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Real-Time Flight Tracking at Azul Linhas Aéreas

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Real-Time Flight Tracking at Azul Linhas Aéreas CASE STUDY: AZUL LINHAS AÉREAS Real-Time Flight Tracking at Azul Linhas Aéreas Felipe Starling, IT Manager Flight Ops Solution, Azul Linhas Aéreas outlines a 100% global, real-time aircraft flight tracking project AIRCRAFT IT Operations • SEPTEMBER-OCTOBER 2018 • 26 CASE STUDY: AZUL LINHAS AÉREAS hile this article is ultimately about flight tracking, an important and pertinent topic today, readers will need a context in which to put the flight tracking information. So, perhaps the first thing I should do is to explain something about the airline that is the subject of Wthis article. AZUL LINHAS AÉREAS Azul at a Glance We believe we are the fastest-growing, most profitable and best positioned airline in Brazil 2008 2012 2014 2015 2016 2017 Maiden Acquisition of Next-Gen Partnership with United Partnership with HNA Azul IPO (US and Brazil) Flight TRIP Airlines Aircrafts US$ 100M investment US$ 450M investment NYSE: AZUL 15 Dec 64 destinations 63 A320neo for a 5% economic stake for 24% economic stake B3: AZUL4 33 ERJ-E2 in Azul in Azul Lisbon VCP-SSA Orlando Ft. Lauderdale/Miami Cayenne Boa Vista • #1 in destinations served (over 100) Macapá Belém Manaus Santarém São Luís Parnaíba Tabatinga Parintins Altamira Jericoacoara Tefé Fortaleza Teresina Fernando Marabá Imperatriz de Noronha • #1 on 71% of routes served Carajás Natal Juazeiro do Norte João Pessoa Porto Velho Campina Grande Alta Floresta Petrolina Recife Palmas Ji-Paraná Sinop Paulo Afonso Maceió Cacoal Sorriso Vilhena Barreiras Aracaju • #1 in departures (~one third of departures Lençóis Fiero de Santana Salvador Cuiabá Barra do Valença in the country) Garças Brasília Vitória da Conquista Ilhéus Rondonópolis Goiânia Montes Claros Rio Verde Caldas Novas Governador Porto Seguro Valadares Corumbá Uberlândia Araxá Teixeira de Freitas Uberaba Ipatinga Positive Fundamentals Driving the Brazilian Aviation Market Campo Grande Divinópolis Três Lagoas S. J. do Rio Preto Belo Horizonte (Confins) Bonito Araçatuba Varginha • #1 in on-time performance in Brazil 2017 (OAG) Ribeirão Preto Vitória Presidente Prudente Zona da Mata Dourados Marília Campinas Campos dos Goytacazes Growth in the Brazilian middle class supported by rising per capita income, leading to more Londrina Bauru Cabo Frio Maringá São Paulo Rio de Janeiro São Paulo (Guaruhos) (Santos Dumont / Galeão) Cascavel (Congonhas) passengers and flights per capita in Brazil Foz do Iguaçu Ponta Grossa Curitiba Lages Chapecó Joinville Passo Fundo Navegantes Santo Angelo Florianópolis • #1 in customer satisfaction Uruguaiana Caxias do Sul Jaguaruna Brazil Domestic Passengers by Year Santa Maria Porto Alegre Domestic Flights Per Capita Pelotas (in millions) Hub New destination Source: Azul, Innovata, OAG and Melhores Destinos Punta Del Este New international routes (announced) Córdoba Montevidéu Buenos Aires Rosario Bariloche 131 FIGURE 1 Azul represents 50% 2,2 of pax growth since From commencing operations in 2008 (figure 1)and now ten years old, Azul has 2007 grown organically and by acquisition. In 2012 Azul acquired Trip Airlines which 89 was, at the time, the largest South American airline in terms of number of 21 destinations. 2013 saw Azul starting a program to introduce Next-Gen aircraft 1,1 across the fleet with orders placed for 63 Airbus A320neos and 33 Embraer 47 ERJ-E2 second generation. Partnerships were established in 2015 and 2016 with 0,6 68 0,5 0,5 United Airlines in the USA and HNA in China. 2017 saw the airline’s IPO being 0,3 listed on both the New York Stock Exchange as well as in Brazil. As things stand today, Azul serves more than 100 destinations and is the number one operator 2007 2016 2021E Brazil Brazil Chile Colombia US US 2015 on 71% of the routes it serves as well as being number one in departures with 2007 2015 2015 2015 1960´s one third of departures in Brazil. Azul is also number one in Brazil for on-time Source: Azul, IATA, CEBR, ABEAR and IBGE performance and number one for customer satisfaction. FIGURE 2 Looking more widely at the Brazilian aviation market (figure 2), in the period That’s all against a background of the number of domestic flights per capita in 2007 to 2016, the market doubled with Azul being responsible for half of that Brazil being pretty low compared to a comparable South American market such growth. as Colombia or a mature market such as the USA. The inference is that there is a AIRCRAFT IT Operations • SEPTEMBER-OCTOBER 2018 • 27 CASE STUDY: AZUL LINHAS AÉREAS great deal of opportunity to expand and exploit that market. That said,, Azul Out of the 98 cities that Azul serves in Brazil, 61 have populations in excess of 1 already has a presence in a lot of cities in Brazil (figure 3 — places marked in blue). million people and, also of the cities Azul serves, the airline is number one in 68 Market and Route Leadership of them. All that is achieved with a fleet of mixed aircraft types. Azul operates 34 Azul is strongly positioned in Brazil, with