Itapemirim aims for leadership in Brazil’s domestic airline market

RIO DE JANEIRO, BRAZIL – Itapemirim Transportes Aéreos – an airline belonging to the Itapemirim Group, which has the largest fleet of interstate buses in Brazil – will begin its first flights at the end of this month. But its plans are ambitious and, for the next 12 months, the newcomer is planning to have 35 destinations and 50 aircraft.

Moreover, it is aiming at the leadership of the domestic segment, and will be flying to Europe in 2023. “Our goal is to hold 40% of the market,” says Sidnei Piva, the group’s president.

For now, the newcomer will fly only the Airbus A320 ceo (previous generation model), with 162 seats. This was business model of Avianca Brasil, which was declared bankrupt almost a year ago. As its main differentials, ITA will bet on premium on-board services and inter-modality with buses – Itapemirim is the country’s largest insterstate bus company.

Search for leadership in domestic flights

“I often joke that the market is like a Formula 1 race. No one wants to finish last. Everyone wants to win. We are a new team, but we always wanted the podium. And, if an entrepreneur expects to come in third, he or she is mediocre. It doesn’t work. I am competitive and I don’t accept this. We are going to seek the leadership, and how long it takes depends on the team,” says Tiago Senna, Itapemirim Group executive.

In recent months, the commercial aviation market has seen some changes, with Azul standing out, conquering first place during the pandemic, with a 37.5% market share this year. Gol, which used to lead, dropped to second place with 29.9%, while LATAM Brasil closed the year with 27%. In its best years (2017 and 2018), Avianca Brasil had up to 11% of market share.

“They want to fill the space left by Avianca Brasil. But the market is not built overnight. And despite the interesting idea of integration between road and airport, I’ve never seen it anywhere else. It may be something that will be super successful, but it may also not make any sense. It’s a gamble,” says Thiago Nykiel, CEO of Infraway Engenharia, a specialist in
infrastructure and aviation.

The Itapemirim executives – Piva, Senna, and Adalberto Bogsan, recently hired as the airline’s CEO – did not disclose which measures will be taken to conquer the leadership and what is the estimated time frame for this feat. But they guaranteed that, by next year, all the conglomerate’s strategies will be aimed at strengthening the company and creating
international routes.

“That is the goal, but we don’t have a defined deadline. We must see how the market will react and, therefore, there is no point in setting a date today. There is no point in us starting a bunch of business fronts and lines, but with empty airplanes. We are very ‘down to earth’, particularly at the start of the company, since we depend on attracting passengers. There’s a whole structuring up to that point,” Bogsan says.

Competition with Azul, Gol and LATAM

According to Thiago Nykiel, Itapemirim’s main competition will be with Gol and LATAM, due to the size of its aircraft and the fact that its network is focused on “trunk airports” (as the main hubs are called); he recalls that Azul needed 14 years to become market leader, only after pandemic circumstances had weakened the competition.

“The main point is that air transportation is very competitive. It is complicated. There is no ready formula. To be efficient like the main rivals, you have to win in scale gain and with route capacity. It is a tremendous challenge. When people ask if it is possible, we have to bear in mind that everything is possible. But it’s unlikely, considering that the companies provide an excellent service,” says the specialist.

For Sidnei Piva, this will be healthy competition, but, in order to stand out in the market, Itapemirim Transportes Aéreos will offer differentials that “companies have forgotten, such as human values in attendance and comfort”. For instance, the aircraft will have 18 fewer seats than maximum capacity, to allow for more space on board. In addition, there will be no charge for checking luggage or choosing a seat.

Itapemirim’s growth strategy

“The first step is to connect the group’s transportation modals. Obviously, when we start planning, it will only make sense depending on how our market will react with respect to the pandemic, vaccination, and sanitary procedures. It is an exercise in consumer analysis to make this interconnection in a rational way where financial results occur,” says Tiago Senna, vice-president of the Itapemirim Group.

According to Sidnei Piva, all plans set in motion now have been outlined since 2016 (just one year before the conglomerate tried to buy Passaredo, which did not work out). The executive had previously confirmed the intention to fly 10 different routes to Europe. But the airline has not disclosed where it will start its international operation in 2023.

At this point, the newcomer has adopted the strategy of offering flights to 8 destinations with prices up to 65% lower than the competition, including on special dates, such as Christmas and New Year’s Eve. According to Tiago Senna, there were 12 million accesses to its website the day sales began; however, he did not disclose the results, which are considered “strategic information.”

Source: Exame