JetBlue Founder Sees Big Potential for his New Brazilian Airline

When David Neeleman stepped down as CEO of JetBlue Airways Corp. a year ago, he swore he’d never start another airline. “Shows you how compelling this Brazil idea really is,” the JetBlue founder said of his latest venture, an airline that will appeal to Brazilians on service and price.

The 48-year old father of nine who has been involved in starting up three carriers north of the equator says he won’t be launching another one on this side of the globe any time soon.

“If someone came to me and said, here’s $400 million to start an airline in the U.S., I’d say, ‘No way,’“ Neeleman said over lunch in New York last week.

Oil at more than $120 a barrel, a slowing economy and fierce domestic competition are squeezing airlines. Most U.S. carriers reported sharp losses in the first quarter. The pair –Delta Air Lines Inc. and Northwest Airlines Corp.- is combining to try to cut costs, and several others are said to be seriously exploring joining forces.

Analysts and industry insiders such as Neeleman say the solution to those problems, barring a sharp reduction in oil prices, is to cut capacity –the number of planes and seats chasing passengers. To an extent, that’s why airlines need to consolidate, analysts say; they need to eliminate redundant routes and hubs.

But even Delta and Northwest are reluctant to identify potential cuts, saying they’ll retain their hubs and routes, for now.

But Brazil is different, he says. Two carriers, TAM and GOL control more than 90 percent of the market, and prices are about 50 percent higher than they are here, he said. There is no passenger rail service to speak of; people who can’t afford to fly travel long distances by bus.

Neeleman plans to start service next year with three planes, then add a plane a month until he has 76 in service. He has raised $150 million –about a third of that from Brazilians, the rest from the U.S.- and has invested $10 million of his own money.

Neeleman was born in Brazil while his father was in the country as a Mormon missionary. He holds joint Brazilian and U.S. citizenship, which gets him around a Brazilian law blocking foreign citizens from owning more than 20 percent of an airline.

Azul will fly domestically at first, but may add international routes later. The airline will be privately held, with the intention of someday going public. Neeleman will hold voting control.