A better balance in Brazil

Paulo Kakinoff, CEO, GOL, explains that the airline has emerged from the crisis as a healthier airline, with the demand for air transport in Brazil recovering rapidly.

INTERVIEW BY: GRAHAM NEWTON

Despite business travel still lagging behind leisure travel, the Brazilian low-cost airline is recovering after the global pandemic, with the aim of wanting to be the best airline to travel with, work for, and invest in.

There are many challenges until we return to the pre-pandemic pattern. We are cautious, but I believe there are reasons to be optimistic.

Demand for air transport in Brazil is recovering rapidly due to the consistent drop in Covid-19 cases and fatalities and the rapid advance of vaccination in the country. We have more than 110 million Brazilians fully vaccinated (55% of the population).

Our 3Q21 results highlight that we have maintained great discipline throughout 2021. The balance sheet is more sustainable and less leveraged than our competitors, having completed several relevant funding initiatives to ensure that the airline maintains suffi cient liquidity levels to focus on recovery.

Our focus on our people and our customers gained even more strength. At the beginning of the crisis, we told everyone that we were going to start crossing a desert, without knowing how large it was or what the temperature would be.

But it was necessary for everyone to have a single point of view, as we knew that this challenge—the biggest one we have ever faced—would also be overcome.

During this period, the priority was to preserve the team and ensure our confi dence in the end of the pandemic was never shaken. Now, with vaccination advancing and the teams being able to gradually resume their activities, we believe that we are leaving the desert behind.

Additionally, we were one of the few fi rms in the region that were able to preserve liquidity. We adjusted capacity according to the level of demand as well and when that is combined with our determination to deal with all stakeholders in an equitable manner, we have overcome the pandemic with a better balance.

The air transport of people and cargo has revolutionized societies. And in a time of unprecedented challenges, when resources needed to reach those who needed them quickly, such as vaccines, medical teams or equipment, our sector was essential to our country and the world.

Right at the beginning of the pandemic, GOL off ered free transportation to doctors working to fi ght the pandemic, an initiative that was also adopted by other national airlines and that continues to this day. In addition, an essential air network was preserved by GOL, even in the worst moments of the pandemic, reaffi rming our commitment to Brazil and Brazilians.

Since the beginning of the National Immunization Plan, all our commercial fl ights have been available to government authorities to transport COVID-19 vaccines free of charge.

The Brazilian government supported us in several initiatives, such as the extension of the period for reimbursement of tickets to customers and deferrals of payments to companies managed by the government.

However, unlike other countries, no direct fi nancial contributions were made available to help airlines. In other words, obtaining resources to face the crisis came from the company’s own capacity with the capital market and its investors/creditors.

It’s true that leisure travel is making a comeback faster than business travel. There is a pent-up desire for travel, and we have already noticed a growing demand for tourist destinations, especially domestic ones, driven by the rise in foreign currencies and travel restrictions.

Markets such as Recife, Salvador, and Florianópolis were the fi rst to register bigger growth, but on the other hand, it is already

possible to observe the resumption of demand for destinations such as Brasília and Porto Alegre, with a more corporate travel profi le.

The forced acceleration of the digital transformation, which has defi nitely consolidated virtual meetings, is felt in the slower return to corporate travel. But the need for team meetings, events, and visits to customers has enormous growth potential, both because of the pent-up demand and the economic recovery. It is still too early to say what this new scenario will look like in terms of volume and behavior, but there is a consensus that face-to-face meetings will continue to be necessary in the business world.

Few sectors were as aff ected as aviation. Before, we transported 110,000 people per day and now, with a recovery in progress, we have an average of 70,000 customers per day. Cargo has been even more relevant to GOL’s operations. The growing attractiveness of this mode of transport, especially due to the accelerated development of e-commerce in all regions, creates an opportunity for diff erentiation.

We are able to transport packages and deliver them on the same day to the destination city, ensuring speed, effi ciency, and security in logistics even in a country with continental dimensions such as Brazil.

The company has also invested in strategic partnerships to ensure even better connectivity for the so-called “last mile”, by connecting the end customer more quickly with land distribution logistics.

We have a product diff erentiated by the airline’s extensive air network and by providing faster delivery through this land partner, we will have a great growth driver.

GOL is the result of tariff freedom and has always defended healthy competition. The balance

between supply and demand is a fundamental aspect of a sustainable aviation industry.

So, we must tackle the structural question of costs, heavily aff ected by the dollar and the price of fuel. The objective must be to improve access to air transport, and work towards an agenda that positively aff ects the consumer.

We consider the 737 MAX fundamental to GOL’s expansion plans, as it reduces fuel consumption around 15%, with a range of about 1,000km more when with to current 737NG aircraft.

We started 2021 with all 10 aircraft available for operation, and we should end the year with around 25 MAX active. In 2022, we will be receiving around 16 new 737 MAX aircraft and so have 41 MAX aircraft in our fl eet of 136 aircraft. This acceleration in fl eet renewal is imperative to the company’s cost-cutting and its initiatives to increase competitiveness as demand recovers.

