GOL Linhas Aéreas Inteligentes S.A. provides scheduled and non-scheduled air transportation services for passengers and cargo, maintenance services for aircraft and components, develops frequent-flyer programs, among others.
Airline Business
Routes and Schedules
The company’s operating model is based on a highly integrated route network that is a combination of the point-to-point, hub and spoke and multiple-stop models. This combination increases the connectivity of its network, permitting tr...
GOL Linhas Aéreas Inteligentes S.A. provides scheduled and non-scheduled air transportation services for passengers and cargo, maintenance services for aircraft and components, develops frequent-flyer programs, among others.
Airline Business
Routes and Schedules
The company’s operating model is based on a highly integrated route network that is a combination of the point-to-point, hub and spoke and multiple-stop models. This combination increases the connectivity of its network, permitting travelers to fly from a given point of origin to more destinations, while maintaining a low-cost structure, improving aircraft and crew scheduling efficiency and reducing its carbon emissions. The high level of integration of flights at selected airports allows it to offer frequent, non-stop flights at competitive fares between Brazil’s most important cities. The company’s network also allows it to increase its load factors on its strongest city pair routes by using the airports in those cities to connect its customers onwards to their final destinations.
The company’s operating model allows it to build its flight routes to add destinations to cities that would not be feasible to serve in the traditional point-to-point model individually, but that are feasible to serve when simply added as additional points on its multiple-stop flights. The company focuses on the Brazilian and South American markets, with hubs in São Paulo, Rio de Janeiro, Brasília and Fortaleza, and carefully evaluate opportunities for continued growth. The company seeks to increase the frequency of its flights to existing high-demand markets and add new routes to its network to destinations that can be reached with its Boeing 737 Next Generation aircraft (for example, destinations in the Caribbean). The company’s Boeing 737 MAX aircraft permit it to offer reduced flight times to passengers that make connections in South American hubs on their route to the United States, Europe and Africa.
As a low-cost carrier operating a single fleet type, the company works through alliances and codeshare arrangements with large international carriers and regional carriers in order to serve destinations that cannot be served by its Boeing 737 aircraft due to airport infrastructure or local market conditions.
In 2023, the company transported over 30.2 million passengers in the domestic market.
The company uses its dominant market position at its main hubs to support traffic by offering connecting flights to its customers throughout its network.
Under its business model and route network, the company has flexibility to increase direct flights during the high season because it has a dominant position in main high density airports, and to increase connecting flights during the low travel season to increase load factors.
Services
Passenger Transportation
In order to offer high-quality and consistent value-proposition services to its corporate and leisure customers, the company pays particular attention to the details that provide for a pleasant, complication-free flying experience, including convenient online sales, check-in, seat assignment and flight change and cancellation services; high frequency of flights between Brazil’s most important airports; low cancellation and high on-time performance rates of the company’s flights; self-check-in at kiosks at designated airports; friendly and efficient in-flight service; free shuttle services between airports; buy on-board services on certain flights; free healthy snacks for all passengers, including options for kids; mobile check-in for paperless boarding pass and smartphone application for Smiles account management; more legroom and greater comfort (GOL+Conforto in the domestic flights and GOL Premium Class in the international flights); complete platform of in-flight entertainment with Wi-Fi access, live television, movies and series; premium domestic and international lounges for business class and premium Smiles passengers in the Guarulhos and Galeão airports; and expansion of Smiles’ loyalty program to promotional fares.
Because the company understands that efficient and punctual operations are important to its customers, it strives to offer high rates of on-time performance and a high completion factor, as well as low rates of mishandled baggage.
In general, passenger demand and profitability reach peak levels during the January and July vacation periods and in the final two weeks of December, during the Christmas holiday season. Conversely, the company often witness a decrease in load factor during February or March, when annual carnival celebrations take place in Brazil.
Ancillary revenues include revenues from on-board sales, ticket change fees and various other services. Further development and growth of these services and, consequently, of related revenues are a key part of the company’s strategy.
Since December 31, 2022, all of the company’s aircraft had Wi-Fi installed, which is an additional and increasing source of revenue.
Mileage Program, Cargo and Other Revenues
Mileage program, cargo and other revenues include revenues from the company’s GOLLOG services, as well as from its Smiles loyalty program.
