Morning. [Foreign language]. It's great to see so many familiar faces. My name is Andrea Butcher. I'm the head of IR at Azul. On behalf of the Azul team, I would like to welcome you all to our university center, our home here, UNIAzul. It's great to have you here. For those of you that are joining us via webcast, it's great to have you here as well. We hope that today will be informative and help you as you continue to make your investment decision on Azul. Today's slides are available in our IR website. I also wanted to go over our agenda today. John Rodgerson, our CEO, will kick off the presentations to talk about our investment thesis. We'll have Abhi Shah, our Chief Revenue Officer, who'll talk about revenue and product.
Alex Malfitani, CFO, will talk about business units, Azul Cargo, TudoAzul, financial highlights. We also have here with us Jason Ward, our VP of People and Customers, who'll talk about Azul's culture and why it's so important to Azul. After the presentation, we'll have Q&A, there'll be plenty of time for questions. For those of you who are staying with us to go to VCP and to see the E2, we have buses leaving up front right after the event. Please go up front once we are done. With that, I would like to invite John to the stage.
Thanks, Andrea. It's a pleasure to have so many of you here with us. This is a big week for David Neeleman. He's turning 60 years old. It's very difficult for him to turn 60 years old, and I'm glad this is being webcast because I think he's finally understanding that he's mortal. His family's having a big party for him, and that's why he's not here today with us. It's a pleasure to have all of you here at our University. As Andrea said, I've talked to many of you, but the culture of Azul is very strong here in this building. There's roughly 800 people a day that pass through this building. I encourage you when you're sick of hearing our slides and want to step out, walk around the building. Pop into a few classrooms.
All the classrooms are open. Stop in there. Talk to our people. Talk to the professors. Our house is your house today. Get a feel for what we're all about because I think the culture is a really, really important part of what we're doing. Every single time we invite a new crew member to join our team, their first day is here in this room, and our entire leadership team receives them in this room because they're now part of our family. They're the ones that are responsible for delivering over 900 flights a day and delivering an unbelievable culture and experience. Hopefully, you'll feel that. It'll be great to spend a lot of time with you today at the airport, seeing the new E2, and we're around all day to meet with any of you as you see fit.
Many of you know Azul. We want to give you a very in-depth look at what we're building. What we've built over the last decade and what we're building over the next 3, 5, 10 years. I've said it often and I'll continue to repeat it, Azul is just at the beginning. We're just getting started, that's why we're so excited. We have a very unique network. Abhi will talk about that. We're growing the business and expanding margins at the same time, which is very unique in this business, and so we're excited about it. I talked a lot about the culture. We have the strongest balance sheet. We have a lot of assets that many of you don't give us credit for.
Hopefully today, as we spend a lot of time on these hidden assets, you'll be able to give us full credit for the assets that we have. I want to start why we're in Brazil. Obviously, we've got a bunch of Americans that are down here mixed with a great Brazilian team. The reason why we're in Brazil is because Brazil has an unbelievable amount of untapped potential. If you take a look at where it was in 2008, there were roughly 50 million enplanements a year in 2008. Last year, it was just under 100 million. Okay. I guarantee you that every single person in this room has been to Miami and New York and to Paris, but many of you haven't seen Foz do Iguaçu, Fernando de Noronha, the Amazon, and much of the Northeast because Brazilians don't travel enough.
We need to change that. We are changing that. If you take a look at it, Brazilians travel less than Colombians, less than Mexicans, less than Chileans, and certainly less than the U.S. and the rest of the developed world. As you look at this and you pick on Abhi for his high fares, you'll see that we've been able to stimulate traffic in what I would call a lost decade in Brazil. The last decade's been very difficult. The last five or six years, we've had really no GDP growth in Brazil. We've done it with higher fares. We are so excited to see what happens now when we have fuel-efficient aircraft coming in, when we have the ability to get some GDP help in Brazil. The opportunity is absolutely tremendous.
Just getting to where Colombia is, you need 50% more aircraft in the country. That's a huge opportunity for us, and we're doing that every single day. If you take a look at this year, the unique business model of Azul is the pie is expanding. We did not need to steal customers from our competitors to grow our business. This airport out here in Viracopos was an empty airport prior to Azul coming. Had roughly 10 flights a day. Now it has close to 200 flights a day because we're growing the pie. That means that our competitors can also grow the pie as well. If you take a look at all airports in Brazil have grown in traffic since Azul started flying. That means what we do is very unique, it's different, but we need to do a lot more.
Brazilians need to travel a lot more, and we're going to show you how we're going to make that happen. I think it's important to understand that this company is led by a founding team. We are not executives that have been given the keys to run somebody else's business. Every single person that you're going to talk to today is a founder of this company. Many of our original shareholders are private equity investors, including some of them that are in this room today, are still shareholders of Azul. That matters. Many of you thought, "Oh, once this company goes public, these guys are all going to pick up and leave and go back to the United States." None of us have left. In fact, we've gotten people back that have left. Why?
We believe that the future is going to be way better than the past. We believe we're just getting started. A founding team that we are. We're united as a founding team. We clearly know the mission that we're executing to. That's really, really important. We don't agree all the time. We certainly agree that we want to grow this company and we want the best for our shareholders. That's really, really important. Every single one of these people are shareholders in this company. It really matters. This is our baby. We would never turn our baby over to somebody that we don't believe could care about it as much as we do. This is pretty amazing.
Those of you that kind of saw the screens out there, what we were in 2008 and what we are in 2019. We have a track record for growing this business, and we're growing it in a responsible way, and we're growing it in a way that every day we get stronger. Every time we add a new dot to the map, and Abhi will talk about that, the network strengthens. Every single city on the map gets stronger because of the network advantage. We know how to grow this business. When I said we're just getting started, a lot of it has to do with the business plan. When we sat down across the table from many of you when we went public, we said we were going to expand margins by five margin points by 2020.
We did that when the BRL was at 3.12, and everybody thought that there was going to be great GDP growth in Brazil. What's happened in the last two years and four months since we went public is the BRL went from 3.12 to 4.12, and we've had no GDP growth. Yet we still committed to our promise and are delivering upon that. The reason why we're so excited is that it's just getting started. The next generation aircraft coming in, we're only 40% of the way there. We've been expanding margins, even with the macro headwinds that you've seen from a currency standpoint and from a lack of GDP growth standpoint. The business units are delivering, that being TudoAzul, Azul Cargo, our investment in TAP as well. All of those are delivering.
Our non-ticket revenue, the ability now to charge for bags, that's about 50% of the way there. As you can see, we've really had no macro benefit as of yet. That's why we're so excited as to what this airline looks like in another one year, three years, five years. Alex often says we shouldn't have committed to five margin points of expansion. We should have committed to doubling our EBITDA. That's what we did. When you take a look at this, it's one thing to expand margins by five margin points, what we committed to the market, but top line has grown substantially since 2016, right? I mean, our revenues are up almost 80% and expanding margins.
You're going to see that growth continue as we move into 2020 and into 2021 and beyond, because there's a lot more opportunity, kind of referencing back to that slide of Brazilians don't travel enough. Take a look at what we've done from a profitability standpoint. Every year, we've expanded our bottom line profit, which is really important. This is the key. We're still only at 42% of our ASKs are our next generation aircraft. That makes a big difference because we have a lot of aircraft to replace, and I'm going to walk you through that now. I get this question often. Why doesn't a new airline just come up and start in Brazil? Can't anybody just repeat what you guys have done? Anybody now can start an airline in Brazil because there's 100% foreign capital. Okay.
I want to talk through the steps to build Azul. We raised $250 million of startup capital. We're the most capitalized startup in the history of aviation. $250 million of startup capital. We acquired Trip. We have José Mário Caprioli is here with us today. They had about $150 million of invested capital in that company. We took $100 million investment from United Airlines. We took $450 million from HNA pre-IPO, then we took $400 million from you when we went public. There's $1.3 billion of equity that went in to build this company.
This is not somebody that's going to show up with $50 million and say, "Hey, I'm going to go fly around Brazil." There's $1.3 billion over a decade of work, with David Neeleman, who is the most successful airline entrepreneur in the world, and a team that's been dedicated on the ground for over a decade that built this. Big difference, thinking that somebody can just show up in Brazil and replicate what we've done. To build out more than 105 cities in the country, 114 all throughout the world, it's very, very difficult to replicate what we've done, and we've been working at this 24 hours a day over the last decade. Quickly, the investment thesis, which is our significant hubs that Abhi's talked about, our network connectivity, the diversified fleet.
We're doing something that's very different than our competitors are doing in Brazil. This is what we call our fortress hub in Campinas. Those of you that flew in there today, I encourage you to look at a FID screen, okay? When we were going to go public, one of our competitors said they're going to double their flights in the Campinas Airport. Oh, they're going to go from one to two. Right? It's the hub that works for us, and it's the fortress hub that we have all of this connectivity in and out, and Abhi will walk you through that. I like to talk a lot about the triangle, and I like to make fun of the Leblon mafia and the people in Faria Lima. Brazil has historically thought of Brazil in the triangle, which is Rio, São Paulo, Brasília.
