:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/AUU457KU6FG7XDAUJFMRCCVUXQ.jpg "A MercadoLibre Inc. distribution and fulfillment center in Cajamar-SP, Brazil.")
Argentine e-commerce company MercadoLibre Inc. (MELI) has partnered with Brazilian airline Gol to add six planes to its airline fleet in Brazil. Currently, MercadoLibre already has three aircraft operating with deliveries throughout the country, in partnership with Sideral and Azul, and will maintain the freight operations with the aircraft of these other companies.
The agreement with Gol is valid for 10 years. With the increase of the air fleet, MercadoLibre will have nine airplanes at its disposal, tripling its capacity of flights throughout Brazil. Of the six new aircraft, three will be available in June and the other three will start flying next year.
Besides, under the agreement, Gol can still supply six more aircraft until 2025. “It is something to be evaluated further ahead, but it is a possibility that we have,” said Fernando Yunes, Senior VP of MercadoLibre in Brazil, at a press conference on Tuesday.
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The planes supplied by Gol will be Boeings 737-800 with the capacity to operate 24 tons in each take-off. With the partnership, MercadoLibre intends to quadruple delivery capacity in the country to 40 million packages and reduce delivery time by 70-80% for customers in the North and Northeast regions of Brazil: 70% of the volume of deliveries with the new air fleet goes to these regions. MercadoLibre expects to reduce the delivery time from 7, 8 days to 2 days in these regions, especially in Manaus, the capital of Amazonas state.
In the second half of this year, these airplanes will be painted with the colors and logo of Mercado Libre. The maintenance area of GOLLOG is also preparing to make the conversion of these aircraft in Brazil. According to Gol’s CEO Paulo Kakinoff, these aircraft are already part of Gol’s fleet and will be converted into freighter aircraft. “These aircraft are innovative in terms of cargo and efficiency,” Kakinoff said.
Gol’s logistics area, GOLLOG estimates a growth of about 80% in the capacity offered in tonnes in the domestic market. In the airlines’ leasing contracts there is a redelivery cost, in which financial agents rent the aircraft. In the case of the exclusive partnership with Mercado Libre, the aircraft will not be returned. The contracts are extended in a freighter version, so Gol expects to save R$ 25 million this year and another R$ 75 million in 2023. “This transformation [into freighter aircraft] is proportional to a greater reduction in fixed costs, generating new possibilities for auxiliary revenue for the company,” Kakinoff said.
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Furthermore, with the increased capacity and services offered, GOLLOG expects an additional R$100 million in revenue with this partnership, as well as an increment of R$1 billion over the next five years, according to Julio Perotti, executive director of GOLLOG. “With these exclusive operations we are bringing 100 new direct jobs just to attend this operation and we will still put in the market another 90 to 100 indirect jobs for this operation”.
According to Kakinoff, there is no compromise in the supply for passengers with the converted freighter aircraft. “We will have full utilization [of the airline network] around December this year. The domestic market has already practically resumed pre-pandemic demand. The international one hasn’t yet. We would already have idleness in the fleet in this second semester, so now we increase utilization,” he said.
“The project is the result of 10 months of work, a period in which the two companies proved their capacity for joint development. The first step is to offer this new level of cargo transport logistics for e-commerce deliveries. We have steps planned for the expansion of this number of aircraft, given the success of Meli. We expect that we grow this number. We are focused on making the best delivery possible,” said the CEO of Gol.
For Yunes, faster delivery increases customer loyalty. “Reducing the delivery time from 7, 8 days to 2 days increases customer loyalty, increases the market. There are products that you don’t wait 8 or 9 days to buy, you go to a physical shop. But if it arrives in two days, more products are bought.”
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MercadoLibre did not disclose the amount invested in the partnership with Gol, but said it is part of the investment package of R$17 billion in Brazil, announced at the beginning of the year.
Pablo Navarrete, director of transportation at MercadoLibre, said that the e-commerce firm is also developing an airline network in other countries in the region, such as Mexico, but for now, the partnership with Gol is exclusive to Brazil.
