JetBlue Founder Starts Low-Cost Brazilian Airline
RENEE MONTAGNE, Host:
Investors are increasingly looking at Brazil, which is a fast-rising economic power that's forecast to become the fifth largest economy by 2016. A key reason is Brazil's dramatically expanding middle class. And that's what's prompted a big name in the American airline industry to head to Brazil. David Neeleman, he's best known for founding JetBlue, but when he was forced out in 2007, instead of fading away, he just headed to the new land of opportunities. NPR's Juan Forero has this report.
(SOUNDBITE OF BEEPING AND AIRPORT ANNOUNCEMENT)
Unidentified Woman (Announcer): (Foreign language spoken)
JUAN FORERO: The announcements at the Campinas airport outside Sao Paulo come one after the other. Another Azul flight is ready to take off.
Unidentified Man (Announcer): (Foreign language spoken)
FORERO: Azul means blue in Portuguese - and it's quickly being noticed in Brazil's airline industry. David Neeleman's idea was simple - tap into Brazil's mushrooming middle class by offering flights to underserved cities, cheap flights, in some routes as cheap as the bus.
DAVID NEELEMAN: You know, when someone flies, someone who's taken the 72-hour bus ride before, and all of a sudden they fly for the first time, they're never going back to the bus.
FORERO: To Neeleman, the numbers held promise. Brazil has nearly 200 million people, but there were only 50 million airplane boardings in 2008. The U.S. has 300 million people but Americans flew seven times as often.
When Azul began operating nearly two years ago, two Brazilian airlines had more than 90 percent of the market. Now, Azul is making gains. Two million people flew Azul in 2009. Four million are expected this year. It's been done, Neeleman says, by making it easy for people like Maria Jose Silva.
At a busy Sao Paulo bus terminal, Silva, who is 50, boards an Azul bus to the airport. It's free, a godsend for the wife of a bodyguard.
(SOUNDBITE OF MUSIC)
FORERO: Packed, the passengers sit back on the bus and listen to Brazilian music en route to the airport.
MARIA JOSE SILVA: (Portuguese language spoken)
FORERO: Silva says it's her first time on a plane. The route she's flying, to Recife in the far northeast, used to take her three days on a bus. As she reaches the Azul counter, she marvels that she'll instead get to Recife, to see relatives, in three hours.
JOSE SILVA: (Foreign language spoken)
FORERO: Silva adds that her ticket - about $180 round trip - was a few dollars cheaper than what the bus would have cost. To attract flyers, Azul introduced segmented pricing - buy early and you buy cheap. That had not been widely used in Brazil. And Azul offers a range of credit options, Neeleman said, even for people without credit cards.
NEELEMAN: We're providing not only fares and convenience and speed of not going on a bus, but also credit things that aren't offered. And so, what that's done is our competitors have followed suit in some of these areas and have lowered their fares and segmented their fares, and that's why you're seeing this huge explosion in air travel.
FORERO: At the root of Azul's business plan is Brazil's booming middle class. As Brazil's economy grew into the world's eighth-largest, more than 30 million people have been lifted up from poverty in recent years. They earn between $600 and $2600 a month - and belong to what Brazil calls Class C.
NEELEMAN: So it's really gratifying to see now, that you have, like, 100 million people now just in the - what we call here the C Class, which is the middle class, which would be lower middle class in the United States, and that they're starting to participate. It's that group that's really giving the growth to the economy. It's not the A and B class, the 30 million that have always existed.
FORERO: Neeleman should know a thing or two about Brazilians and their hopes and dreams. He was born here when his father, a reporter, was based in Sao Paulo. And though he left young, he returned at age 19, a Mormon missionary assigned to the poverty-stricken northeast.
NEELEMAN: I couldn't believe that - how there was this huge disparity between the two sides. What I saw here in Brazil is that it was really 20 million, 30 million people who were the economy and everybody else was kind of on the outside looking in.
FORERO: That's dramatically changed - and Neeleman says that's one of the reasons why he came back to Brazil. Investors seem to agree. Neeleman raised a whopping $235 million from investors for his venture - and he says the airline should be, quote, "solidly profitable by the end of this year."
Unidentified Woman #2: (Foreign language spoken)
FORERO: On a slick Embraer, a Brazilian-made aircraft, the passengers can come from every walk of life. There are businessmen and politicians, maids and factory workers. And there are people like Maria Jose Silva - the woman who was on her first flight.
JOSE SILVA: (Portuguese language spoken)
FORERO: She says the night before, she couldn't sleep - she was so excited about her flight. And she says she's never going to get on a bus again.
Juan Forero, NPR News.
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