Our competitors, 92% of their flights hit the triangle. The triangle has historically been well-served by aviation. Azul, we fly in the triangle, but we fly a lot outside of the triangle. Look at what we do just in Cuiabá. Look at what we do in Confins. Look at what we do in the interior of São Paulo. Look at what we do in the Northeast. A significant difference in strategy from our network because the triangle was already stimulated. There are plenty of people on Faria Lima that go back and forth to Rio every single day. Okay? You're not bringing anything new to the table. Prior to Azul flying in Brazil, there was no direct service between Belo Horizonte, the fourth largest city, and Porto Alegre, the third largest city. You had to stop in the triangle to make that connection.
When you think about the triangle and think about the Azul proposition of what we're doing, think about what it looks like in the context of e-commerce and how Brazil is changing, and what is the value of our network throughout all of Brazil. Who can deliver a package in more than 100 cities in Brazil in one day? Only our network can do that. When 92% of our competitors' flights hit the triangle, the triangle doesn't need e-commerce help. There's plenty of roads and trucks that can deliver those packages. I encourage you today to take off your Faria Lima goggles and your Leblon goggles and look at the immense size of Brazil. Look at where Brazil is growing. Look what's happening in the Northeast, in Recife, the hub that we've created. Look at what's happening with the agribusiness in Brazil.
There's a significant amount of opportunity to grow Brazil, when you look at it through different eyes. You can see that here in the number of cities that we serve relative to our competitors. All of those blue dots is where Azul is number one. We serve many more dots than just those blue dots on that map, but that's where Azul is number one, and we'll continue to add service in and out of there. How do we do it? We're the only ones that have a diversified fleet. We fly the ATRs to ATR cities, which is roughly 400 km. We fly the E-jets. It's our workhorse for the airline, in and out of business cities in the southeast of Brazil. Then we fly the A320s on our trunk routes. That diversified network is really, really important.
If you take the most profitable airline in the world, which is Delta Air Lines, and you take away their regional feed, they'd go bankrupt in six months. They need that regional feed. How come in the most developed country in the world for aviation, the U.S., they need regional feed, yet Brazil didn't have regional feed? That's one of the reasons why Brazil is still well below where it should be in terms of passengers per capita, because there wasn't that regional feed. What's happened is, we, by diversifying our fleet, we've brought in many different types of aircraft as an absolute necessity. Is there an incremental cost to having additional aircraft? Absolutely. There's more pilot training. There's more parts. Okay? Oftentimes our competitors will try and compare our unit cost of an ATR compared to a 737 or an A320.
It's apples and oranges. What I will guarantee you is that our A320neos have the lowest unit cost. When you're comparing an apples to apple comparison, we certainly are more efficient than our competitors are. I think that allows us to grow the business over time. One of the reasons why Avianca Brasil doesn't exist today is because they just tried to fly in the triangle and tried to do what everybody else was doing, and they never diversified their fleet, and they grew themselves to death. Okay? We have a very different business model with a lot of capital behind us, will allow us to continue to grow the business. The most exciting thing about Azul today is that we have a significant amount of our departures on old generation aircraft. Okay? New generation aircraft have been built.
Take a look at this. We fly the Embraer 195, which has 118 seats. Every time we take off now in a E2, it's going to have 18 more seats and 26% lower cost per seat. Think about this, an aircraft that's producing roughly 10% more revenue and has 26% lower cost per seat. On an absolute basis, it's got 14% lower cost per trip. That's nirvana for an airline, okay? Producing 10% more revenue because you have 18 more seats per aircraft and 14% less total cost. A lot of times the question comes up, "Well, can you fill it?" That's the same question you asked us when we went public, and we've shown you every single quarter since we've gone public that we've actually increased our traffic with the addition of larger aircraft. So these aircraft are really important to us.
Look at what happens with the A320neo. You've been hearing a lot about the A320neo story from us over the last couple of years, but now it's all about the E2. The E2 is very exciting because the E2, it's plug and play with our pilots. It's literally just a two and a half day training course difference to fly the E2 versus the E1. That pain that we've had over the years of taking the A320neos in and having to transition all of our pilots, that does not happen on this next fleet type. Take a look at what happens here. We have 900 flights a day, but 510 of those flights, more than 50% of our flights today, is on old generation aircraft.
Just think about what Azul looks like in three years when those 500 flights a day are now replaced by aircraft that produce 10% more revenue and has 14% lower trip cost. It's pretty phenomenal the margin expansion that will result from these aircraft coming in. When you have 26% lower seat costs, you can actually lower fares and increase profitability going forward. I don't want to mislead any of you. Fares are not driven by the aircraft type. Fares are driven by the economy and market dynamics. What I want to show you is that we have the ability to actually lower fares and stimulate demand because of the economics of these new aircraft.
When I close my eyes and think of what happens in three years, having 510 flights a day on next generation aircraft, it's a pretty phenomenal change to the business. This is the fleet plan going forward. Our job as a management team is to do all we can to accelerate the next generation aircraft. We'll talk about that today when we get to questions and answers. I will tell you that the E1 market has been tough. It's been tough to move aircraft. However, we're starting to finally get some traction, there's some possibilities out there. We believe we will be able to accelerate the fleet plan and be able to move more E2s into the fleet sooner.
Embraer has the capacity to do that, and we believe that we can finally place some E1s in the market to accelerate that fleet transformation. The brand. Many of you flew in on Azul today. The brand is strong. I think it's important. When you fly Azul, it needs to be an experience. When you compare ourselves to Amazon, Netflix, the Azul brand is really important. I think that's why our competitors went crazy when we were trying to enter into the Ponte Aérea because they know that our brand is a significant presence, people enjoy flying us, and it matters. I think as you took a look at it, we measure it by every single aspect of the flight.
We know what our customers think of our pilots, what they think of our flight attendants, what they think of our call center, what they think of our snacks. We measure that, and we believe that if our NPS is strong, our net promoter score is strong, margins will follow. We don't believe that taking care of your customers hurts profitability. We think the opposite. We think giving a great experience to our customers delivers an unbelievable experience, and they pay more for that. We've proven that. If you take a look at our unit revenue, our RASK that Abhi Shah delivers on a monthly basis, our unit revenue is higher than our competitors. A lot of it's driven by the great customer service that we deliver at the airline.
With that, I'll turn the time over to Abhi.
Thanks, John. All right. Thanks, guys, for coming. I'm sure there's going to be a lot of questions about network, a lot of questions about RASK and revenue. I'm going to try and cover some of the anticipated questions already because I know they're going to come, but of course, feel free to throw whatever you feel like at the end. First of all, our network. As John said, we're incredibly proud of this network. It's a differentiated network, as you know. Very low overlap with our competition by design. We want to explore new parts of the country, new sources of traffic. 104 cities in Brazil, over 900 daily flights, over 230 routes. Really trying to explore different parts of the country that really have never had service at this level.
If you look at Campinas, where we are right now, Belo Horizonte, Recife, they've never had this level of service in the history of Brazil. Recife is going to be approaching 80 departures a day. Belo Horizonte, 100 departures a day to something like 40 destinations. That is a level of service that they've never had before, including Buenos Aires, Orlando, Fort Lauderdale. Really, we've built out a network that has I was giving this talk to Embraer last week, and today, somebody from Vitória de Conquista can go to Rio and come back on the same day. That was not possible. That's what David always says, "When you make it convenient, when you provide these types of services, they will fly more often," and that's what's happening. In terms of our leadership position, and I want to focus a lot on this in the next slide.
We continue to be very strong where we fly. I know many of you have raised concerns about our growth in Guarulhos the last six months and things like that. I'll get into that. The overall strategy has not changed. That's the key message here. If I leave you with anything today, it's that our strategy has not changed. We continue to be very focused in our network, what makes us strong, and improving the connectivity of our network. That's the key. Will continue to be our focus for the years to come. 72% of our routes, we are alone. That number has not changed significantly. It's gone up actually over the years. Continues to have very low overlap with our competition. That is something that we've focused on in our growth.
We will finish this year with something like 36, 38 A320s. Many of you raised concerns with this growth. Are you going to enter more competitive markets? It hasn't happened. We continue to be very strong where we fly, that's our strategy going forward. This slide really highlights that. If you compare to 2015 before the A320s entered the fleet to this year with some of the Avianca Brazil cancellations and what we project going forward. 2015, we were 62% of our routes, we were alone. We expect next year, 71% of our routes. Getting better, even more stronger as we are growing the airline. Many people say, "Well, as you grow, you won't have enough places to fly." Well, that simply is not true.
We've shown over the last four or five years that our network has the ability to generate the traffic, to create the demand that allows us to grow within our network itself. We've actually gotten stronger as we've grown. We've gotten more dominant in our network as we've grown. These numbers include some of the capacity that we've put in light of the Avianca Brazil bankruptcy. I'll talk a little bit about that. I'll pause here for a second. If you look at our growth in GRU, where many of you have questions, Avianca had 60 departures a day, a weekly average. Per day, 60 departures because they wouldn't cancel on weekends. We've added 20 departures a day. One third of their capacity is all. We've entered five new routes that just account for 10 departures a day. 20 flights out of 910.
We've really, really focused on dimensioning our growth in GRU for some very specific motivations. Number one was to fly local markets, corporate markets. We don't really have interest in flying to all the places in the northeast, for example. We do that from Viracopos right here. We wanted to have some presence in São Paulo for the big corporate local markets like Porto Alegre, Curitiba, Rio, things like that. We wanted to really be relevant for the international connecting partners. As you look at the movements with Delta and LATAM, there was a good move. You want to be able to provide that connectivity to long-haul carriers. We fly long-haul wide bodies, and we know the importance of having this domestic connectivity or onward connectivity. We've perfectly, I think, very efficiently dimensioned GRU to perform these objectives.