The company makes efficient use of extra capacity in its aircraft by carrying cargo, through GOLLOG. The company’s 85 flight destinations throughout Brazil, South America, the Caribbean and the United States provides it access to multiple locations in each region. With its capacity of approximately 611 average daily flights, the company can ensure quick and reliable cargo delivery for its customers.
GOLLOG has developed an extensive portfolio of express services to meet the growing demand for door-to-door deliveries, fixed deadlines and additional optional services. The company intends to increase its efforts in express delivery services by further strengthening its logistics capability, mainly by expanding its ground distribution network, increasing the company’s commercial efforts and using innovation and technology to facilitate the boarding and tracking of cargo and to provide automatic updates to order status. Following is an overview of GOLLOG’s portfolio of services:
GOLLOG Saúde was designed to serve the healthcare industry. To enhance GOLLOG Saúde’s services, the company invested in a cold storage warehouse at the Guarulhos airport to maintain temperature-controlled cargo prior to boarding.
GOLLOG Urgente provides the fastest delivery option within Brazil, offering same-day deliveries for short routes, and has been an important component in GOLLOG maintaining its revenue yield.
GOLLOG Rápido, CHEGOL and CHEGOL Mini provide a range of cost-effective express delivery solutions for customers.
The company’s Smiles loyalty program, with 22.6 million members as of December 31, 2023, provides it with significant revenues derived from the redemption and expiration of miles. In addition, the company’s Smiles loyalty program provides an incentive for customer air travel bookings, thereby boosting ticket sales and its number of repeat customers.
Aircraft Fleet
In 2023, the company advanced its fleet transformation plan to replace Boeing 737 Next Generation aircraft with Boeing 737 MAX aircraft. As of the date of this annual report, the company’s fleet comprises 97 Boeing 737 Next Generation aircraft and 44 Boeing 737-8 MAX aircraft.
As of December 31, 2023, the company’s 137 leases without purchase options had an average remaining term of 107 months.
Under the company’s lease agreements without purchase options, it is required to return the aircraft and engine in the agreed condition at the end of the lease term and may be required to maintain maintenance reserve payments or pay maintenance deposits during the term of the lease. Title to the aircraft remains with the lessor. The company is responsible for the maintenance, servicing, insurance, repair and overhaul of the aircraft during the term of the lease.
The average age of its operating fleet as of December 31, 2023, was 10.4 years. The average daily utilization rate of its fleet was 10.0 block hours in 2021, 11.0 block hours in 2022 and 11.7 block hours in 2023.
The company’s configuration permits it to add up to nine additional seats to the Boeing 737 MAX’s configuration while maintaining the aircraft’s pitch that provides the most comfort to passengers in Brazil.
As of December 31, 2023, the company had an order book of 64 Boeing 737-8 MAX and 37 Boeing 737-10 MAX aircraft for delivery through 2030. The company is the main client of Boeing 737 MAX aircraft in South America and one of the eight largest in the world. As a result of its order book, the average age of the company’s operating fleet, 10.4 years as of December 31, 2023, will be reduced by 2025, leading to lower maintenance costs and fuel consumption and, as a result, reduced greenhouse gas emissions.
Sales and Distribution
The company’s customers can purchase tickets directly from it through a number of different channels, including its website through its booking web services, its call center, at airport ticket counters and, to a lesser extent, global distribution systems (GDS). In August 2021, the company’s switched its passenger service system to Sabre, which is one of the most used by airlines.
The company’s low-cost business model utilizes internet ticket sales as the primary distribution channel, especially in the local market. In 2022 and 2023, approximately 92% of the company’s passenger revenue, whether directly from customers or through travel agents, were booked online, making it a global leader in this area.
In addition, the company’s customers can purchase tickets indirectly through travel agents, which are a widely used travel service resource. In 2022 and 2023, travel agents provided it with distribution outlets in approximately 50 and 64 different countries, respectively. GDS allows the company access to a large number of tourism professionals who are able to sell its tickets to customers around the world and enables it to enter into interline agreements with other airlines to offer more flights and connection options to its passengers, which adds incremental international passenger traffic.
Maintenance
By ANAC regulation, the company is directly responsible for the execution and control of all maintenance services performed on its aircraft. Maintenance performed on the company’s aircraft can be divided into two general categories: line and heavy maintenance.
