Gol is second largest carrier in Brazilian airline industry

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Dec. 2 2014, Updated 12:01 p.m. ET

Major players in Brazil airline industry

The Brazilian airline industry had four major players in the 1990s: Varig Airlines, VASP, TransBrasil, and TAM. Varig, VASP, and TransBrasil could not recover from competitive pressure in the market after GOL, the new low-cost-carrier, entered. Only two airlines—TAM and GOL—were left in business. GOL acquired part of Varig in 2005, and three more carriers—Webjet, Azul, and Avianca—were formed.

Webjet, formed in 2005, was acquired by Gol in 2011 mainly to gain slots at Brazilian airports. In 2008, the founder of JetBlue formed Azul, which later merged with regional carrier TRIP Airlines in 2012. Avianca was founded in 1919 in Colombia and licensed its brand in Brazil in 2010. TAM was acquired by LAN Airlines in 2012 to form LATAM Airlines Group (LFL).

Part2_Market share of major Brazilian airlines

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Current market share

Currently, the four carriers that make up the Brazilian airline industry include LATAM (LFL), Gol (GOL), Azul, and Avianca (AVH). LATAM and Gol captured the majority of the Brazilian domestic market share by traffic, and both carriers together account for ~75% of the market share.

The US airline industry was also restructured after a series of mergers and consolidations over the past few years. The top six airlines, including Delta (DAL), United (UAL), American (AAL), Southwest (LUV), and JetBlue (JBLU), account for ~79% of the total market share.

However, in recent years, the major carriers lost part of their market share to small carriers, including Azul and Avianca. While Gol’s market share decreased from ~42% in 2009 to ~35% in 2013, LATAM’s market share decreased from ~45% to ~40%. On the other hand, Azul’s share increased from ~4% to 17%, and Avianca’s share increased from ~3% to ~7% during the same period.

ETFs such as the Brazil Small-Cap ETF (BRF) and the Brazil Consumer ETF (BRAQ) hold 1.57% and 1.2% of their holdings, respectively, in GOL.

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