Big local markets, more corporate markets, a lot of connectivity to international partners like United, like American, like TAP, like Turkish, like all our codeshare partners. That's our goal with GRU. It's still today, after this growth, is number 4 for us in terms of departures, after Viracopos, after Confins, after Recife, and then Guarulhos. We've invested just the right amount to serve our purposes. I think we're basically done. There's not a lot more that we want to do there because it is serving the purposes that we want, which is to have some important presence in São Paulo, have the local markets, and really be a relevant connecting partner for international long-haul carriers. I think that's going to be very, very important as we go ahead.
At the end of the day, after that, we continue to be just as dominant in our network, more dominant in our network after our growth. The E2s are starting. We're going to go visit one today. Starts flying on Thursday. We're very, very excited. That's, as John said, 500 departures a day that are in our markets, in Campinas, in Belo Horizonte, in Recife. These are all Embraer E1 markets today. All of them are going to be E2. Our focus over the next two years with the E2 is our network because that's where the airplanes are flying today. Hopefully, that makes you feel a little bit more comfortable about what we've done this year. The bottom line is our strategy has not changed.
We continue to focus on our network, where we are strong, and we see lots of growth potential in our network as we go forward. I talked about our hubs, each of them progressing very, very nicely. These are average weekly numbers. The peak day numbers are much higher. The important part of our multiple hub strategy is they each serve different geographies. I stress this a lot with our route planning team. The hubs have to do something different. If they're all doing the same thing, we're just stealing revenue from ourselves. We're not growing the pie. If you look at Recife, its job is to serve the northeast, all the capitals in the northeast, and to really grow the market there. Belo Horizonte is the middle of the country. Little bit shorter distance to the north and northeast. Lot of cities in the Minas area.
All of these have great connectivity to Belo Horizonte. Of course, Campinas, São Paulo is our south, southeast hub, all of the big cities flowing into there. Each one of them has a very different purpose. I talked about GRU as well. It's a local market for us. It's not a hub. It's not meant to be a hub. It's just meant to get some local demand out of the São Paulo and SP1 region that we call it. Each hub is doing something very, very different, and that's what allows us to create the platform for future growth. We just announced Belo Horizonte to Fort Lauderdale.
The reason it will not steal from our VCP flight is because it has a different set of connecting cities than VCP does, and that each and every hub is doing something very different and is able to grow and access a different set of markets and different set of demands. This broad platform is what allows us the ability to grow very, very healthily in the future. Our destinations I talked about, 51 in Campinas, 40 in Belo Horizonte, 26 in Recife, and really leading the way in all of these cities that we fly. More convenient connections, more flexible schedules, really allows customers travel options that they never had before. This really is one of the ways that we're growing the market in all these different geographies.
We've seen this graph before. It just shows the power of the network and how difficult it is for somebody to enter into our markets. We have an example like Ribeirão Preto, pretty close by here, flying into VCP, connecting to all of the different cities in the VCP network, in the Campinas network. If one of our competitors enters one of these routes, they only get a small piece of the traffic, unless you want to build out an entire hub network or enter all of these cities. It really allows us to be very resilient and very robust. When different types of demand are strong or weak, we're able to turn on connections, turn off connections, and really be able to generate traffic that way.
It makes our network very resilient, very robust, and actually very difficult to attack because any one piece that you try and attack, you're only getting a small piece of the pie. It's very difficult, as John said, over the last 10 years, the investment that we made in the network to replicate the entire thing. This is a great example of showing the power of the network and how upgauging for us has been so powerful. This is why we've been able to grow the last two years, increase load factors, and most importantly, increase unit revenues. We have not had to lower fares as we've grown capacity, and that's something that really speaks to the power of the network. In this example, we have a flight, Campinas to Recife.
It's a hub-to-hub flight for us, and we have all these dots on one side of Campinas and all the other dots on the other side of Recife. They all want to connect to each other. What was happening before is we did not have enough seats from Campinas to Recife. Now, you could say, well, just add 20 flights a day. Yeah, they have to connect. If you have 20 flights a day, they're all not going to connect to the destinations on either side. In this type of scenario, you actually want to have larger aircraft that are flying into your banks and flying into your hubs and delivering maximum amount of seats and passengers in the most efficient way possible.
In this example, we increased capacity by 72%, actually, and our load factor went up by three points because we generated 94% more connecting traffic. This is how we've been able to maintain our traffic and our unit revenue. We have not been forced. We haven't had to lower fares. Our fares have actually gone up as we've increased capacity. Now, we'd like to lower fares in the future with efficient aircraft, but I will always take the demand, I'll always take the fare when I get it. Our network is what stimulated the traffic, and this is a very unique proposition.
Nobody in Brazil has this type of connected network, and this is what allows us to be very confident as we now transition into the E2 program over the next couple of years, that the traffic is there because the network is what's creating and generating this demand. It's not coming through lower fares. Our strategy remains the same as we said before. We want to continue focus on upgauging. We want to focus in our network. If you look at how we're going to deploy the aircraft over the next couple of years now as we go into the E2s, the vast majority is upgauging as it has been with the A320s. Frequencies in current markets to improve the schedule.
One thing we've seen with the Embraer is because of the low trip cost compared to a 737 or A320, you're able to have seven, eight, nine flights a day in a market, whereas our competitor can only have two, three, four flights a day in a market, and that really gives you a lot of relevance with the corporate customer. New markets. I think the E2, especially because of the 14% lower trip cost, is going to open up a set of markets for us that the A320 is too big for and the E1 was not efficient enough.
There are a lot of point-to-point markets in our network we could potentially open up where we see lots of connecting traffic, a little bit longer, a little bit thinner, all domestic, where perhaps an A320 is too big, but we can have nonstop service from Campinas, for example, to some places in the north and the northeast where the A320 is too big, but the E2 is just the right size with 136 aircraft. Some opportunities to connect dots in our own network that perhaps the A320 is too big for. None of this envisions anything that changes the competitive dynamics of the industry. We're not really thinking about there's no need for us to enter in any competitive markets.
Our network is big enough, our network is broad enough, and our network has enough potential and needs, actually, this aircraft that all of these E2s over the coming years, there's enough space for them to grow in our network. That's a really important message, as we look for the next few years, is our network has the space, has the potential to capture these aircraft, and I'm very confident about the traffic that's been generated. I talked about our fares going up, and we've done very well in the corporate market. If you look at our passenger share in Brazil overall, it's 22%, 23%, but our corporate revenue share is 33%. We're significantly overachieving our fair share in the corporate market. Our fares have gone up.
We had a higher base than our competitors. Of course, they've benefited significantly more than we have because of the Avianca Brasil. Even then, even with the higher base, even with our growth, we've been able to keep pushing fares up. We continue to have some of the highest fares in Brazil. That's something that we'd maybe like to change in the future. Again, as demand is strong, as we're seeing demand in our network, we'll take demand as it comes. We've done very well in the corporate market. I don't really expect this to change. I think with the E2s, this will only make us stronger. Talk a little bit about international. Of course, I talked about flying long-haul wide-bodies. Flying long-haul wide-bodies, you have to give yourself every chance to be successful.
For example, we have no head-to-head competition, airport-to-airport competition where we fly long-haul wide-body. We have great connecting partners on the other side, whether it's in Fort Lauderdale, in Orlando, in Lisbon, in Porto. We have sufficient connecting capacity with our partners. These are the things that you need to give yourself every chance to be successful when you're flying long-haul wide-bodies. Our strategy is pretty conservative, actually. We fly from where we are strong, our three hubs, to where our partners are very strong. It's Orlando, Fort Lauderdale in the U.S., or Portugal in Europe. What we do well, and there's a video when I talk about product, is that we're doing really well with the long-haul high-yield leisure market. I talked a little bit about GRU and the importance of connecting traffic with international partners.
We have 7 codeshares today and 27 interline agreements. There's one very interesting thing happening with distribution today. Historically, codeshares were much more relevant than interlines because of the way GDS screens used to work and display the flights and things like that. Today, if you go to United's website and you type in Chicago to Curitiba, you will not know on the results which is a codeshare and which is an interline. The experience for the customer is actually the same. It's not as relevant anymore. Interline agreements can generate just as much traffic as codeshare agreements. It's equally important to have interline or codeshare, and it really opens up a lot of possibilities for us using our network, primarily in GRU, to be a relevant connecting partner. Today, Azul and United is a very relevant partner in GRU.
I think we're number 2 or number 3 in terms of all connecting passengers in GRU. United, I think, is very happy with how we've been able to provide them with connections. Now with our sort of improved schedule, we're really going to be important, I think, for future partners flying into GRU. I think we sort of anticipated that movement, and I think it's going to serve us well going forward. This is great for the domestic network, and I think very important for airlines flying into Brazil long haul. Non-ticket revenue growth has done very well over the last couple of years. Some big movements like, of course, charging for baggage, seat assignments. We've unbundled the domestic and the international product at the same time, and actually quietly and efficiently. We charge for baggage domestically and internationally.
