For David Neeleman, life after JetBlue leads to Brazil

"Shows you how compelling ... this Brazil idea really is," the JetBlue founder said of his latest venture, an airline -of course -that will appeal to Brazilians on service and price.

The 48-year old father of nine who has been involved in starting up three carriers north of the equator says he won't be launching another one on this side of the globe any time soon.

"If someone came to me and said, here's $400 million to start an airline in the U.S., I'd say, 'No way,'" Neeleman said over lunch in New York last week.

Oil at more than $120 a barrel, a slowing economy and fierce domestic competition are squeezing airlines. Most U.S. carriers reported sharp losses in the first quarter. Two -Delta Air Lines Inc. and Northwest Airlines Corp. -are combining to try to cut costs, and several others are said to be seriously exploring joining forces.

Analysts and industry insiders such as Neeleman say the solution to those problems, barring a sharp reduction in oil prices, is to cut capacity -the number of planes and seats chasing passengers. To an extent, that's why airlines need to consolidate, analysts say; they need to eliminate redundant routes and hubs.

But even Delta and Northwest are reluctant to identify potential cuts, saying they'll retain their hubs and routes, for now.

"We're all competing, and nobody wants to be the first to pull back," Neeleman said. "If they do, then the other guy takes his market. So, we're all on this ... Bataan Death March, marching along and losing money."

But Brazil is different, he says. Two carriers, TAM Linhas Aereas SA and Gol Linhas Aereas Inteligentes SA control more than 90 percent of the market, and prices are about 50 percent higher than they are here, he said. There is no passenger rail service to speak of; people who can't afford to fly travel long distances by bus.

Because most Brazilian flights require passengers to change planes at hubs, Neeleman's airline, Azul -which is Portuguese for Blue -will appeal to higher-end travelers by offering more nonstop flights. On the lower end, it will offer fares only slightly more expensive than bus tickets, hoping to not only take market share from Brazil's existing carriers, but to entice people who don't normally fly.