In Brazil, new airline Azul aims to attract nation's growing middle class
Wednesday, November 3, 2010; 3:41 PM
CAMPINAS, BRAZIL - At 19, a tall and gangly Mormon missionary named David Neeleman traveled to northeastern Brazil, spreading the word of God in a region so poor that he still remembers it as "very upsetting to me."
After that two-year stint, a bubbling entrepreneurial spirit led Neeleman back to the United States, where he built airlines celebrated for their innovation.
Neeleman is back in Brazil and once more looking for converts - this time to fly his new carrier, Azul.
The airline's growth, like that of many companies in this booming country of 200 million, is powered by an expanding and increasingly prosperous middle class, known as Class C in Brazil.
"It's really gratifying to see now that you have 100 million people who are now just in the what we call the C class," Neeleman said in a recent interview at Azul's headquarters outside Sao Paulo.
Thirty years ago, when he was ending his missionary work, Neeleman recalled, a fraction of Brazilians, perhaps 30 million, held most of the country's buying power. In the past eight years, though, the Class C - made up of households earning $650 to $2,850 a month, what would be considered lower-middle class in the United States - has mushroomed by about 30 million people.
"It's that group that's really giving the growth to the economy," Neeleman said. "It's not the A and B class, the 30 million that have always existed, that have always spent money."
The millions of new, upwardly mobile Brazilians are helping power an economy, the world's eighth-largest, that economists predict will grow 7.5 percent this year. Their leap into the middle class has prompted Brazil's president-elect, Dilma Rousseff, who won a runoff election Sunday, to say that eradicating poverty in Brazil is feasible.
Indeed, as the popular, eight-year presidency of Luiz Inacio Lula da Silva comes to a close, this country is undergoing what sociologists call a remarkable social and economic transformation in which 20 million people have risen out of poverty since 2003. Wages went up 5.2 percent a year during his presidency, and income inequality has fallen.
Marcelo Neri, an economist who studies socioeconomic trends, said newcomers to the middle class increasingly enjoy a new stability that includes jobs in the formal economy and benefits such as health care and pensions.
They are also buying at a record rate. Last year, car sales doubled to 4.5 million from 2003. The number of credit cards issued to consumers rose 438 percent in a decade. Airplane boardings also jumped, from 33 million in 2003 to more than 56 million. That means lucrative opportunities for investors, whether they are selling washing machines, new homes or airplane tickets.
"They were used to targeting 10 percent of the Brazilian population," said Neri, chief economist at the Center for Social Policies at the Getulio Vargas Foundation in Rio de Janeiro. "Now they are spreading their reach."