We charge for seat assignments domestically and internationally, including long-haul wide-body. This is in addition to extra legroom and economy extra and the SkySofa and all those kinds of things. This, in addition to, of course, the growth we've seen in Azul Cargo, has given us a very nice boost in our non-ticket revenue per pax. For us, the relevant metric is per passenger because on a percentage basis, our passenger revenue itself is also growing 25, 30%. On a percentage of revenue, you will not see that much of an increase in non-ticket because our passenger revenue is growing so fast. On a per passenger basis, that's where you're seeing the impact of the ancillary unbundling opportunities as well, of course, Azul Cargo that Alex will talk a little bit more about.
This is sort of a pet project of mine that I'm very proud of. It's sort of making the customer more self-service here in Brazil. Brazil, as you know, the traveler is very well connected. We've been able to improve a lot in our mobile experience and a huge increase in the number of self check-ins that we have. I can tell you that more than two-thirds of our customers do check-ins by themselves today. That's driving efficiency in all of our customer checkpoints, touch points, basically. They gave us a great rating on the App Store, which is very nice. We're happy about that. We're continuously providing innovations and services on the app. Really, in terms of efficiency, in terms of self-service, it's what the customer wants anyway.
It's easier for them, and they've really taken to it very strongly over the years. I think we have a video now, Show you our international product. Apologize for that shameless marketing, but it is a pretty cool video, so we wanted to show you. Basically, the idea is, look, you want to give yourself every chance to be successful. We focus our international product where it matters. A good business class, a solid business class. We don't have the most expensive whiskey. We don't have the most expensive vodka, but we have a great seat and we have good food. We don't have lounges in Fort Lauderdale. Some of you that flew, we don't have a business class lounge. It costs money. It's not what our customers are asking for.
What they're asking for is great onboard product, a great seat, and most of all, amazing crew members, which is what we have. We've really been very disciplined. I know there's a lot of people that say, low cost, long haul, it doesn't work. If you stay very disciplined and true to what you're trying to do, I think we've shown that it can work. Our domestic product, we focus on free live TV, snacks and drinks, and sort of the experience, the example that I give when talking to our crew members is, and always amazes me, is somebody walks into an Apple Store, they walk out five minutes later, they paid $1,200 for a phone, and they're happier when they left than when they got in, and they paid over $1,000 for a phone. It's crazy. For me, why can't Azul be that aspirational?
Azul has the highest fares in Brazil. If we can make our customers leave the airplane happier than when they get in, I have no doubt that they'll come back week over week after week, and they will continue to be very loyal and fly with Azul. We have live TV, we have free snacks and drinks. Again, as Jason will talk about, what really I think sets us apart is our amazing crew members and the difference that they bring. Extra leg room products, domestically and internationally. It's great ancillary revenue, and of course, our customers upsell in a very meaningful way. Our business class, we talked about that. The focus is on the seat, being able to sleep, lie-flat experience and kind of very simple, but cool. With that, I'll turn over to Alex.
I'm going to talk a little bit about our business units. I know cargo is something that a lot of people have been asking us about and something that we're very excited about. I think in general, just to take a step back, the way to think about our business units and just to think about the Azul opportunity overall is the power of the network. It all kind of boils down to the power of the network and the great experience and the great operation that we run on it. The way that we have this geographic dominance will allow us to continue generating new ways of extracting profitability from it, right? Once we realized that we own this network, it made total sense for us to start flying internationally.
It was never the original plan for us to start to fly internationally, but we can make money flying internationally because of all the connectivity that we have, right? When we promised you a five-point margin expansion before we went public, obviously, we thought about Azul Cargo as one of the possible drivers of profitability, but we completely missed just how powerful it could be, right? That's, again, I think an indication of how over time, we will be able to look at our network and realize that there are new and exciting ways for us to extract profitability from it. I think there are ways that five years from now, we'll be extracting profitability from our network that we don't even know about today, right? The network is our platform, right?
We own our geography, we will want to serve the customers in that geography and provide to them everything that we can provide, and that will allow us to continue generating more and more profitability going forward. In terms of Azul Cargo specifically, what a lot of people I think don't know is that with Azul Cargo, it's not just the 115 cities that we fly to. Through our Azul Cargo franchisees, we already serve 3,700 cities door to door. Right? Obviously, the asset, the CapEx part of Azul is just the aircraft flying from the cargo terminal to another cargo terminal. We have a network of partners that allow us to go door to door to 3,700 cities in Brazil.
The same way that we're the only airline that can fly to all these destinations with passenger aircraft, we're also the only airline that will able to fly cargo in the bellies of these passenger aircraft, right? The same way that it doesn't make sense for somebody, as Abhi demonstrated, to come into our network to serve the passengers, it won't make sense for them to come into our network to fly cargo. All right? That is a sustainable, exclusive competitive advantage that we have and that we will develop, going forward because 93% of the cargo that we're flying is flying in the bellies of our aircraft, right? Nobody else Can somebody buy cargo aircraft and fly into high density routes of Brazil? Yes, but that's the same thing as the triangle that John talked about, right?
Can somebody fly an A320 between São Paulo and Brasília? Sure. Anybody can, right? Can somebody fly a cargo aircraft between São Paulo and Manaus? Sure. The power of the network and the ability to fly cargo in the belly of passenger aircraft, only Azul can do that. This is very similar for all of our business units. Our business units get the benefit of piggybacking off of the airline and selling the surplus capacity that we have. If we can fly one kilo of cargo between a cargo terminal and another cargo terminal, the margin on this business is almost 100%, because the marginal cost of flying an extra kilo of cargo in the bellies of a passenger aircraft is very, very low, right? Even if the yield is lower than the public fare, the public yield that we offer, the profitability is higher, right?
Because the marginal cost is so low. As we continue expanding revenues from Azul Cargo and from TudoAzul and from Azul Viagens, all of those businesses have higher margins than the consolidated airline, they will help expand margins going forward as they've been doing up to this point. A lot of people ask us, "How much growth is there?" Right? "How much can you grow?" Cargo only occupies 25% of our bellies today. Right? 50% of our bellies are empty. Cargo could, essentially, if we could fill every flight on every route, cargo could triple in volume until we get to capacity. Right? The fleet is also growing. Essentially, there's a lot of headroom, and that headroom just keeps getting higher and higher, so there's a lot of ability for us to continue growing our cargo business.
Essentially, what we see as a vision for Azul Cargo is for us to offer a complete end-to-end logistics solution because we're the only ones that have this portion of the service. Nobody can replicate this. If you believe our business model as it relates to the customer, as it relates to the passenger, you have to believe our business model as it relates to cargo, because we're the only ones that are going to have this link in 75%, 80% of the routes that we fly, right? Obviously, we don't do this, and we don't do this, but a lot of people do, and we can partner with them.
Our franchisees do, and there are a lot of very cool businesses popping up, a lot of it technology-driven, that we can partner with, and some of them we already partner with, that we can use to provide this end-to-end logistics solution. Today, like I said, we already do that to 3,700 cities, 3,700 destinations are where we do end to end. With more focus, with more energy, with more resources thrown into this, we can increase the technology, increase the functionality, increase the partnerships, and provide that end-to-end logistics solution, and essentially be the provider to all of these players, be they manufacturers, be they retailers, be they online players who need to transport cargo throughout Brazil. Right? The beauty of this is growing significantly. Azul Cargo is about half a billion BRL in revenue this year, which is 50% higher than last year.
There's no reason why Azul Cargo shouldn't continue growing at 40%, 50% rates for the next two, three years, or even further, right? Like I said, there's a lot of capacity available, and Azul Cargo benefits from the growth in the fleet as well. This growth should continue like this. If you just do the math, obviously, if you're growing 40%, 50% a year, you're going to double the size of this business in less than three years, and again, this is higher margin than the airline, so it dramatically helps us continue expanding margins. We just started with e-commerce. Obviously, e-commerce is growing off of a lower base, but it grew 142% over the last few years. It's a lot of potential, a lot of opportunity.
Obviously, you guys know that we don't care about market share, but this is just to illustrate that this is already a very relevant business. We're the second largest cargo airline in Brazil already. We're never going to pursue being number one, but I think this illustrates, if some of you are saying, "Well, but is there really a lot of cargo going to Alta Floresta or to Pato Branco?" This shows that we already have a significant share of volume in Brazil, and we're only getting started. Right. The beauty of this, and why we're so excited about this, and why we're more excited about this than when we first started talking about Azul Cargo when we went public, is that this is a huge tailwind for e-commerce, right. This is what e-commerce needs. Obviously, everybody that's in São Paulo or Rio, we're spoiled, right.
First of all, we have a lot of retail options, right? We have a lot of physical brick and mortar places where we can go and buy stuff, right? But if you start getting outside of São Paulo, outside of Rio, those options go down. You don't have as many malls, as many cool brick and mortar retailers as you have here in the big cities. Plus, when you start getting away from the southeast, the time to delivery when you buy online goes up dramatically as well. Right? In Brazil, on average, it still takes about five to seven days for you to receive something that you buy online. But if you look at just the northeast, for example, it can be more than 10 days, right? Consequently, the penetration of online commerce in Brazil is not that high.
If you're able to compress the delivery times, obviously, this is what happened in the U.S., this is what happened in China, if you compress delivery times, that will stimulate e-commerce, right? E-commerce has always been cheaper than a brick-and-mortar. It's always been more convenient. You've always had more availability. The Achilles heel has always been the time to delivery, and continues to be that, but we've only started scratching the opportunity here of being able to provide something. Our average delivery time to the north of Brazil is 2.8 days. It's a lot less than this. We're going to work on it to make it even less and less as we go forward.
