Star Alliance continues to pursue Azul to boost the grouping’s network in Brazil, and expects the airline’s new ties with United Airlines and TAP Portugal to open doors for relationships with other Star members.
“We continue to have a dialogue with them,” says Star chief executive Mark Schwab on the sidelines of the ALTA Airline Leaders Forum in San Juan. He points out that Azul, like other Brazilian carriers, is facing challenging conditions with a financial downturn in its country, and that joining an alliance might not be on the carrier’s immediate list of priorities.
But Schwab believes that taking part in a global airline grouping could be a smart strategic move during a downturn.
“We can bring you significant value,” he says. “When times are difficult, that’s when you really need a stream of revenue from elsewhere.”
Azul has so far been non-committal when it comes to joining Star. Azul founder David Neeleman told Flightglobal earlier this year that the airline does not see a “great need” for membership.
Star is “delighted” at Azul’s blooming relationship with Star member United Airlines, which earlier this year announced a $100 million investment in the Brazilian airline for a 5% stake. The two airlines have become codeshare partners, and Schwab expects more of such relationships to follow with other Star members.
Azul also recently drew closer to TAP Portugal when Neeleman took part in acquiring a majority stake in TAP through his jointly-owned consortium Atlantic Gateway. Neeleman has made it clear that Azul will be TAP’s preferred partner in Brazil.
Schwab emphasises the need for Star to have a second member in Brazil, even after it added Avianca Brazil to the group earlier this year. “40% of the Latin American business is in Brazil,” says Schwab. “We want to make sure we are strong in that marketplace.”
Star wants at least a 20% share of the Brazil marketplace, which it currently does not have as Avianca Brazil is only the fourth biggest player in the market while Azul is the third.
While there have been some indications that Avianca Brazil is not exactly thrilled to have a domestic competitor in Star, Schwab says the alliance believes the two airlines will complement each other well.
“There is not much overlap between their networks,” he says.