GOL, Copa Airlines in Codeshare Pact; Approval Awaited

In order to forge ahead with its plans of increasing codeshare allies, leading Latin American low-fare passenger carrier, GOL Linhas Aereas Inteligentes S.A. (GOL), has applied to the Agencia Nacional de Aviacao Civil (ANAC) and Conselho Administrativo de Defesa Economica (CADE) for the approval of its bilateral codeshare agreement with Copa Holdings SA’s (CPA) subsidiary and prominent air carrier – Copa Airlines.

If granted, almost all flights of both the carriers will be regulated as per the agreement. At the same time, these Latin American carriers will jointly gain access to more than 54 destinations around Brazil.

A codeshare deal allows sharing of flights, which implies that a passenger has the free will to avail any flight operated by either of the companies under the agreement, irrespective of the flight number.

The contract also provides extended and seamless connectivity between flights of the two carriers. Moreover, passengers of both the carriers will benefit from this deal by means of easy one-stop ticketing, more flying options and better baggage check-in facilities.

Airline partnerships are a strategic key to a carrier’s growth prospects as they provide expansion opportunities without incurring heavy costs. Thus, the new agreement will help both GOL and Copa Airlines enhance services by controlling costs and taking advantage of travel benefits.

Earlier, both the carriers had struck a deal related to the Frequent Flyer Program ("FFP"). Under the program, the members of GOL's Smiles can easily earn or utilize miles while flying Copa flights.

In Jul 2014, GOL had inked a codeshare agreement with UAE-based Etihad Airways. Further, the carrier had signed a codeshare agreement with Delta Airlines Inc. (DAL), whereby the companies were able to enhance connectivity in the Brazil-United States route.

Hence, we believe that these tie-ups with leading carriers will not only enhance flight offerings for passengers but also expand carrier networks.

GOL currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the airline space is Hawaiian Holdings (HA) with a Zacks Rank #1 (Strong Buy).