Panel SA: Air ticket reduction involves revision of Petrobras’ price policy, says president of Azul

Right arm of Azul founder David Neeleman for more than two decades, John Rodgerson is a very Brazilian gringo —an expression he likes to use to define foreigners. He’s been in the country for almost 15 years, speaks Portuguese full of slang, is playful, and has learned, like no one else, what it’s like to give it a go.

Friends claim that his life is mixed with that of the company. In an interview, he almost only used first-person verbs to refer to his own company.

In 2023, Azul will start to operate more strongly in Congonhas. The executive argues that the sector discusses with the new government the formation of fuel prices by Petrobras, one of the items that weigh on tickets.

Why are airline tickets so expensive? Fuel doubled because of the war [da Ucrânia]🇧🇷 If it doubles, the tax also doubles. There is the exchange rate, which has devalued in the last two years. This impacts the final price. But I can only charge a high price if someone is willing to pay. And demand is strong like we’ve never seen it before.

But that’s not the only reason why tickets are so expensive, It’s? It depends on the fuel and the problem is in the international parity. Why do I pay 40% more than the gringo pays in Miami [EUA]🇧🇷

why is it more expensive Brazil? There are taxes. In the US, no. When a foreigner refuels his aircraft to return to Miami, he does not pay taxes. I [Azul] I fill up to travel to Recife and pay tax. International flight free. It’s cheaper to go to Miami.

Is this just a tax issue? Do not. It’s the way we are [aéreas] charged. Petrobras says that, if it did not exist, we would have to import [combustível], and then we would pay taxes and charges —which would be 40% above international parity. Why do they charge me more for a product that is already here, which is not being transported? And then there is still the ICMS. The problem here is how the price is formed.

Do you consider that there is openness in the new government to discuss this? The Bolsonaro government began to study. I think the new government will want to encourage more travelers to the country. Class A will always travel, but classes B and C will not. It is a shame that Chileans, Colombians and Mexicans travel more than Brazilians because fuel is cheaper in these places. Besides, when you fly São Paulo-Rio and, by divine will, the airport closes, I have to pay for the hotel, food, transportation and I still run the risk of being sued in court. How is it possible to sell an airline ticket for R$ 40 if I have to pay R$ 2,500 for each passenger [que não voar por razões climáticas]🇧🇷 That’s why no low-cost company [baixo custo] come hither.

If you solve this, then, does the ticket price go down?Yes. And that will generate jobs and improve the economy. Every Azul flight helps the guy who sells cheese in the Northeast. And the Uber driver, who transports more tourists.

Why did the sector not have a reduction in ICMS on fuel?You need to ask the government. We plead. In fact, unlike other countries, Brazilian companies did not receive a subsidy during the pandemic. The US granted US$ 100 billion for airlines not to go bankrupt. Europe also helped. Here, only airports received.

Now Azul will compete with Gol and Latam in large capitals from Congonhas. What will change?Every time a Gol and Latam flight takes off, there is a 92% chance that it will land in Rio, São Paulo or Brasília. I’m flying the [cliente do] agribusiness, the interior of Amazonas, Pernambuco, Bahia. There are cities that are only served by Azul. Gol and Latam serve around 52 cities each. But they are the same — together they serve 58. I reach 160.

Next year, we will have Congonhas. We will fly from there to Brasília, Curitiba, Confins, Recife, and the airlift (Rio-SP). In the last 14 years, we have built a super-profitable company, without subsidies, let’s say, from Congonhas. It’s easy to earn money at an airport where you arrive in the center of SP, the country’s largest GDP. This is the last piece of our puzzle. The photo will be more beautiful later.

What leads you to believe that they will continue to be different without reproducing Gol and Latam’s business?Our network is different and we operate with smaller aircraft. When we enter Congonhas, I’m going to fly to Porto Alegre, for example, and, from there, connect with ten more cities.

Why would someone change Gol and Latam for Azul just because of connectivity?You can buy Gol to Curitiba, but your suitcase may not arrive, you will check-in twice, go through the X-ray again. When you buy the complete thing, no. For Caruaru (PE), you will fly from Congonhas to Recife, change aircraft, and continue to your destination. Experience and prices will be better.

Azul has already planned to merge with JetBlue and TAP. Wouldn’t it make sense to resume this plan today to offset the weight of the exchange rate in the operation?It’s always good to have partners, but a corporate thing is complex and it’s not in the plans.

How are the profit margins due to the pandemic?We are improving now, but still burning cash.

X-ray

John Rodgerson

Career: He was one of the main executives of the American JetBlue and joined Azul in 2008. But he worked much earlier, when it was still an idea of ​​David Neeleman, its founder, in search of investors to make it viable. In 2017, he was elevated to the presidency of the company and, this year, he became CEO. Today he takes care of the strategy.