President of Azul affirms that in Brazil there are opportunities but it is expensive to operate

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President of Azul affirms that in Brazil there are opportunities but it is expensive to operate
John Rodgerson, Azul Linhas Aéreas
Source: Diário do Turismo
May 18, 2022

"We went through the most acute phase of the pandemic thanks to vaccination and when we imagined that we would have a moment of calm, the war came, the rise in the dollar and fuel" said John Rodgerson

During this period, the company founded by Brazilian-American David Neeleman, surpassed the main national airlines and is now the largest airline in Brazil in number of flights and cities served, with approximately 900 daily flights to more than 140 destinations. With 160 planes and more than 12,000 employees, the company is run by John Rodgerson, who gave  Diário do Turismo  this exclusive interview. 

By Paulo Atzingen

In 2023, Azul Linhas Aéreas Brasileiras celebrates its 15th anniversary. From the start, in 2008, to the present, what are the main brands for this solidification in Brazil? 
Azul has solidified and grown a lot in these 15 years. We consolidated our brand and created business units such as Azul Conecta, Azul Cargo, Azul Viagens and TudoAzul, which continue to grow and expand.
We are the Brazilian airline with the largest number of departures and cities served, with more than 900 daily flights. We serve more than 150 Brazilian cities and transport more than 22 million Clients in 2021.
Another important milestone in our history is the construction of the Campinas hangar, which completed two years of operation last month. We carry close to us all the control of maintenance, logistics and implementation of new technologies in the aircraft here in Brazil and no longer abroad, generating significant savings.

What led Azul to choose to invest in regional routes? 
Betting and investing in the regional aviation market is part of Azul's business model. We are already in 150 destinations, while before the pandemic we were in 116 cities. Our expectation is to reach 200 destinations in Brazil in the coming years, because we know that our country depends much more on the air modal to be connected, which directly contributes to the economic and social development of all the regions that have a regular airline. In addition, Brazilians have a strong desire to travel and it is worth noting that there is much less travel here than in Chile and Colombia, for example. There ARE opportunities and regional aviation is a key part of this growth.

Does the air transport market in the State of São Paulo still have room to grow? 
There is always room for aviation to grow. We built, in Campinas, the largest airport in number of daily flights in this country. Before Azul, Viracopos had very few commercial flights and was an airport focused only on cargo. But we have more opportunities to expand the routes we already have within the state and eventually open new cities with Azul and its sub-regional arm, Azul Conecta. But it is useless to have only the desire of the airline. Investments and incentives from the public and private sectors are needed to make the new routes and destinations viable for all.

Which are the most promising Brazilian regions and states for Azul Linhas Aéreas expansion plans? 
Azul, as a competitive company, is always attentive to new opportunities that are added to its business plan. We are looking for new locations in all regions, but our planning for this year is for the North and South regions.

Does the quality and size of regional airports inhibit the company's expansion potential? 
Infrastructure remains a major deficiency at many airfields in the country. There are many cities with the potential to receive a regular flight, but we find ourselves with a lack of basic technical elements for a safe operation, which is a non-negotiable value in Azul. We also have many cases of airports that we operate with restrictions. There are cities that we would like to offer more flights or at better times, but due to the lack of instruments that help air navigation, we limit our operation. This undoubtedly remains an obstacle, especially in regional aviation.

How important is the IPO in Azul's trajectory? 
Azul debuted on the Stock Exchange in April 2017 and was an important way to capitalize the company to continue investing in Brazil and accelerate our growth.

What are the prospects for Azul's international routes? 
Right now, we are focused on our local network. We do believe in the resumption of the international market, but in a slower and more gradual way.

How do you analyze the competitive scenario among Brazilian airlines? 
We are happy with the business plan that Azul has been building for itself and for Brazil. What I can say is that we are a strong company that connects small towns with the rest of the world.
Despite being a country conducive to opportunities, we are still an expensive country for air operations. These are challenges that already existed when we arrived, 14 years ago. Many companies close their doors with little time in operation or go into judicial recovery. It is an extremely taxed and regulated sector that requires discipline in the conduct of business.

What is your opinion about ABEAR, from which Azul Linhas Aéreas emerged? 
We are excited about our future. We will continue with our plans to develop more and more cities, markets and fleets, stimulating access to air transport so that even more Brazilians can fly in Brazil and around the world. We are already a group with more than 11,000 crew members and we have a lot of growth ahead of us. Therefore, we understand that our dialogue with civil society, authorities, competent bodies and other interest groups must be carried out directly by the company. However, we continue to have a close and friendly dialogue with ABEAR on various issues of common interest to the industry.

How do you summarize the institutional relationship between Azul and the federal government? Do you have criticism or complaints? 
Our relationship not only with the federal government but with the governments of each state is very friendly. As a Brazilian company that is committed to the country and wants to be closer to Brazilians, we maintain a close relationship with everyone to work together for the growth of the economy, the airline industry and the greater number of people who travel by plane.

How much does Azul Cargo's billing represent in the company's billing? What are the trends in this segment? 
Fourth quarter 2021 revenue, released in February 2022 and available on our RI website, demonstrated that the logistics business maintained its excellent performance with a record year, exceeding the ambitious goal of doubling revenue in 2021, compared to with 2019. The billing for the year reached R$ 1.1 billion, 128.0% higher than the 2019 billing of R$ 480.7 million.
And this growth of Azul Cargo has been the result of the company's business, which offers an incomparable logistics solution for our Clients. Cargo already serves more than 4,500 cities and communities across the country, and in more than a thousand cities we deliver orders in two days. This is a milestone in the country's history and our goal is to continue advancing with quality and efficiency.

In addition to Viracopos, in Campinas, which are the most important airports in the country to anchor Azul's regionalization strategy?
The company's main hub is the Viracopos airport, in Campinas, but we also have important bases, such as Belo Horizonte, Recife, Belém, Manaus, Porto Alegre, Rio, Curitiba and Cuiabá. In these markets, we have a very robust day-to-day operation, offering fast connectivity with any other city in Brazil or with any of our international bases.

David Neeleman, Brazilian by birth, founder of JetBlue and Azul Linhas Aéreas, is he the 'almighty' type or is he good at delegating and sharing? 
I have known David for many years and despite not being the CEO, he does have a seat on the board. Our relationship has always been one of camaraderie and in favor of democratic and quality aviation, in addition to the thousands of jobs that are under our responsibility.

Add, John, any relevant content not reached by the questions
We went through the most acute phase of the pandemic thanks to vaccination and when we imagined that we would have a moment of calm, the war came, the rise in the dollar and fuel. Even with all these challenges, we are still excited and confident for the second semester and for the years to come. We are optimistic about our growth and recovery plans and we are sure that both Azul and Brazil will continue to grow more and more.


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