The entire sector is very focused on ESG (Environmental, Social, Governance) and GOL aims to establish an operation that is 100% committed to the environment.

In April 2021, the company announced its commitment to net-zero carbon by 2050. Then, in June, GOL was the fi rst company in Latin America to launch a voluntary off set scheme, an initiative developed in partnership with MOSS, one of the largest environmental credit platforms world, acting in forest conservation projects in the Amazon. This is what we call “shared responsibility.” Though GOL seeks defi nitive solutions for the impact that commercial aviation has on the environment, carbon off setting manages to mitigate the harmful eff ects of operations in the meantime.

In September 2020, we established the Recife-Fernando de Noronha-Recife route as the fi rst 100% carbon neutral route in the country. In this case, the carbon off set generated by the trip is entirely donated to customers and crew by GOL and MOSS, with right to a certifi cate. A gift for the island that is Brazil’s ecological sanctuary.

To be an ESG company and a reference point in sustainable aviation in the regional market, GOL has been working for over a decade on numerous issues related to sustainability. Our investments in sustainable aviation fuels in Brazil are already a reality and will account for a large part of the success when achieve net zero. Above all, it is about an organizational culture that expresses a sustainable way of being and doing.

GOL uses digital technology in an unprecedented way and has a business model that revolutionized the country’s aviation market, democratizing access to air transport.

We were pioneers in launching check-in via smartphone (including through biometrics), the mobile geolocation service for customers, and a website with accessibility features to serve people with visual and motor disabilities. In addition, we recently implemented a communication app onboard and check-in by WhatsApp. We were also the fi rst airline to off er wi-fi onboard for all our routes.

We continue to invest in more modern systems and solutions that help us to improve and customize the passenger experience, from the search and choice of tickets to the aftersales and loyalty program, passing through the most critical points such as service, sales and check-in.

We have one of the lowest costs per seat in the world, so we continue to off er competitive prices, but with quality and effi cient products. Our market positioning has evolved, and customer perception has followed the changes, recognizing a new GOL. Our purpose is clear: To be First for All. That is, the best airline to travel with, work for, and invest in.

David Bunting, Managing Director, EMEA, JBT Ground Support Equipment

Ground handlers have been hit hard, for example. Staff have been furloughed or lost their jobs and expensive ground equipment has lain dormant. David Bunting, Managing Director, EMEA for JBT Ground Support Equipment, says many handlers turned to the cargo sector for some degree of relief.

“The cargo sector has been resilient and even grown during the pandemic,” he notes. “This growth can be put down to a number of factors, including the requirement of personal protective equipment for frontline staff dealing with the pandemic and the increase in on-line retailing.”

But switching to handling cargo fl ights was easier said than done. Because the industry lost the bellyhold capacity of passenger fl ights, space was at a premium. The airline solution was to quickly press unused passenger aircraft into cargo service. This created a host of challenges for ground handling companies that were short on personnel and the right equipment.

Simply, cargo ground fl eet isn’t designed to dock at a passenger door and cargo shipments aren’t expected to be walked up and down passenger steps.

JBT’s Cargo Chute was designed to meet this challenge. The Cargo Chute is a temporary modifi cation to passenger steps, eff ectively turning them into a conveyor belt. Operators are able to safely unload packages in a controlled manner eliminating the requirement to walk down steps while carrying cargo and packages. This alleviates the strain on operators, reduces manpower requirements, and speeds operations.

As this work continues, ground operators must also turn their attention to the industry restart. It will not be easy. The sector has low margins and high staff turnover even in normal times. Gearing up to handle the resumption of passenger traffi c from a standing start will test every company in the sector.

Bunting believes that JBT is better placed than many as the company manufactures a broad range of ground support equipment, which is easy to operate, reliable, and supported by a truly global customer service network.

Ensuring their equipment is ready for action could require a full safety inspection, however, although this depends on how the machinery was stored and maintained while idle.

“Careful attention will need to be paid to components which may have deteriorated while out of use, such as hardened seals and fl at spots on wheels,” says Bunting. “We’ve even seen birds and vermin nesting in equipment but, hopefully, if it has been regularly checked and run to normal operating temperature and, for electric equipment, batteries kept optimized this won’t be an issue.”

To assist its customers, JBT has run a number of online maintenance training courses as well as customer specifi c virtual troubleshooting. This has helped keep its vast range of equipment prepared for all eventualities.

Equally important is the use of data to understand exactly what is required and how a piece of equipment is performing. Modern fl eet is constantly monitored, and the use of metrics can fi ne tune operational effi ciency. JBT’s iOPS telematics suite provides a multitude of data to support the effi cient operation of a ground handler’s fl eet, such as live access to a machine’s current status, fl eet utilisation, and predictive maintenance warnings.

As the industry begins its long recovery to pre-COVID traffi c levels, many innovations will come to the fore. For ground operators, this could make all the diff erence and allow a return to profi tability. JBT is determined to lead advances in the sector and provide the fl exibility and reliability that ground operators crave in their equipment.