We'll be able to compress that delivery time, and this is going to be nirvana for our partners like Mercado Livre, who what they want is to be able to deliver something that's bought online as quickly as possible, because that's going to stimulate their own growth. That's going to stimulate their own profitability. Then, when we talked about business units when we went public, when we talked about our margin expansion, we also talked about ancillary revenues. Right? I think here, there's been a lot of progress, and I think it's been one of the reasons why we've been able to deliver on our IPO promise, but there's still more to extract.
This is, I think, more mature than the rest. Azul Cargo is only beginning, and TudoAzul, which I'm going to talk next, still has a lot of headroom, a lot of potential to go forward. Obviously, charging for bags was important, was a milestone, but there are still a lot of things in Brazil that we don't charge for and that other countries like the U.S. or Europe have already started charging for. There's more for us to explore here. Talking about TudoAzul, you guys are probably familiar with the business, but just for those of you that maybe are more used to the U.S. style of loyalty, this is really a very important channel because a lot of people buy surplus seats through points.
This is a way that we use to segment our capacity and to be able to offer surplus seats for an average fare that's lower than maybe what's available publicly. A lot of the banks, for example, banks buy BRL billions in tickets every year, and the loyalty programs are one of the ways that they access these seats. A lot of it is from retail as well, and one thing that the industry has developed recently over the last two, three years is also a big B2C business. B2C, us selling points directly to the customer, either when they need to complete the number of points they need to buy a ticket or through the subscription program that we call Clube. These are real, very relevant businesses that are just bringing a lot of revenue into the company.
Again, the same concept of marginal cost applies here. If we can direct all of our TudoAzul traffic to surplus seats, the margin in this business is again, almost 100%. The marginal cost of an empty seat, of filling an empty seat is very low. As we continue growing the revenue in TudoAzul and bringing in that revenue at a higher average margin than the rest of the company, we'll continue expanding margins for the company overall. Since we started running TudoAzul as a separate business unit, we had essentially 8% revenue share. We don't have the numbers anymore for our competitors because one of them has been brought back into the fold, but we estimate that we are at about 20% revenue share today. The way we run this business is as an independent business unit.
We have a lot of agility, we have a lot of focus, we have a lot of resources, but we have no intention of spinning off this program because spinning off the program, as our competitors have demonstrated, is just very inefficient. It creates conflicts of interest, and it creates tax inefficiency. Our plan is to always own 100% of this business, and it's important. It's one of the hidden assets that John talked about. We don't believe we get credit for the fact that we own 100% of our loyalty program when our competitor owns much less than that.
There should be an adjustment for that because this is a high growth, high margin business that we own 100% of, and that we don't need to spend any money to be able to extract all the profitability and keep all of the earnings that we get from this business. A lot of upside as well, because even though we took it from 8%-20%, Azul has about 30% revenue share. There's still more space for TudoAzul to continue growing. It's growing at about 30% annually, and it should continue growing more than the airline going forward. We're very happy about the co-branded card. This is something that we used to not focus a lot on, but we redesigned the value proposition of the co-branded card recently, and it's today by far the best platinum card in the business.
We don't have a black card yet, but that's certainly a possibility. Right now, just from the platinum card, this volume is growing significantly, and this used to be the 10th largest source of revenue for TudoAzul. Today, it's the fourth largest revenue source for TudoAzul, just the co-branded card alone. That's from all the growth that's coming from that business. Again, B2B, it's the biggest part of the business, us selling points to banks, us selling points to retailers, but it continues growing. Even though it's very big already, it's still growing at 30% plus rates, and the B2C portion also growing in the high 30s. A lot of cool things. This is sort of our lab. This is where we create new products and kind of throw new things at the wall to see what sticks.
A lot of cool things kind of coming down the pipeline. We launched the Clube 20.000. The club is a subscription program where customers pay a monthly subscription every month. We launched the Clube 20.000, and then we were quickly imitated by our competitors. It's a very good way of segmenting our customers and just a lot of partnerships, a lot of cool things. Magazine Luiza is a recent partner. When you buy on Magazine Luiza, you can get to those Azul points. It's a way for Magazine Luiza to stimulate traffic on their own website, so things going very well here overall. I'm going to turn it over to Jason.
Thanks, Alex. It gives me great pleasure to be here. I know a few of you, others I'm just knowing today, but take care of the people and customers at Azul and everything that's been talked about. I just want to share a few slides with you about how we can make that happen here with our culture. To start, we have another video to show you. It was our 10-year anniversary video that was produced by our crew members.
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Azul é número 1.
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The best.
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Agora é voar mais alto. O que nós vamos fazer nos próximos cinco anos da Azul vai ser mais do que nós fizemos nos últimos 10 anos da Azul.
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[Non-English Content] . No. I think how do we create this value? We've always had this idea that if we can take care of our crew members, if they feel like really we are there to support them, we give them the tools, the resources they need to take care of the customer, that's what's going to happen. The customer isn't necessarily the most important, the crew members are most important. They will take care of our customers, even when there's problems, when there's irregular operations, we will take care of them.
Most of our customers will see how we handle them in these situations, that will make them even more loyal than if they didn't have these problems passing through, whether it's a canceled flight, delayed flights, weather delays. These customers that are paying these fares that Abhi's talking about, they're doing that because of Azul, because of the way they're being treated. They'll create the value for the shareholders, for the investors. Just Azul culture, it's very simple. We want to create the best airline in the world. I'll show you a few awards that we've received that we're well on our way to do that. How do we do that? What is the mission that we have? David said that in the video.
John has said it today, but we want every one of us to be able to say, "This is the best place that I've worked for." I've worked at five different companies, airlines, and three different countries with David, and I can say, as I said in the video, without question, it's the best job I've ever had, and it's because of our crew members, because they're focused on giving the customer the best flight that they've had, the experience that they've had. It's all based on these values, the six values that you can see in the presentation.
This is something that a lot of people can say, they can put it on the wall, they can teach it to people in classrooms, but how do we make sure that our crew members understand that this is the secret recipe that we have, so that it's not just something that's spoken? Andrea and the team went through and created how many hours do these people, the executive team spend? We've spent over 100 hours with interacting with our frontline crew members, whether it's through these pocket sessions. John mentioned here every 15 days, every other week, we stand right here in this room with our new crew members, introducing ourselves, talking about that. José Mário and John talk about the history of the company, the expectations that they have, and that our high standards must be their high standards as well.
The pocket sessions that you see here, opening up, updating our crew members. We work with our financial planning analysis team, to create the presentation that we will go out and share with our crew members, update them on what's happening at the company, why it's important, explaining the why that it's important that we deliver on our promises. What it is that the three of them that have already spoken, what they're promising to you, how do we make sure that we deliver that and that we use our people? The Chega Mais program, which is very similar to the Leadership Connection. Every one of our managers, directors, and our executive team, we are godfathers or godmothers, padrinhos, that we adopt a base or location. For example, I have Belo Horizonte. We are not the fathers or mothers, but we're these godfathers that we'll take care of them.
The most critical piece is to interact with them. Go out and talk to the customers, listen to them. What are the challenges that we're having? I love the story with Henai, who's our director of finance in the back there. He went to his city in Cuiaba. He found out, as he was working with our crew members and talking to customers, that we had a couple of processes that were very old, antiquated processes that we were asking our crew members to do. As he saw that, he quickly started sending WhatsApps to everybody saying, "This is ridiculous. We got to stop doing this. It's very inefficient." How long would have that taken us to figure that out had it not been through our engagement with our crew members?
John asked us last year to implement a skip level program. We call it Portas Abertas, open door policies. As a vice president, I have regular meetings with my managers that report to my directors to talk to them, to influence them, to ask them what's happening, but to hear them and what are the challenges that they're having at the manager level. Then celebration. I think it's always appropriate to pause a little bit and to celebrate the victories that we have. We work very hard. Our people work diligently throughout their shifts. We need to pause a moment and celebrate, and you'll see, as we have in this room here today, we have a lot of things to celebrate as well. Focusing on making sure, as I mentioned, it's very critical that you have the right tools and resources.
You set expectations for your team. You show them what it is that you need them to do. Make sure they understand. Do they have the right tools and resources? Investments that we're making to ensure that we have the right tools for our crew members to perform their jobs. I think many of you are very critical about wanting to have metrics. This culture piece, it's very soft, but how do we measure that? Our compensation for our executive team is very much performance based. Our managers, directors, VPs, all of this, we have basically the operating margin is fundamental to our compensation. We have other goals, whether they're crew member satisfaction or customer loyalty, the NPS, and then also, obviously, our operational performance.
All this is based on that profit sharing for our crew members based on these metrics as well, and then also the annual stock grants. The long-term incentives are based upon our performance. Our people, crew member satisfaction. I think one thing that's very critical that we preach to our people is that there's a difference between crew member satisfaction and your engagement. What we measure is crew member engagement. Satisfaction very much involves the day-to-day, what's happening. More of an engagement involves the mind, the heads of our people, what's in their heart. What is it they're doing? How do we measure that? We do a crew member satisfaction survey each year, and you'll see that as we've grown, we've been able to not only maintain, but also increase our crew member engagement, and it's through these programs.
