EMB195ER
Topic Author
Posts: 253
Joined: Mon Sep 13, 2004 3:31 am

GOL Business Model

Sat Oct 16, 2004 12:25 am

Hey Guys,

I was thinking about GOL business model and when we compare it whit some well established LCC airlines it is possible to identify some differences:

01 – GOL offers food on board of its flights and it is free. Of course this food is a small snack with some juices or soft drinks. EasyJet, Ryanair don’t offer anything.

02 – GOL flies to some cities in which a LCC shouldn’t be flying to (BSB – PVH for instance). It is against one of the basic principles of LCC philosophy, which is, only flying for high density routes.

03 – It is possible to book connecting flights and re-schedule flights. Ryanair clearly states they are not responsible for any connecting flight, for instance. Their responsibility is only taking you from A to B.

04 – Their fares aren’t as cheap as it used to be at the beginning of their operations. Of course they are still cheaper then JJ or RG, but comparatively higher then before. In competitive routes their prices are low (I booked a flight GRU-GIG-GRU for 33,00 UDS each leg), but on those less noble routes their prices are comparatively higher than it should be.

I have a friend who was a manager at GOL at its beginning and he told me that their business plan changed dramatically from the original idea. For instance, they were considering to fly to Jacarepaguá (Rio de Janeiro), a small airport, not to SDU or GIG. CPQ would be their main hub in São Paulo, not CGH. They would largely use their buses companies to take passenger to these airports.

However, everything changed when Transbrasil collapsed. They smartly saw a great opportunity to get market share and TR passengers wouldn’t fly them if they were a real LCC airline. Passengers would massively migrate to VP.

I understand that GOL has many advantages over their competitors (JJ and RG) and its justify their success. For instance:

01 – A new company with no old debt;

02 – New employees with small labor costs;

03 – An aggressive use of technology, which makes their costs smaller

Finally, from passengers view GOL needs only a frequent flyer programme to be equal to JJ and RG.

What I conclude is that GOL is a mix between a LCC and a full service airline. I think we are seeing a new model of airline in the LA region and do hope they succeed on this venture.

Hugs,

EMB195ER
 
MEA-707
Posts: 3666
Joined: Mon Nov 15, 1999 4:51 am

RE: GOL Business Model

Sat Oct 16, 2004 12:46 am

GOL is definitely based on the Southwest model, who also offers free drinks and simple snacks but no meals, connecting flights, flights to main airports (LAX, PHX, SAN, LAS, PHL, STL) and isn't very much cheaper then the competitors on the same routes either.
nobody has ever died from hard work, but why take the risk?
 
hardiwv
Posts: 4341
Joined: Sat Oct 09, 2004 11:30 pm

RE: GOL Business Model

Sat Oct 16, 2004 1:55 am

I agree with MEA-707, and EMB195ER articulated very well the situation and business model of GOL. It's a combination of low fare and main-stream airline, offering flexible and efficient services. JetBlue is also an example of mixed model. I think we are seeing the emergence of a new business concept in the aviation business, and GOL is at its fore-front.

Hardi


 
hardiwv
Posts: 4341
Joined: Sat Oct 09, 2004 11:30 pm

RE: GOL Business Model

Sat Oct 16, 2004 3:18 am

Just fresh from the news:

GOL will start flights (twide daily) to EZE from December on the following routes:

1 - MAO-GRU-EZE;
2 - SSA-GRU-EZE

This will allow for improved connections between the Brazilian cities of Manaus and Salvador to Buenos Aires.

The followin third route is under study to start in 2005:

3 - GIG-FLN-EZE

Hardi

 
JJMNGR
Posts: 924
Joined: Wed May 26, 2004 9:06 pm

RE: GOL Business Model

Sun Oct 17, 2004 5:44 am

EMB195ER,

Just one comment. At the end of your message, it seems that only GOL has no debits and makes use of technology.
Only GOL AND TAM are on same level in terms of no debits and use of technology. TAM has no Governmental, labor, social security etc..debits. TAM has all its duties and compromisses in perfect order and all are being paid and the company is being profitable.

Sds,
 
EMB195ER
Topic Author
Posts: 253
Joined: Mon Sep 13, 2004 3:31 am

RE: GOL Business Model

Sun Oct 17, 2004 6:35 am

Come on JJMNGR....

I am not agaisnt JJ, you know that.....  Smile/happy/getting dizzy

But anyway, the focus of the threat is GOL and its business model.

Huges,

EMB195ER
 
hardiwv
Posts: 4341
Joined: Sat Oct 09, 2004 11:30 pm

RE: GOL Business Model

Sun Oct 17, 2004 6:40 am

JJMNGR:

We know that GOL "and" TAM are profitable well managed airlines. However, the topic of this thread is GOL and its inovative (or maybe " dual") business model, which combines the features of a low cost carrier and a traditional airline. What many people argue is tha GOL is a low cost airline. EMB195ER articulated well and explained that it's not simple as that, as GOL mixed both, low cost and traditional model, coming out with something new in the market!

Hardi

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