Line maintenance comprises routine, scheduled maintenance checks on the company’s aircraft, including pre-flight, daily and overnight checks and any diagnostics and routine repairs. All of the company’s line maintenance is performed by its highly experienced technicians at its line maintenance service bases throughout Brazil and South America.
Heavy maintenance comprises more complex inspections and servicing of aircraft that cannot be accomplished overnight. Heavy maintenance checks are performed following a pre-scheduled agenda of major overhauls defined by the aircraft’s manufacturer, based on the number of hours and flights flown by the aircraft. In addition, engine maintenance services are rendered in different MRO facilities.
The company has entered into two strategic MRO partnership agreements in order to provide maintenance services for its CFM 56-7, maintenance for parts and components on its fleet of Boeing 737 Next Generation and 737 MAX aircraft, as well as consulting services related to maintenance workflow planning, materials and facility optimization and tooling support.
The company holds the FAA 145 Repair Station certification for C-checks, which are performed approximately every 20-24 months or based on a specific number of actual flight hours, at the company’s maintenance center in Confins (GOL Aerotech) and certification by the European Aviation Safety Agency, or EASA, which is the European Union’s aeronautical authority.
In 2020, the company was certified by the National Civil Aviation Administration of Argentina to perform maintenance, preventive maintenance and alterations, which allows it to expand its GOL Aerotech coverage in the Latin American MRO market; the CAA Cayman aviation authority, expanding its coverage to perform maintenance on aircraft and components operating under the rules of this authority; and the FAA to work on CFM56-7 and Leap-1B engines at its engine shop in Confins and repairs in composite materials in the Composite Shop at the same location.
The company’s engine shop, part of GOL Aerotech, certified by ANAC, EASA, FAA, ANAC Argentina, 2-REG and CAA Cayman for low-complexity services and repairs on CFM56-7 and Leap-1B engines, which power the Boeing 737 Next Generation and 737 MAX aircraft it operates, has the latest infrastructure and tools to conduct maintenance services that were formerly performed by third parties. Among the benefits of insourcing these services are reduced repair and logistics costs and reduced engine off-time and replacement time, as well as an improvement in environmental sustainability as a result of not having to transport aircraft to third-party maintenance facilities. The company also has the capacity to expand the services offered by its engine shop.
Partnerships and Alliances
The company has forged tailor-made relationships with key industry players, including American Airlines in the United States and Air France – KLM in Europe.
The company’s robust market positioning enables it to successfully negotiate multiple partnerships with major carriers worldwide, primarily through codeshare and interline agreements. The additional passenger inflows generated by these partnerships enhance its revenues with minimal incremental costs.
As of December 31, 2023, the company had 14 codeshare agreements with Aerolíneas Argentinas, AeroMéxico, Air Canada, Air Europa, Air France, American Airlines, Avianca, Copa Airlines, Emirates, Ethiopian Airlines, KLM, TAP TAAG Linhas Aéreas de Angola and Turkish Airlines, 15 frequent flyer agreements and 40 interline agreements.
American Airlines
In February 2020, the company announced its new codeshare agreement with American Airlines. This codeshare agreement enables its customers to travel seamlessly to more than 30 destinations in the United States. The company’s codeshare flights operate in its international hubs in São Paulo (Guarulhos) and Rio de Janeiro (Galeão), integrating 34 Brazilian and international routes.
In September 2021, the company announced the expansion of its commercial cooperation with American Airlines, through an exclusive codeshare agreement that has strengthened the relationship between the two airlines. The company’s Smiles and American Airlines’ AAdvantage loyalty programs are partners in the largest frequent flyer program in the Americas with enhanced benefits that began in the first half of 2022. These include access for loyalty members to benefits such as priority check-in, priority security, priority boarding, a larger checked baggage allowance and preferred seats on both airlines. Customers may earn and redeem frequent flyer miles on both airlines.
Air France – KLM
The company has a long-term strategic partnership for commercial cooperation with Air France – KLM. The company’s partnership covers a significant portion of demand between Brazil and Europe and provides exclusive benefits to its customers. In addition, Air France – KLM is an important MRO service provider for its operations.
