The regional & low-cost leadership award was presented to Constantino de Oliveira Jr, GOL
You can't argue with success, and Brazil's GOL is certainly one of the most successful low-cost airlines around. Less than six years old, it has been expanding its fleet and routes dramatically but has remained profitable since its second year. Company officials give credit to GOL's operating mantra, which it calls the "virtuous cycle", in which lower operating costs allow for lower-priced fares, which in turn lead to higher booking levels, producing strong earnings growth, and so on.
São Paulo-based GOL is forecasting that its capacity will increase about 45% this year, that it will fill about 74% of its seats and that it will achieve an operating margin somewhere between 26% and 28%, a level most airline executives can only dream of.
Since it began service in January 2001, GOL has increased its traffic and is now the second largest domestic carrier in Brazil, with just over a third of the home market, as of May. Although aided by Varig's retrenchment, GOL's low fares - and especially its very inexpensive night flights, called "Corujoes" (night owls) - have attracted many new flyers, who can take a two-hour flight instead of an eight-hour bus journey.
GOL now operates 530 daily flights to 44 destinations in Brazil and six in Argentina, Bolivia, Uruguay and Paraguay. Service to four international points were begun this year, as were flights between Argentina and Paraguay. GOL also recently received authority to operate 21 flights a week to Santiago, Chile.
"Our vision for the next five years is to be recognised as the company that popularised air travel, not just in Brazil but in South America," says Constantino de Oliveira Junior, GOL's chief executive.
An outgrowth of Grupo Aurea, a family-owned ground transportation company, GOL currently operates 50 Boeing 737s, mostly -700s and -800s - and will end 2006 with 62 aircraft in its fleet. It continues to operate a dozen Boeing 737-300s but will phase them out by the end of 2009, at which time it will operate 88 737s, most of them -800s with a special performance package to operate efficiently into short-length, restricted airports.
Efficiency and productivity have been key to the carrier's achievements. Modelling itself after US and European low-cost carriers, GOL has adopted key elements of their success: single aircraft type, for the most part; high aircraft utilisation (13.9 hrs block time in 2005); fast turnaround times (25 minutes); substantial use of technology, such as internet bookings (80%, including travel agencies) and ticketless travel; single-class service with assigned seating; and simplified on-board services.
Planning for aircraft and flight crews is so exacting that there is "sort of a just-in-time delivery" of both, says Richard Lark, GOL's chief financial officer. "New aircraft arrive in Brazil in the morning and are transporting passengers the same day," he adds.
GOL has also focused on maintaining a strong balance sheet, with substantial cash balances and a low debt-to-capitalisation ratio. The company's shares (26% are traded publicly) have been listed on both the Brazilian and New York stock exchanges since 2004. As one of the judges said: "The GOL journey is a remarkable one."
Source: Airline Business
