Gol is close to having an airline in the Dominican Republic

Gol Linhas Aéreas plans to open an airline in the Dominican Republic, Gol Dominicana, in the second half, Valor has learned. The idea is to assemble a fleet of seven Boeings 737-800, with flights to Central America and the US. Gol didn’t confirm the information. It said “it’s always monitoring opportunities on the international market.”

The definitive step for Gol to implement this plan was given last week, on April 17th. It was when the Dominican Republic’s Chamber of Deputies approved changes in the air legislation of the country, aiming to acknowledge Gol as a national airline, despite having its capital controlled by foreigners.

Currently, 62.74% of Gol’s total equity is held by Volluto, a fund formed by the company’s chairman, Constantino de Oliveira Junior, and his brothers. Wellington Management Company, another fund, holds 5.08% and Fidelity has another 2.52%. There are 25.19% of the shares dispersed on the market. Delta Air Lines holds 2.98%. And a stake of 1.49% is divided between the board, the management and the company’s treasury.

Media reports in the Dominican Republic say the law change to benefit Gol was approved urgently, at the request of President Danilo Medina. The Chamber of Deputies transformed the bill into law, which now needs presidential sanction. The changes were already approved by the Dominican Senate.

The new Dominican aeronautical law says that airlines that can be acknowledged as Dominican are “airlines constituted with up to 100% of equity from foreign investors always and when such investments belong to an airline recognized internationally or to a subsidiary controlled by them that is authorized by the Executive Power.”

Such change was carried out because the Dominican Republic wants to have its flagship carrier, as Panamá did with Copa Airlines, which built a hub in Panamá City.

People familiar with the talks between Gol and the Dominican government say that other benefits may be granted to the new airline, such as tax incentives in the purchase of aviation fuel and reduction in airport fees.

With R$1.5 billion in net losses last year, the worst in 12 years of operation, Gol doesn’t intend to make additional investments to build the fleet of Gol Dominicana.

As part of its strategy of reducing the supply of seats for flights in Brazil, instead of adding seven new jets to the Brazilian market, whose delivery was already scheduled, Gol plans to transfer them to Gol Dominicana. This way, it would avoid cancelling orders already placed with Boeing.

Last October, Paulo Kakinoff, Gol’s CEO, told Valor that the airline plans to build a hub in Santo Domingo, Dominican Republic. He said the idea was to offer flights to the US. Gol has already started to sell tickets to Orlando and Miami from the Dominican capital.

Gol has plans to increase connections to the US, to cities including New York, Las Vegas and Los Angeles, with departures from Santo Domingo. Through its minority shareholder Delta Air Lines, which also operates in Santo Domingo, Gol intends to offer its passengers connections to Asia and Europe from Atlanta, where Delta has its hub.

(Alberto Komatsu | Valor Economico)