 2,499 airports registered by the National Civil Aviation Agency. Most of these airports don’t have enough infrastructure to receive commercial airplanes, not even an ATR aircraft.
“It is hard to get private investors [into these airports] if they don’t see a regular commercial operation. The activities with Azul Conecta will complement Azul’s operation proving the routes work. So investors can come, build the infrastructure to hold an ATR airplane, and we can develop the market,” said Bento Ribeiro.
Azul has a fleet of 140 aircraft, including 33 ATR 42 and 72. It also has 40 Airbus A320, three Airbus A321, ten Airbus A330, two Boeing 737, five Embraer E2 jets, and 53 Embraer ERJ-190.
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What is Azul winning with Conecta?
Approximately 98% of Brazil’s air passenger movements are concentrated in 65 airports. Thirty-one of those airports are located in major cities. In 2018, 82.6% of Brazil’s flights took off from one of the 20 main airports (out of the 2,499 existing aerodromes in Brazilian territory).
It is safe to say that many communities in Brazil may be underserved. Azul aims to expand its services to up to 200 cities. The fleet of Cessna Caravan (an airplane with nine seats) works perfectly to do that.
Moreover, the coronavirus pandemic affected the demand worldwide. “In the turmoil of the current times, we have reopened markets using TwoFlex airplanes instead of Azul’s,” said Bento Ribeiro.
But there’s more than just commercial passenger air services. Azul Conecta will use three of the Cessna Caravan planes to operate cargo-only flights. These airplanes will complement the flights served by Azul Cargo, which has grown a lot in the last few months.
“Azul Cargo has a demand in smaller Brazilian cities. The TwoFlex fleet complements us perfectly,” added the airline’s executive.
How launching Azul Conecta contrasts with the LATAM codeshare agreement?
During this pandemic, Azul and LATAM Brazil signed a codeshare agreement. It began with 35 routes and as a non-overlapping route codeshare. Nevertheless, the LATAM-Azul alliance would have been entirely off both companies’ plans if coronavirus never happened.
“It’s an agreement based on necessity. In January, if you asked both airlines if they would cooperate, we would have said you’re crazy,” said Bento.
Marcelo Bento also downplayed the rumors of a LATAM-Azul merger. The current alliance is not even a complete codeshare agreement, he said. Also, the companies don’t have antitrust immunity.
“[The merger rumors] are a lot of speculation. There’s nothing concrete about it. Before, we would have to expand our codeshare to international routes. We are not anywhere near to having conversations about mergers.”
What do you think of Azul’s plans in Brazil? Let us know in the comments.