In October 2023, the company and Air France – KLM group announced the renewal of the strategic partnership for the next 10 years. From January 1, 2024, until the date of this annual report, 17% of passengers travelling to Brazil with Air France – KLM connect via GOL flights, and over two million passengers have already benefited from this partnership.
As part of this renewed partnership, the company and Air France – KLM will continue to invest in enhancing the customer experience and creating a more integrated product. Customers will benefit from an optimized network between Europe and Brazil, covering over 80 European destinations and 45 Brazilian destinations.
Competition
Domestic: The company’s main competitors in Brazil are LATAM Brasil and Azul Airlines.
Loyalty Program: Smiles
Smiles is one of the largest coalition loyalty programs in Brazil, with 22.6 million members as of December 31, 2023. The company’s Smiles business model is based on a pure coalition loyalty program comprising a single platform for accumulating and redeeming miles through a broad network of commercial and financial partners.
The Smiles loyalty program allows members to accumulate miles through flights with GOL and its international partners, all the significant Brazilian commercial banks that issue credit cards, including through co-branded cards issued by Banco Bradesco, Banco do Brasil and Santander, a broad network of retail partners, including Localiza, the largest car rental agency in Brazil, global hotel chain Accor Hotels and Smiles Travel Agency, among others, direct customer purchases of miles and purchases of miles and benefits through Clube Smiles (Smiles Club). The company is Smiles’ primary redemption partner, but members may also redeem miles for products and services from commercial partners.
Cargo: GOLLOG
The company is Brazil’s second largest cargo airline with a 26% market share in 2023. Through GOLLOG, the company generates cargo revenue using the belly space on regularly scheduled passenger aircraft. The company’s cargo business has grown at higher rates than its passenger travel business, in large part because it counts with an excellent and diversified base of clients in the B2B segment and e-commerce markets and are well-positioned to support this market’s expected growth as it forges and strengthens its client relationships. The company is committed to delivering quality logistics solutions and its cargo business will be an increasingly important contributor to its financial performance.
Additionally, in the second half of 2022, the company began cargo operations under a ten-year commercial agreement with Mercado Livre, which operates marketplaces for e-commerce and online auctions. These cargo operations, which are part of the company’s investment to serve the needs of the growing Brazilian e-commerce market, will rely on a dedicated freighter fleet of six Boeing 737-800 BCF, two of which it received and began operating in 2022, and the other four it received and began operating in 2023. In addition, the company has the option to add additional six cargo aircraft by 2025.
MRO: GOL Aerotech
GOL Aerotech is the company’s business unit dedicated to providing MRO services, including to third parties. The company provides maintenance, preventive maintenance and modifications on its aircraft. GOL Aerotech represents an important cost saving source for the company as it is able to rely on local workforce instead of relying on other maintenance providers that would expose it to exchange rate variations and higher market pricing. The company’s local maintenance services also reduce its repair and logistics costs, as well as engine off-time and replacement time, and support its sustainability efforts as it does not have to transport aircraft to third-party maintenance facilities. The company has expanded its MRO services to other airlines and what began as a cost-saving initiative has become a revenue generating opportunity. The company operates the largest MRO facility in Brazil, with over 145,000 square meters of hangar and ramp areas, six shops, more than 6,100 square meters of parts storage area and over 750 employees. In February 2022, the company renewed its maintenance hangar lease in Confins and converted its Brasília hangar to support maintenance services. As of the date of this annual report, the company has three maintenance units (Confins, Brasília and Congonhas) and continue to seek expansion opportunities for its GOL Aerotech business.
Innovation: GOLLabs
GOLLabs is the company’s innovation business dedicated to researching and developing new technologies and services to generate new revenues and reduce costs, including by optimizing its pricing and route strategies and enhancing its customer experience through initiatives, such as face recognition technology to facilitate check-in and boarding procedures, media streaming partnerships to provide enhanced entertainment options and a customer service platform through mobile chat applications, among others. GOLLabs is responsible for the entire lifecycle of the development of an innovative concept, including market testing and analytics and implementation and training, and plays a key role in creating value in its other businesses.
History
GOL Linhas Aereas Inteligentes S.A. was founded in 2000. The company was incorporated in 2004 as a stock corporation (sociedade anÔnima) duly incorporated under the laws of Brazil with unlimited duration.
