Azul takes Jetblue’s ‘no-frills chic’ approach to gain a foothold in Brazil

Air travel in Brazil is booming as a result of the rapid expansion of the middle class in the country, about 100 million strong. According to a recently released IATA study, the Brazilian domestic aviation market has grown 19 percent in terms of revenues in the first six months of 2011, the world’s fastest growth. As a comparison, the domestic market in China and India expanded with nearly 8 percent, while the U.S. recorded a 2.5 percent growth.

Azul Linhas Aéreas
Started by Jetblue founder and former CEO David Neeleman, Azul (Blue in Portuguese) in December 2008 entered the market as a Latin version of the New York-based airline. Just like Jetblue, Azul operates a ‘No-Frills Chic’ concept – where the low cost idea meets a dash of innovation – in order to differentiate itself in a market dominated by TAM and GOL.

The airline was named Azul after a crowdsourced naming contest, which created an instant buzz around the airline. In its first year of operation, Azul also offered an ‘all-you-can-jet’ promotion when launching new routes. The PassaporteAzul allowed purchasers to travel on as many Azul flights as they wanted for a one-month period for R$499 (USD306, EUR215). According to Azul, 80 percent of the purchasers on those passes had never flown on the airline before. As a result, Azul boarded more than 2 million customers in 2009, its first year of operation, the first airline in the world to achieve this. Azul was recently also named Brazil’s most innovative company by Fast Company magazine.

Ônibus Azul
Azul has, by choice, avoided the major airline hubs and connection centers in São Paulo and Rio de Janeiro, choosing to focus on cities less well served by established airlines. For example, its main hub is Campinas Airport, which is located an hour’s drive from São Paulo. To make it attractive for consumers to travel via Campinas, Azul provides free bus transportation for thousands of its passengers daily from Brazil’s business capital as well as from several other cities it serves. The airport transfer buses offer live satellite TV and free Wi-Fi onboard.

Onboard experience
Azul has a single-class cabin with seats arranged in a 2:2 configuration with a 31 inch (79 cm) pitch, the largest in the market according to the airline. Just like Jetblue, passengers can book an extra-legroom seat (34 inch/86 cm) in the first rows of the cabin, a product called Espaço Azul (Azul Space). Prices start at BRL20 (USD12, EUR9) on flights between Rio de Janeiro and Sao Paolo Campinas, and vary depending on the route.

Azul does not use trolleys onboard, saying it saves weight and makes the service provided by the crew more personal. Passengers can choose from a free selection of five types of Azul-branded snacks, four types of soda, and water. The cabin crew first writes down passengers’ choice of drinks, returning later with their order on a platter. Another crew then starts offering snacks in a larger tray, encouraging passengers to take as many as they want. No other merchandise is sold on board.

Together with Avianca Brazil, Azul is the only airline in Brazil to offer in-seat in-flight entertainment on domestic routes. The system (not AVOD by the way) offers seven channels (sports, news, music, kids, etc) and is available on most aircraft. Azul is also planning to add live TV from Jetblue subsidiary DirecTV. In a move to catch up, rival LCC GOL just announced it will start offering passengers free access to content stored on an onboard server via their wireless devices.

Payments
To tap into the large portion of the population that has never flown, Azul has created a pricing structure designed to make air travel more attractive to people with lower incomes. The great majority of Brazilians travel by long-distance bus, so Azul offers competitive prices, which are sometimes even lower than bus tickets. The airline also allows customers to purchase tickets in advance via a 10-month interest-free payment plan, an option that is also offered by TAM and Gol (6 month installments).

Aircraft liveries
In a sequel to its crowdsourcing naming contest when starting the airline, Azul in June 2011 held an ‘Your Art Up There’ (“Sua Arte Lá em Cima”) contest in which it invited its social network fans and followers to come up with a design for one of its aircraft. After receiving hundreds of entries, Azul recently unveiled the winning design, which will be featured on an Embraer 195 jet later in 2011.

Another campaign that used Azul aircraft livery to generate some buzz are Azul’s ‘pink aircraft’ that promote the work of Femama – a Brazilian charity dedicated to fighting Breast Cancer (Delta has a similar initiative in the U.S,). The interior of Azul’s pink aircraft (an Embraer and an ATR) also got a pink makeover and for several weeks the aircraft was flown by an all-female cabin and cockpit crew.

Market share
Today Azul has a fleet of 31 Embraer E190/195 jets and 8 ATRs, operating around 300 flights per day. The airline will expand its fleet and destinations over the coming months when it will receive several more Embraer E-jets and is also planning a public listing at the São Paulo stock exchange. By charging low fares and providing frequent and direct services to 40 destinations in Brazil, many who were underserved, Azul currently holds 8.5 percent of Brazil’s domestic market in terms of passengers per kilometre flown and says it wants to capture 10 percent by the end of 2011 and 25 percent within 10 years. As CEO Neeleman summarizes on how to succeed in the airline business: “Have the best product. Have the lowest cost. And kill ’em with frequency.”

Special thanks to Dan Segal (Rio de Janeiro) for contributing to this article

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