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GOL Trials Hub-and-Spoke Operations in Brazil with Regional Carrier
As the fight for slots at Congonhas Airport near Sao Paolu develops, there is one airline in this history which called the most attention: Passaredo Linhas Aéreas. The small carrier, which currently operates six ATR 72-500 and maintains a large debt, seems to be outlining a bigger operation with its partner, GOL Linhas Aéreas, the largest domestic carrier in Brazil.
These flights would, for the first time in the country, emulate a model which is widely used on feeder operations in the United States where a major carrier sells flights which are operated by a smaller airline. The model is known as hub-and-spoke and typically relies on smaller regional carriers to operate shorter flights while the main carrier focuses on medium-to-long-haul operations.
Passaredo already has an interline agreement with Gol since 2017, but that was the extent of the relationship, with Gol having no control over the airline. Now, it has been announced that GOL will sell flights from its Brasília hub to three cities – Araguaína, Barreiras and São José do Rio Preto – all of which operated by Passaredo, but only sold by GOL.
This partnership will be especially important for GOL in the Congonhas market. Once Passaredo earned slots there, it will serve as a way not just to increase the presence in the airport, which is massively used by the corporate passenger, but also as a way to block Azul’s growth there.
Also, allying with GOL may be Passaredo’s final hope as the airline has been fighting extinction. In 2012, the carrier asked for the “recuperação judicial” (judicial recovery) proceedings, a kind of a Chapter 11 Bankruptcy Protection, after accumulating an enormous debt. Though leaving the recovery in 2017, the situation worsened, with the number of flights and fleet consistently decreasing since then.
In an interview with Brazil Journal, Passaredo CEO Eduardo Busch stated that the airline is in talks with lessors to add up to four aircraft until the end of the year. To the aviation website Ponte Aérea, the airline claimed the fleet can grow even more to up to five aircraft at the end of the year.
While Azul may have thought it could get all the Congonhas slots after Avianca Brasil’s bankruptcy, such a task may be tougher than imagined. In a press release, the airline stated that overly breaking up of the slots in Congonhas may represent a subtilization of such valuable assets, in a subtle way of saying that this goes against what the airline originally planned.
Meanwhile, it seems that if GOL profits with this Passaredo partnership and decides to further expand it, Azul’s golden days of a virtual monopoly in regional operations may be in serious danger.
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