John Rodgerson, CEO of Azul Brazilian Airlines, is confident he won’t see any competition anytime soon because he has full faith in his carrier. Several carriers said a similar thing regarding their respective markets & then got sporadic.
Brazil will stay a demanding place for ultra-low-cost carriers (ULCC) to effectively work due to its legal environment, high labor & fuel costs, and burdens for flight disturbance.
Azul Brazilian Airlines CEO John Rodgerson assumed the souk in Brazil “isn’t there yet” for the ultra-low-cost carrier model rising in Chile, Peru & Colombia on Wednesday at the Skift Aviation Forum in Dallas. Brazilian Airlines is a low-cost carrier with flights to 170 objectives in Brazil.
In a discussion with WestJet Aviation Advisor & board member Alex Cruz, Rodgerson said one main reason was the airlines previously unbundle their products, which is a keystone policy of ULCCs. Fuel costs are also 40 percent more costly than in the U.S. & Europe and unions have the lowest income.
Another major factor here is that the airlines bear the cost for the errors they have no right over. To make the same point, he cited the example of Rio de Janeiro’s Santos Dumont airport, which may be closed due to the effects of “fog” or bad weather.
They said when [Santos Dumont] is closed, we are responsible for all passenger supplies, internet access and a hotel night and it has nothing to do with us. Rogerson said that a huge event for a ULLC and it would be “game over for that commerce model.”
Brazil’s authoritarian environment also makes it more difficult for ULCCs to be profitable. According to Rogerson, “Brazil is known to be a very litigious society” and this is because Brazil is home to 85% of the world’s lawsuits. Azul has been ranked as the most on-time airline in Brazil four times this year, but says we receive 4,000 civil lawsuits a month
Ultra-low-cost carriers would have to spend a significant amount of funds to fight off lawsuits. He also said ULLCs would have to deal with legal troubles spread out in the nation.
