Delta Air Lines and GOL Linhas Aéreas Inteligentes have agreed to create a long-term exclusive commercial alliance.
Under the agreement, Delta Air Lines and GOL, which has a 40 per cent market share in Brazil and which until now has also had a cooperation agreement with American Airlines, will expand cooperation to leverage each other’s strengths and further link Delta’s network with one of Brazil’s largest airlines.
As part of the agreement, Delta will invest $100 million in GOL Linhas Aéreas Inteligentes and will have a seat on the GOL board of directors. The $100 million will buy Delta a 3 per cent stake in GOL, according to Brazil’s national civil aviation agency.
“GOL has been a strong partner for Delta in Brazil and Latin America. This agreement reinforces our relationship and moves Delta one step closer to achieving our goal of becoming the best U.S. carrier in the region,” said Richard Anderson, Delta Air Lines’ chief executive officer.
“By forming a long-term commercial partnership, we will capitalize on the strengths of our two networks to provide expanded customer benefits and better serve the U.S.- Brazil marketplace,” added Anderson.
“The agreement is in line with GOL’s strategy of seeking out long-term partnerships and strengthening its capital structure with a focus on generating value to its shareholders,” said Constantino de Oliveira Junior, GOL’s chief executive officer.
“Delta’s vast experience in the U.S., the industry’s most developed market, combined with Brazilian commercial aviation’s growth potential, provides an opportunity to improve our business model and return on capital employed over the next years,” said de Oliveira. “Our customers will benefit from additional flight options, more flexibility and new products and services.”
Brazil’s economy has undergone a remarkable period of growth in recent years with GDP now at $3.7 trillion. Brazil is now the seventh-largest economy in the world and is predicted to soon become the fifth-largest. Demand for flights between the United States and Brazil are expected to grow by 11 per cent over the next four years.
Delta notes Brazil is destined to become the fourth largest aviation market in the world by 2014, with more than 90 million passengers. The two carriers say their new agreement offers comprehensive travel options not only within Brazil but to the U.S. and beyond, with Delta gaining access to GOLs extensive domestic destinations and GOL having access to Delta’s unparalleled global network.
Along with the ability to accrue and redeem flight awards, the deepened alliance between Delta and GOL will also give customers:
● Enhanced loyalty alignment, offering differentiated service and recognition to the premium customers of each airline;
● Expanded codesharing to include GOL’s code on Delta flights between the U.S. and Brazil, as well as flights within the carriers’ domestic networks and to other key international destinations;
● Reciprocal access to airport lounges;
● Coordinated sales efforts allowing greater market access; and
● Co-located airport facilities for easier passenger connections and check-in.
Pending regulatory approvals, the carriers will use their extended, long-term commercial agreement to exchange best practices across operations, marketing and sales.
Delta says the new agreement with GOL complements Delta’s codeshare relationship with Aerolineas Argentinas, which will join the SkyTeam alliance in 2012, as well as a long-standing codeshare relationship with Delta’s existing SkyTeam partner Aeromexico – in which Delta is planning to take an equity stake.
Since its formation in 2001, GOL has stimulated flight demand in Brazil by means of an extensive network of routes and competitive fares, the airline seeing average annual passenger growth of 11 per cent.
GOL says its enhanced alliance with Delta, coupled with GOL’s strong balance sheet and large e-commerce platform, solidifies the company’s strong position in the Brazilian market and increases its international presence, while preserving its strategy of operating short-to-medium-haul flights with a standardized narrowbody fleet of Boeing 737NGs.
According to the two airlines, a significant number of Delta/GOL passengers will come from Brazil’s expanding middle class, which now accounts for 46 per cent of the country’s purchasing power. The number of Brazilian people with the financial resources to fly is projected to increase by 19.5 per cent by 2020 to reach 153 million.