I think a lot of times it's very easy to say, "We're going to start to do this," but how do you create these programs, implement them, and ensure that you have this development of our culture? You see we spend time also with our talent development. Looking at how do we develop new leaders, prepare them for the future for this growth. Critical path to ensure that we have the future leaders. We have over 700. We'll have close to 1,000 internal promotions this year in looking at this. One thing, a couple of years ago, John had asked us to look into this. We have a scholarship program, Voar, Associação Voar.
We are going to be having Jose Mari, who is here, David Neeleman, all of the executives will be creating this Associação Voar to look for our crew members that may not have the financial funds to become pilots, maintenance techs, or flight attendants. We see that they have huge potential, but they don't have the financial means to do that. Through this program, we'll be able to provide scholarships for these future critical positions that we need and give them a place so that they can create a better future for themselves and for their families. We talked about leadership development as well. The trading places or walk a mile in my shoes. It's a program to ensure that we understand what it's like. Some of the best flight attendants that we have started at the airport or at the call center, so they understand what it's like.
We incentivize all of our leaders and truly all of our crew members, we have close to 14,000 crew members, to do this program, to participate at least once a year. We offer it two to three times a year. To go walk a mile in someone else's shoes, to truly understand that first and foremost, we're Azul, and then we have our individual positions as well. To ensure that we're bringing in the highest talent of the country, we started this year, we kicked off the new trainee program. Various other companies have had this. Our board members have talked about this. Alex has asked for this for a couple of years now. We've kicked off. We will launch February 2020, it will be our first program for the trainee program.
We launched it last month on social media online, and we're looking for six positions or six spots to join us, and we've had over, I just confirmed with our director of HR here this morning, we have over 31,000 people interested in this program. Huge response for people and making sure that we get the best of the best as well. Again, John talked about our NPS scores. We measure this with our own internal surveys that we send out to our customers. The net promoter score is based off of what we're doing, but we also use the metrics from ANAC and from the consumer rights websites to ensure that we accompany what it is that we're delivering to our customers, what our customers are saying to third parties, whether it's ANAC or Reclame Aqui.
These award-winning service, you'll see the banners that are here as well. Our customers are giving us huge compliments. These awards that we share, it was a clean sweep, the top 10 airline in the world, low-cost, Latin America, best in Brazil, best in Latin America for economic class, as well as for our business class, various other awards that we get. Azul University. We do all of our training here in-house, state-of-the-art facility. Hopefully, you've taken a tour. If not, you're welcome to take tours afterwards as well. We have a capacity of 800 people here with our 21 classrooms. With our simulators that are here, we're getting another simulator preparing for that. John had a great vision. We started saying every other week we're here doing these bem-vindo aboard or the welcome.
After that, we go through the building, we sit down, and we talk with our crew members, pilots, flight attendants, maintenance techs, cargo, airport, talk to them about what's happening, interacting with them. Hopefully, you saw that. It's very hard to miss, but we are building one of the largest and most modern hangars in Latin America here. We're going to have over 93,000 square feet. It gives huge advantage to be able to insource a lot of our heavy checks. A lot of our wheels and brakes are here as well. We're going to be able to put A320s in this or two of our A330s in here. Great opportunity. It's going to investment of over BRL 150 million that will be ready first quarter of 2020. I think probably to sum it up, I talked about this strong culture.
We've launched a program called Sou Azul, I am Azul. Just to give you guys a little bit about, it's hard to imitate this culture. I just wanted to share a story about John because I think it starts at the top. It's not something we can just talk about. We have to demonstrate. Every other week, we're here doing this. Last week, last Monday, a week ago, John was not able to be here. He was in Rio. He was meeting with customers all day long, up early, flew over there, met with a bunch of customers, spent time with crew members at Santos Dumont, and then he flew back in here.
I happened to be here at 5:30 when he landed, and then all of a sudden, he comes back over here to go up and talk to our pilots, talk to our flight attendants, spend a couple of hours talking with that. It is very hard to duplicate because stuff has to come from the heart. It cannot be something that just says, "Okay, this is what we are going to do." When we fly, we make a speech. We introduce ourselves, whether we are the vice presidents, directors, or John himself doing this, then we go through the aisle and talk to customers, listen to them. What are they saying? What feedback do they have for us? Again, very hard to duplicate.
You can say you're going to do it, take a picture, put it on Instagram, but to actually do it and listen to your customers, again, something that's very critical, and it comes from the heart. It's something we want to do, we love to do. Our customers absolutely love that as well. Thank you. With that, I'm going to kick it back over to Alex.
Thanks, Jason. To just wrap it up, what does this all mean in terms of the investment opportunity for Azul? I think one thing that we're very excited about, and that we're very upfront about, we have a lot to improve upon. A lot. Right? The training costs that we talked about, we spend a lot in training to bring people from an Embraer E1 onto an A320neo. Right? There's a lot of cost. The fact that we're growing this much, the fact that we've been growing 15% every year for the last three years, is it 100% efficient? Absolutely not. Right? There's a lot of inefficiency in our numbers. We have the best margins in the business. Right? We can get at this inefficiency. We are getting at it, there's a lot of opportunity here. Right? We can be more efficient.
We can be more productive, right? We are not going to rest on our laurels and say, "Hey, we already have the best margin in the region. Why try to expand it?" No. There is a lot of opportunity. We know there is. Right? That is why we are so excited. That is why we are so aligned with all of you who are investors, because we know that this company can be even better than it already is. Right? One of the things that we already talked about, but I think this chart is important to illustrate. We do not have an E2 flying yet. Right? This aircraft is going to be transformational. We have a few A320neos, still less than half of what we are going to have. Look at the numbers for the E1.
Obviously, the trip cost from the E1 to the E2 goes down, and that's what we've been talking about all the time, right? That the E2 is going to be a much more efficient aircraft. The trip cost is going to be lower, even though the aircraft is bigger, has more seats. Obviously, the cost per seat of the E1 versus the E2, the E2 is a lot lower than the E1. One thing that we don't talk enough about, and it's a huge source of upside going forward, look at the seat cost difference between an E2 and an A320neo. It almost doesn't exist. Right? That's why this aircraft is going to be so powerful for us, because we can explore new markets. Abhi talked about this.
We can send the E2 to develop new markets at a very low risk because it has a significantly lower trip cost, but we don't pay a big penalty in seat cost. Normally, that's the trade-off, right? You can get a lower trip cost with a smaller aircraft, but normally you pay for it in higher seat costs. With the E2, we're paying for it, but very little. Right? That's what makes this aircraft so exciting. If you like these numbers, there is zero ASKs from the E2 in these numbers. Right? Once the E2 starts coming into the network and starts replacing the E1s, this number should only go up. The other thing, John mentioned this, but I think it's worth talking about it in a little bit more detail. Right?
When you look at our average CASK, you're looking at a blend of an A320neo, an E1, and an ATR. Right? Our competitors love comparing that blend with the CASK for a 737. Right? That makes no sense because there's nowhere in Brazil where an ATR competes with a 737. Right? The 737 competes with the A320neo. I think it goes without saying that obviously the CASK on our A320neo is much lower than the CASK on a 737NG or an A320ceo. Right? You don't need to even do math to prove that. The CASK on our A320neo is going to be lower, is lower than the CASK on a 737 MAX or the competitor's A320neo. Why? Because we just have a more efficient cost structure. We have fewer employees per aircraft, and we fly the aircraft more hours per day.
This is all public data. UBS puts out a report where they track all the A320s and the 737s tail number by tail number. You can see that we fly the A320neo. We already have 30-plus aircraft in the fleet, and we fly that aircraft more hours per day than the competitors and pretty much more than everybody else in the world, except, I think, one airline. Right? There's a lot of efficiency here, which shows that our cost advantage is sustainable. Right? Even though we are ahead of the curve in terms of our fleet transformation, right? We're transforming the fleet much faster than the competitor. Somebody says, "Well, at some point, your competitor is going to catch up, and they're going to have next-generation aircraft as well." Yes, but it's going to take a lot longer than us.
Even when they get there, our CASK on the neo is going to be lower than the CASK on their next-gen aircraft. Again, there's a lot of cost in the numbers. We're proud of our numbers, but one cost that's there and that we've talked about is that training a pilot to go from the E1 to the neo is very expensive. A pilot that's fully productive on the E1, it takes them as long as four months to be fully productive on an A320neo. To be flying alone without an instructor, to be fully productive. It's four months of training. From the E1 to the E2, we still haven't gotten a lot of those pilots trained, but it's two and a half days. It's a completely different story. Right?
Our numbers have the bad side of the story, the fact that we're spending a lot to train our pilots. Going forward, we won't spend nearly as much to train our pilots. Again, if you like our numbers today, wait till you see what's coming. Like I said in the video, we want to have a company that's going to last forever, that's sustainable. Obviously starting with high margins is very important. Having the highest margins in the region already puts it at an advantage that if something happens to the Brazilian real, something happens to GDP, something happens to oil, we're starting off from a position of strength. Besides that, we also always want to have more liquidity than everybody else, less leverage than everybody else.
Again, Brazil can throw anything it wants at us, and if we have the highest liquidity, if we have the lowest leverage, we'll always be in a position of strength. We always said that if the BRL went to four, one of the Brazilian airlines was going to go bankrupt. The BRL went to four, and one of the Brazilian airlines went bankrupt. Nobody ever worried about Azul because we have this risk mitigation strategy where we carry a lot of cash, where we keep our leverage low, where we keep our exposure to currency low. Some of the E2s, as many as we can, are going to be financed in BRL. That's a beautiful competitive advantage that only Azul has. The fact that we can finance our aircraft in BRL puts us in a much stronger, more defensible position than our competitors.
