Competitive Strategies Case Study

Gol, Brazil’s Low-cost Airline : Popularising Air Transport

OR

Abstract:

Brazil’s low-cost airline, Gol broke news in 2007 because of its brazen move the previous year. It was ambitious to acquire the country’s decrepit flag carrier, Varig. Thereby, trying to out-compete its rivals like TAM. Obviously, they have opposing business models: Gol is a low-cost carrier, whereas Varig is a full-service carrier. Students will be gripped to debate whether Gol can really take off? Studying the cost structures and service value chain of the carriers forms the basis for such analysis. Spotlight is also on the consolidation in Brazilian aviation – should Gol cooperate or compete with TAM; or should TAM adjust or retaliate against Gol’s moves?

Pedagogical Objectives:

To analyse the cost structures of both LCCs and traditional network carriers (full service carriers)
• To study the service value chain of airline operations
• To find ways to cut costs and attain operational efficiencies
• To discuss the competitive strategies in a consolidated market environment – competitor analysis
• To critically evaluate Gol’s plan to acquire Varig.

Keywords : Low-cost Carriers (LCCs); Varig; TAM; Traditional Network Carriers; Global Civil Aviation; Growth Strategies Case Study; Deregulation; Hub-and-spoke model; Code-sharing agreements; Service value chain of airline operations; Load factor and capacity utilization; No-frills service; Cost Structure Analysis; Productivity and Profitability of airlines; Competitor Analysis; Consolidation in aviation industry; Cooperation vs Competition

Contents : 
Civil Aviation Industry
Low-cost Carrier Advantage vs Full Cost Carriers
Reduced Complexity in LCC Service Value Chain
Market Penetration of LCCs based on Passenger Volumes
Performance of Airlines across the World
Financial Situation of Varig
Market Share of the Brazilian Airlines