JetBlue founder to start new airline in Brazil

By Todd Benson

SAO PAULO (Reuters) - JetBlue Airways (JBLU.O: Quote, Profile, Research) founder David Neeleman unveiled plans on Thursday for a new low-cost airline in Brazil's fast-growing aviation market, saying he had already raised $150 million for the venture.

The carrier, still unnamed, will start with a fleet of three jets made by the Brazilian manufacturer Embraer (EMBR3.SA: Quote, Profile, Research)(ERJ.N: Quote, Profile, Research) and should take to the skies in early 2009. In five years, it expects to have a fleet of 76 planes.

"Brazil is a country that needs more competitors, and in particular a different type of competitor," Neeleman said in Portuguese at a news conference in Sao Paulo.

Like JetBlue, the U.S. discount carrier that Neeleman founded in 1998, the new Brazilian airline will offer low fares and use a point-to-point route structure that flies travelers from one city to another without layovers.

The new carrier will face stiff competition from TAM Linhas Aereas (TAMM4.SA: Quote, Profile, Research)(TAM.N: Quote, Profile, Research) and Gol Linhas Aereas (GOLL4.SA: Quote, Profile, Research) (GOL.N: Quote, Profile, Research), which together command more than 90 percent of Brazil's domestic aviation market.

But with the Brazilian economy booming and air travel expanding annually at a double-digit pace, Neeleman is betting there is plenty of room for a new player in an enormous country where travelers have few options and where airfares tend to cost 50 percent more than they do in the United States.

"We believe airfares in Brazil are too expensive. It's time to lower prices to allow more people to fly," Neeleman said.

Neeleman said the new airline, which still needs government approval, will aim to bring affordable air travel to under-served cities outside congested hubs like Sao Paulo and Rio de Janeiro.