When the crisis hit, we had surplus aircraft, we had Embraer aircraft that we had financed in BRL. It was beautiful because it was a natural hedge. The aircraft is priced in USD. We had surplus aircraft to sell. We sold an asset that was priced in USD, so its value had appreciated. The debt that we had on the balance sheet to finance that asset was flat. It didn't go up because it was pegged to the BRL. It's a natural hedge and a competitive advantage that only Azul has in Brazil. Also, as you guys know, we don't like USD-denominated debt. That's a place where we differentiate radically from our competitors. Our competitors accept USD exposure. We don't like USD exposure. We think we have enough. When we issued our unsecured debt in 2017, we hedged it.
We used a call spread structure, which actually puts it as an all-in cost of 99% risk of the CDI. A lot of it was skill, but some of it was luck as well. The fact is that the unsecured debt that we issued is protected, and our competitors have a lot of dollar-denominated debt that has no protection on their balance sheet. The fact that we have a stronger balance sheet and we have higher margins, allows us to be comfortable about the sustainability of this business. A lot of people ask us about our hedging policy. We are very cognizant of the fact that we're exposed to currency or exposed to FX. We do have a hedging policy. We have all the details here on the presentation of what we can do, what we do do.
One important thing as you're doing your model, and if you're doing a stress analysis of what happens if the BRL goes to 450, one thing you need to ask is what's going to happen to oil. There's a very strong negative correlation between FX and oil. First, you need to decide whether that correlation is going to hold or not. You can obviously model a worst-case scenario where the BRL depreciates and oil stays flat, but that's an unlikely scenario. The most likely scenario is for the negative correlation to hold. The next thing you need to keep in mind is that we have a high rate of revenue recapture when we get external shocks. John mentioned that when we went public, the BRL was at 312. When we started this company 11 years ago, the BRL was at 158.
I think a lot of people that thought, hey, if they had a crystal ball and they said, "I know the real is going to go from 1.58 to more than 4," a lot of people would have bet against us. A lot of people would have said, "These guys have more than 50% of their expenses denominated in dollars. I know the dollar is going to go from 1.58 to 4, so it's going to be very hard for them to be profitable." We're more profitable today with the real at 4 than we were back then, even though we were when we went public and the real was at 3. We talked a little bit about this, but I think, again, also worth noting. We have some unique assets that I'm absolutely sure that the market does not give us full credit for.
They will generate profitability or cash over time. Over time, we won't have to convince the market that there's value here. The value is going to show up. The value in TudoAzul is showing up. It's 100% owned by us. We have no intention of selling it, but every year it's bringing in hundreds of millions of BRL in additional revenue at a higher margin than the consolidated company. We own 100% of it. Over time, you will see our profitability going up because we own 100% of this business. Now, I think that we should be priced and valued differently from companies that don't own 100% of their loyalty program. Also, if our competitors are successful in bringing in that program back into the fold, they're going to have to burn a lot of cash to do it.
The value is going to show up. The value will be reflected in the numbers. We have a lot of prepaid maintenance expenses. How does this work? In the beginning of Azul, when we didn't have established credit, our lessors required us to prepay our maintenance expense. There's a lot of money on the balance sheet, a lot of money that has already left the company and that you don't consider cash, but it's related to maintenance expenses that will happen in the future. The new leases that we're signing, because we have a lot better credit now than we had in the past, they do not require maintenance reserves. This balance of maintenance reserves is going to decrease over time because the money has already left the company. The new maintenance events, the money will not leave the company until the event actually happens.
This cash balance, this asset in our balance sheet, as it goes down, it essentially represents an inflow of cash. A cash outflow that has already happened and that we're not getting credit for. The TAP investment. We're very happy with the TAP investment. I'm going to talk a little bit more about it, but I'm also, by talking to many investors as we do on the road in Brazil and in the U.S., in Europe, we see that the vast majority of investors give us zero credit for the TAP investment. Obviously, I'd love to convince you. I think there's a lot of arguments for you to give us a lot of value for the TAP investment. Over time, that value will surface. This will become cash. At some point, we will monetize our investment in TAP. It can be as early as next year.
Obviously, it depends on a lot of things outside of our control. Once that happens, you will see that cash position on our balance sheet, and the market will have no alternative than to give us full credit for that investment. Like I said, TAP is doing really well. We bought our investment for €90 million when the company was valued at about $250 million roughly. Today, the equity value of TAP in our books, the way we're marking it to market, is about $650 million. Like I said, we've talked to a lot of you, and the vast majority of investors don't give us credit for that investment. We own 47% of that company once we convert economic interest. This is the largest company, the largest airline between Brazil and Europe.
The management team that's there running the company has done a lot of very remarkable things, has had a lot of advancement, which have definitely improved and increased the value of the company. We're going to show a quick video here to illustrate that. Abhi says this video is a little angrier than we're used to. That's not really our style, again, the point is there's been a lot of accomplishment, a lot of improvement in TAP, and I think it's not hard to see that. It was a state-owned airline in Europe, you can imagine how efficiently or not it was being run. It used to have the oldest fleet in Europe. Now it has the youngest fleet, obviously, because the government didn't have the resources to keep investing into the fleet as a private operator does.
There's been a whole new redesign of the network that is starting to attract a lot of attention from even strategic players. The Lisbon hub has a very strategic geographical position, which is making it very competitive for flights to North America and South America. That's all very positive. The fact that this location here in the easternmost part of Europe allows TAP to fly to destinations that other competitors cannot fly with lower cost aircraft. This is going to be very exciting, and the U.S. network is doing very well. Obviously, it has a lot of exposure to Brazil. It's the largest carrier between Brazil and Europe. As the Real weakens, the demand for international travel gets affected. Other than that, this is obviously something that is cyclical. Sometimes the Real is strong, sometimes it's weak.
Right now, I think it's easy to prove that it's weak. As the BRL appreciates, this is an additional source of profitability for TAP. As part of being a sustainable company, obviously, we're focusing a lot on ESG. There are a lot of initiatives that we're already pursuing in the company. Now what we're doing is just compiling all that information into a sustainability report using GRI and SASB standards. This is something that we're very excited to be working on, and we're very excited to show it to you once it's ready in the beginning of next year. Like I said, there are a lot of initiatives that we're already pursuing and obviously other initiatives that we want to start pursuing, but there's just a lot about Azul that shows that it is a sustainable company.
Obviously, the fleet transformation that we're going through, it's reducing our CASK significantly, but obviously it's reducing our fuel burn significantly because most of the benefit of the next generation aircraft is in fuel burn. Flávio mentioned this on the video. We have a social effect to our network, right? The fact that we fly to 105 destinations in Brazil, and we're the only airline in 50-plus cities in Brazil, we connect these cities to the rest of the world, right? Without Azul, these cities would be effectively disconnected. There are places in the Amazon where we fly to that the alternative to an Azul flight is a multi-day boat ride. These cities, these communities, depend on Azul to be connected to the rest of the world. We have a very good percentage of our leaders that are women, right?
Still not enough in our opinion, we compare very positively. Just the fact that we generated all these jobs, there's just a lot of things that we're very excited about. We're very happy to compile all this information into a report. Again, John mentioned this, and I think we still feel very strongly about the investment thesis in Azul. We are very proud of what we've built. We're very proud of our numbers, but there's still a lot of upside going forward, right? A lot of you ask us, "Okay, so you promised a five-point margin expansion when you went public," but we are delivering on that in spite of all the headwinds that we had from weak GDP and weakening currency. Obviously, we had some help from Avianca Brasil, but that was recent, right?
We were already on our way to deliver on our promise even before Avianca Brazil went away. Some of you ask us, "What are you going to do once you get that five-point margin expansion," right? We're not going to continue promising, "Can we get to 25% margins?" I think that's not really the question. I think the question is, look at all the growth. Like John mentioned, we promised a five-point margin expansion, we didn't talk about the 70% increase in the revenue base. When you put those two together, the revenue increase plus the margin expansion, that shows how much value there really was in our business plan. We're only halfway done, roughly, with the margin expansion drivers, and cargo is only beginning. Cargo is less than 50%, right? That's what we're most excited about today, is the cargo opportunity.
Is there space for more continuing margin expansion? Absolutely. Is it going to be sort of a linear, kind of gradual path from here to there? No. I think all of you have learned that, and we've all together have grown accustomed to the dynamics here, is that you have to look at the long term, right? Over the long term, we're going to continue expanding margins. The BRL can go to BRL 450, the BRL can go to BRL 350. We've seen oil all over the place, from $25-$150 a barrel. We've seen the BRL at BRL 158, we've seen it at BRL 420, but we've continued generating profitability, expanding margins, and growing the company. I think that's where we need to keep our sight on, right? We're very excited about the fact that over time, we will continue expanding margins.
There may be some noise, but you have to separate the signal from the noise, and then it's very easy to see that this is a very resilient, very profitable business that has a lot of potential going forward. I think that's it. Turn it over to Andrea.
Thank you. Thank you, guys. This was great. We are now ready for Q&A. I would like to invite John, Abhi, and Jason to the stage, please.