strong presence in underserved markets… ATRs, 70 Embraer E-Jets and 8 A320neos which will rise to 35 by 2020 as aircraft on order, see above, are delivered. These are appropriately sized aircraft Most Relevant Airline by City Azul Route Position (September 2017) (Domestic, September 2017) for the Brazilian market and fit well with Azul’s process of opening a market with an ATR service, then developing that market to the point where it will warrant Domestic Population Cities Cities in #1 Cities Where #1* Served (million) the use of the larger E-RJ aircraft and, hopefully, eventually, the A320neo. There are also some small cities in Brazil, a huge country, that will only ever in the 98 foreseeable future justify the ATR aircraft. So, as you can see, the size of aircraft is really important in this market. Also, the ATRs are usually used on routes with 68 an average stage length of under 500km while the E-Jets average stage length 61 52 is nearer 800km while the A320neo fleet serves routes with an average stage 44 41 length of nearly 1,500km. The next generation aircraft have some financial advantage over the Embraer 14 10 e-95 that is currently in the fleet and Azul expects the CASK (Cost per Available 5 Seat Kilometer) to reduce as the next generation aircraft enter service. In fact, we Azul Gol TAM Azul Gol TAM Azul Gol TAM • Strong penetration in underserved markets already have achieved a 29% CASK reduction using the A320neo. What that means • Hubs located in Campinas (VCP) and Belo Horizonte (CNF), two of the largest airports and metropolitan areas in is that all the 56 seats colored yellow in the seating plan in figure 4 overleaf, and the country Azul Gol LATAM additional to the seating available on the E-RJ are, literally, at no extra cost. Source: Azul, ANAC and Companies * Considers leadership by number of departures. Excludes cities in which one carrier has less than a 5% advantage Also, because Azul has a strong position in Brazil and significant market FIGURE 3 penetration, there are 31 cities that Azul serves with international connections, two AIRCRAFT IT Operations • SEPTEMBER-OCTOBER 2018 • 28 CASE STUDY: AZUL LINHAS AÉREAS “…a lot of work has been invested by ICAO (International Civil Aviation Organization) to generate a Global Aeronautical Distress & Safety System (GADSS) with ‘Aircraft Tracking’, ICAO Annex 6.” Next Gen Aircraft: Key Driver of Margin Expansion Superior Service Replacing older generation aircraft with new generation aircraft to further strengthen Azul’s margins going Azul was recognized as the third best airline in the world by TripAdvisor in 2017, has forward attained high customer satisfaction and wide recognition by industry specialists Domestic Product & Service Awards E2 and A320Neo CASK Advantage Next Generation Aircraft Expected Percentage of Total ASKs 47% Best Low-Cost Carrier Best Airline in Brazil Best Loyalty Program in Most On-Time LCC 6% • New, modern aircraft Brazil in the World E2 38% in South America -24.0% 3% • Generous onboard service -29.0% A320neo 27% • Live TV 41% • Premium legroom (30-inch pitch 14% 35% or more vs. 29 inches) Fastest Check-in in Best Staff in South America’s most Best on-time airline Brazil Leadershiprship South • Extra legroom with 34-inch pitch America • Motivated and empowered E195 E2 A320neo 2017 2018 2019 2020 crewmembers • Customer-centric culture 118 seats 132 seats 174 seats 3rd Best Airline in the World Net Promoter Score* A320neo Seat Map 64 63 WC WC Performance Indicators Most On-time LCC in A320neo WC WC Third Most On-time ABC DEF 90% of customers would recommend or strongly recommend the World (A15) Airline in the World (A15) 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Azul to a friend or relative Low-Cost Low-Cost Exit Rank OTP Rank OTP Exit Exit Carrier Exit Carrier Source: Brazil’s Ministry of Transportation, Ports and Civil Aviation, Azul customer surveys, NPSbenchmarks.com, OAG (2015) • A320neo provides 56 additional seats at virtually no additional cost per flight compared to previous aircraft used in st Azul 91.0% rd * Net Promoter Score (NPS) is a management tool used to gauge the loyalty of a 1 3 Azul 91.0% long-haul missions, significantly reducing cost per seat firm’s customer relationships FIGURE 4 and a half times as many as our nearest competitor, made possible also by Azul’s FIGURE 5 partnerships with other airlines in the US, Europe and China. Everything that Azul does is based around the business’s core values: Although predominantly a low-cost airline, Azul operates modern aircraft with • Safety — respect life under all circumstances; generous services and better than average features and facilities such as legroom • Consideration — treat everyone as we would wish to be treated; which we believe to be one of the reasons why we have been growing so fast (the • Integrity — honor our word and act ethically; A330s used on Azul’s international services have facilities such as the sky sofa) and • Passion — be passionate about what we do to serve people; which have been recognized with a number of independent awards (figure 5).
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