Brazil's first low-cost scheduled airline, which has played on the country's passion for soccer by calling itself Gol (Portuguese for goal), has been launched amid scepticism from its main rivals.

Operating initially with a fleet of six Boeing 737-700s painted in a garish orange livery, the airline is modelled on airlines such as Southwest Airlines, JetBlue and easyJet and is undercutting its rivals' fares by 50-60%.

Established airlines such as Varig and TAM accuse Gol of operating at below cost and say that it will not be able to sustain its low fares. TAM has also responded by offering 50% discounts to passengers who book flights more than 21 days in advance on routes flown by Gol. Varig says it will not be drawn into a fares war.

Gol president Constantino de Oliveira Junior, whose company chose the name because they think it is something Brazilians can identify with, insists that the carrier can make ends meet. He says Gol employs only 100 staff per aircraft, as against 170 for its rivals, has a modern fleet to keep down maintenance costs and will offer a minimal inflight service of soft drinks, cereal bars and peanuts. Other cost-control measures include electronic ticketing only by Internet or telephone.

Gol is the latest enterprise of the Aurea Group, a huge passenger transport empire led by Oliveira's father. Oliveira estimates that Gol has a potential market of 25 million consumers who form part of the Brazilian middle class but who cannot afford the fares charged by the big airlines.

The steady, sustained growth of the Brazilian economy leads him to believe that his airline can capture 8.5% of the market in 18 months. By the end of the first month of operation, Gol was reporting load factors of around 50%.

Gol intends to increase its fleet to 10 aircraft by the end of the year and add further destinations to the current seven.

It has booked slots at the main airports to ensure punctuality.

Source: Airline Business