Azul’s pursuit of TRIP signals shift of strategy in fast-changing Brazilian market

Azul's planned merger with fellow Brazilian carrier TRIP is yet another shift in Azul's business strategy since its Dec-2008 launch. The first adaption occurred in 2010 when Azul unveiled plans to add a second fleet type to its all Embraer E190/195 fleet. ATR 72 turboprops were introduced in 2011 to accelerate Azul's growth into smaller domestic markets, which have been expanding faster than trunk routes as Brazil's regional centres have benefitted from the rapid growth in the country's economy.

Now just weeks after Azul founder and chairman David Neeleman dismissed any need for the low-cost carrier to participate in the merger and acquisition activity engulfing Brazil's major airlines, Azul has unveiled its tie-up with TRIP. The merger further accelerates Azul's growth targets and firmly places the new combined company in a strong third place in the Brazilian domestic market behind TAM and Gol, creating a significant market share gap between the newly established Azul Trip SA and its now much smaller competitors. Azul is pursuing the merger with TRIP as demand in the booming Brazilian domestic market has slowed over the last year, leading Gol and TAM to put the brakes on domestic capacity expansion in hopes of creating a more favourable supply-demand balance.