“Azul and Trip together have the scale and volume to bring some interesting competition on fares and destinations,” said Paulo Resende, professor of transportation at Brazil’s Fundação Dom Cabral. “This grows the number of big players.”
The airlines run competing operations on 15% of their routes, but Neeleman said the purpose of the merger was to expand frequencies rather than cut them. Executives dismissed the idea of layoffs among their combined workforce of 8,700.
The airlines currently fly 62 Embraer regional jets and 50 ATR turboprop planes. Neeleman said the combined company’s fleet plans through 2015 only involve those two suppliers, but “there is still time to consider” purchases from other plane makers after that.
Azul has gradually attained its third place share of Brazil’s domestic market with low fares and point-to-point routes to under-served cities with no layovers.
The carrier and its smaller peers have eroded the market share of bigger rivals by tapping demand for affordable air travel in a vast country where less than 10% of the population regularly flies and most people travel by bus.
Among Azul partners are Gávea Investimentos, the Rio de Janeiro-based asset management company controlled by JPMorgan Chase & Co, and U.S. private equity firm TPG.