New Airline Makes Brazil´s Skies Shine Brighter

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.

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 São 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 São 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.

"We worked very closely with Gol to come up with a solution for them," says John Wojick, Boeing´s vice president for Latin American and Caribbean sales. "Gol is a very, very important partner for us."

The decision by Brazilian passengers to fly Gol has taken a bite out of the competition. Both Transbrasil and VASP have folded since Gol took to the skies, and although Varig and TAM still control two-thirds of the Brazilian market, how long they maintain that dominance is an open question. Gol is aggressively adding routes inside Brazil, and after putting Argentina on its schedule last December, it soon hopes to add Bolivia, Chile, and Uruguay.

"In 2000, our goal was to become a recognized world leader in low-cost, low-fare airlines by 2005," Oliveira says with a confident smile. "Now that we have achieved that goal we are setting ourselves the challenge of becoming known as the airline that popularizes air transport in South America by 2010."