Azul Linhas Aereas expects to end the year with a 90% recovery in its domestic market. The Brazilian low-cost carrier currently has the best bounce back in South America from the COVID-19 crisis.
How good has Azul’s recovery been?
Although, by the number of passengers, Azul is the third most important carrier in Brazil, it might be the most important in the domestic market. It has a point-to-point business model, rather than an actual hub like its competitors LATAM and GOL.
Azul stated yesterday that more than 90% of its competitor’s domestic available seat kilometers (ASK) come from routes departing from Sao Paulo, Rio de Janeiro, and Brasilia. Meanwhile, only 30% of Azul’s domestic ASKs come from these three cities.
This diversification has offered Azul a greater recovery opportunity from the current crisis. The airline stated,
“As a result of one of the fastest demand recoveries in the world, in December 2020, the Company expects to operate more than 90% of its domestic capacity compared to the same period last year. For the first quarter of 2021, Azul expects to operate more than 100% of its domestic capacity and more than 85% of its total capacity compared to 1Q19.”
If the airline does achieve this recovery, it will put it in line with other low-cost carriers worldwide. For instance, in Mexico, Volaris and Viva Aerobus have also recovered more than 95% of their capacity.
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But, what about total passengers?
It’s one thing to recover capacity in terms of flights and cities served. But it’s another to do this with passenger numbers, let alone yields. Azul still has a long way to go to recover those to pre-COVID levels.
According to the Brazilian Civil Aviation authority’s stats, between January and October 2020, Azul had transported 10.92 million passengers. In comparison, it transported 22.27 million during the first ten months of 2019. But that’s not a fair comparison because it considers the worst months of the crisis, between April and September.
By October 2020, Azul had already recovered to some extent. In October 2019, Azul transported 2.49 million passengers, while in October 2020, that number was 1.36 million passengers. That’s a 45% decrease on a year-to-year basis.
Meanwhile, yields (the average amount paid per passenger to fly one kilometer) were also down. At the end of 2020’s third quarter, Azul’s yields were 30.3% down, compared to 2019.
What can we expect for 2021?
Despite the mixed results that we presented, we expect Azul to bounce back in 2021. The airline has an effective business model in Brazil. In less than two decades, it has positioned itself across the country.
In 2019 it had 116 destinations; Azul will finish the year serving 113. Of these, 76% are only operated by Azul, and it has the largest number of frequencies in 16% of its destinations.
Moreover, its average corporate ticket price hasn’t fallen as much as other Brazilian airlines. According to Azul, compared to 2019’s third quarter, the corporate ticket price is 8% lower.
Finally, the diversified fleet of Azul gives the company an edge inside the Brazilian market. Azul has aircraft from four different OEMs. It operates 17 Cessna turboprops with nine seats on its recently launched Azul Conecta. Azul also has 33 ATR aircraft with an average of 70 seats, 53 Embraer E-jets with a capacity between 106 and 136 seats, and 43 Airbus airplanes with a capacity for 174 to 214 passengers.
Are you planning to travel with Azul in 2021? Let us know in the comments.
