GOL Linhas Aereas Inteligentes S.A., the largest low-cost and low-fare airline in Latin America, recorded its highest demand in the domestic market for the second consecutive month in the year-on-year comparison since it began operations in 2001.
In May 2010, demand on GOL’s total and domestic route network increased by 14.5% and 14.9%, respectively over the same month last year, thanks to the continuous improvement in the Brazilian economic scenario, fueled by the year-to-date upturn in the Consumer Confidence Index (ICC) and the highest ever Current Situation Index (ISA), both of which are measured by the Getulio Vargas Foundation (FGV). In addition, the combination of: (i) dynamic fare management, with positive results from the introduction of the new fare categories, (ii) the continuous development of the SMILES program, (iii) exemplary quality indices (punctuality, regularity and client service), and (iv) greater flight frequency between Brazil’s major airports, particularly during business hours, benefited business travel, which is historically the strongest segment in May, given the low tourist season.
In comparison with the previous month, domestic and international demand fell by 7.5% and 9.0%, respectively, due to seasonality and the absence of holidays in May, versus two holidays in April (Good Friday and Tiradentes).
Demand on GOL’s international route network grew by 11.5% year-on-year, mainly reflecting the economic recovery in South America, which benefited flights to Argentina and Chile, and high demand on routes to the Caribbean, which already has five destinations (Aruba, Barbados, Curacao, Panama and Punta Cana).
GOL maintained its disciplined strategy of maintaining capacity growth at a lower level than demand growth on its route network. This was particularly apparent in the international market, where supply, measured by ASK (available seat kilometers), actually fell by 5.0% year-on-year, while demand moved up by 11.5%. Domestic supply climbed by 16.4% due to high productivity, with an aircraft utilization rate of more than 12.5 block hours per day, versus 11.8 block hours recorded in May 2010 and the maintenance of a greater average stage length. These combined effects reduced the BELF (break-even load factor) and, consequently, maximized the operating margin, in the peak of the low season, through the dilution of unit costs and the maintenance of higher yield levels. In addition, it prepares GOL’s route network for the transition to the high season beginning as of the holidays in June and the school vacations in July.