Thank you, Andrea. Hey, guys. It's Savi from Raymond James. Just a question related to the fleet transformation, and the transformation is not necessarily tied to growth. I was wondering if you could talk a little bit about how you see the growth continuing over the next few years, especially as the base is bigger now. The second part of that is, in part of the growth and you're getting a lot of cost benefit from the transformation. Alex, as you talked about the inefficiencies, could you talk about how much of a drag that is today from a margin point or something like that, and how long it will take to address some of those?
Yes, Savi. I think we'll have Abhi answer the first part. Just every aircraft that we're taking is densified, right? Every E2 has 18 more seats, every A320neo has 56 more seats. Even if we were metal neutral, there's going to be growth in the network, right? I think that's really important to understand, is that there's going to be natural growth just because of the densification of the aircraft. That's really important to us. That drives down our unit cost, and it's increasing top-line revenue at the same time.
Yeah. In terms of the growth, it's very efficient because it's capacity growth without departure growth, which is obviously much more efficient. I would say that last year we did 16%. This year we're going to be 21-ish. Next year, you should expect to be in the teens, mid-teens, I would say maybe a little bit on the higher side of the mid-teens. Probably in the teens area in the next couple of years, coming slowly down towards low double digits as the base gets bigger. Again, it's all very efficient growth, primarily upgauging and very little departure growth.
Yeah. I'm going to talk about the CASK. I think one thing that's important while we're on the topic. Like Abhi said, we're growing kind of in the teens, if you take out the Avianca effect. We've been growing in the teens for the last three years. We're going to be growing in the teens for the next three years. That's purely from upgauging. It's not driven by GDP. We're doing this as quickly as we can. If you tell us that GDP growth next year is going to be zero, that's how much we need to grow. If you tell us it's going to be 3%, that's how much we can grow. We can maybe adjust a little bit of utilization. The bulk of the growth is driven by, like John said, our focus on getting rid of E1s and accelerating the E2s.
That's the pacing item today. As we grow in the teens, and we're 20% of the ASKs in the market, as Brazil should grow 3% a year, all else equal. 0% GDP growth means ASKs in Brazil should grow 3%, because that's our fleet transformation. It's not driven by GDP. When you add the 1% GDP growth that we do have, and you put like a 2x multiplier with it, which I think most people are comfortable with, that's another 2% growth. Brazil should be growing roughly 5% a year, that's equivalent to 1% GDP growth. If we have zero growth this year, that's effectively a decrease. I think it's important for everybody to notice, I think some people ask, wait a minute, we're going to be back to the same ASK capacity that we had before Avianca went away.
That doesn't mean that the Avianca capacity has been replaced. There's a base growth of ASKs in Brazil of roughly 4%-5% just based on GDP and our fleet transformation. It's not predatory. It doesn't increase competitive dynamics. It's purely based off of the economics of the fleet transformation that are so powerful.
I think too, Savi, these are investments in the future. If you take a look at what Azul looks like one year from now, three years from now, five years from now, this year alone, there are 29 new aircraft entering the fleet. There are 2,000 new crew members coming into Azul today. Certainly we have aircraft exiting, but there's 2,000 people that have joined the Azul family that are getting trained, that are getting ready to produce. The investments we made recently in Guarulhos with the lower ICMS, all of that, it's an investment in the future. We know where we want to be three years from now, five years from now. Yeah, there's pains of growth. Certainly, there's incremental costs that you carry with that growth. I think as you see, it's phenomenal growth over the next couple of years.
When that flattens out, there's additional margin expansion that we've talked about of 1 to 2 margin points when you're no longer cycling through as many people through the system as we have today. It's hard to talk about our people as cost, but there's a lot of cost associated with hiring people. We believe it's investment in the future because those people will be trained, and they will be contributing with us for the long term.
Yeah, I think that's exactly right. There's the 1-2 margin points that we talked about. It's one point essentially of training, and I believe there's at least another point of margin of just the fact that when you grow this quickly, there are opportunities in creating better processes and better automation that in the short term we haven't explored, but we certainly will explore over time.
Hey, good morning. Thanks. Dan McKenzie from Buckingham. Thanks for the presentation today. Very helpful. I'm wondering if you could maybe help give us a roadmap on the RASK, CASK ex fuel side of the business. I think the worry, at least when I came into 2019, I was almost certain we were going to enter with the Brazilian real at BRL 350 or lower, the macroeconomic backdrop's been a little bit of a surprise for investors. As you kind of think about the current volatility, if we straight line this forward, how do we think about growing margins from the RASK, CASK ex fuel dynamic? RASK, in the back of your mind, down 2%-3%, CASK ex fuel down more because of the cost savings. I don't know what you can share, some kind of roadmap would be helpful there.
Hey, Dan. Let me first explain, describe a little bit how the fleet mix affects RASK, and then I'll kind of tell you what I'm thinking is going to happen for RASK in terms of this year and next couple of years. If you look at how the aircraft fleet mix changes how our ASKs are made of. As John showed on one of the slides, our A320s fly 1,500 kilometers on average stage length. Our Embraers fly 700. They fly double the stage length, and the aircraft is 50% bigger. Last year to this year, how much ASKs A320s represent in our domestic network has almost doubled. When you have an aircraft type that's flying double the stage length of the Embraer and is 50% bigger, the RASK of that aircraft naturally is smaller. Is the CASK, of course.
What's happening is that a smaller RASK number now represents more and more of ASKs every year. That's just the math of the weighted average of the ASKs. That's all that is. If you compute this number, it's about 6-7 RASK headwind per year, just from the mix of the aircraft. We're actually delivering a positive year-over-year RASK this year. Not only are we making up for that, but we're going even beyond. That shows how the network has been able to respond in terms of not just load factor, which you guys know I'm not a huge fan of, but in terms of unit RASK, we're making up for that, just a mathematical headwind, and we're able to increase year-over-year. Last year, we increased RASK 1.6%, 1.7 on 16% growth.
This year, we're going to do better than that in terms of year-over-year RASK on more growth. When you look at 3Q and 4Q, I expect RASK to be very close to zero, slightly positive, slightly negative. Okay. That's on 20-plus ASK growth, including the effect of the fleet mix. The network is actually responding very well to the capacity that we're throwing at it. It's equilibrium demand. Looking ahead to next year, yeah, I expect a small RASK decline. I can't say whether it's 2%-3%, 1%-2%, but what I know for sure is I think given the strength of the network, we're going to be able to protect the revenue so that the RASK decline is significantly less than the CASK decline. That's going to be where the margin expansion is coming from.
Just remember the fact about the change in aircraft mix and how that just mathematically generates a RASK headwind. We're right now overcoming that and doing even better because it's going to be positive.
On CASK, I think what's important, given our fleet transformation and everything that Abhi talked about, when you look at CASK ex fuel, you're trying to control for fluctuation in fuel prices, which in Brazil is important not just because of the price of oil, but because of the currency as well. You can't look at CASK ex fuel in the case of Azul because a lot of the benefit from the fleet transformation is lower fuel burn. When you look at CASK ex fuel, you're throwing away the volatility in fuel prices, but you're also throwing away the benefit from better fuel burn, right? You cannot look at CASK ex fuel. You have to look at what we call normalized CASK, right? CASK controlling for oil prices and currency, and then it's very easy to see that CASK has been coming down, right?
It's purely the economics of the fleet transformation. As you go from an E1 to a neo, CASK should go down dramatically, kind of in the 20s, right. 20% or more. RASK should go down maybe 5% or as Abhi said, right. Which gives you the margin expansion, right. All else equal, normally, you should see small reduction in RASK, big reduction in CASK, and then everything else is noise because the BRL has been devaluing, fuel has been very volatile, but that's why you need to look at normalized CASK. Going forward, I think that's what Abhi said, you should see very small decrease in RASK, bigger decrease in CASK, normalized for fuel and FX.
Understood. Thanks for the comprehensive answer. That's great. Follow-up question. Abhi, I guess if I could go to you, the fares, of course, you've unbundled the product. Is there another step potentially to drive revenue in the form of cabin segmentation? I don't know, the last 12 seats of the aircraft, for example, is that an opportunity? It doesn't feel like it's a competitive pressure today. It doesn't seem like it's necessary, but is that something that could help drive revenue at some point? Just for the segmentation.
As Alex, I think, showed on his unbundling slide, we're not all the way there yet to a basic economy, right? We're pretty close, but we're not all the way to basic economy where you would charge for check-in at the airport or having to call a call center and things like that. I think that that is an opportunity to further come down the unbundling path and stimulate even more traffic, especially in regions of the country that have never had before. I would say that yes, it's going to happen. I think one thing that we've done well here in Brazil, different from the U.S., is we've unbundled the product pretty efficiently, and not like a big bang, let's call it basic economy, and let's draw all this attention to it.
We've sort of done it over step by step, and pretty much the same effect has happened. I think there are more ways to go. I do see a basic economy type product coming into the market. It'll take a little bit of time, but yeah, I think it can come, and I think it can help further stimulate at a price point that makes sense for us and for the customer as well.
One thing I think that we still see a lot of upside, Dan, is we essentially sell all of our tickets online, right? There's very little physical purchase of tickets. That means that we only sell tickets today to someone that has a credit card with a high enough limit to pay for the ticket, right? There's a huge mass of people in Brazil that have the purchase power to buy a ticket, but they don't necessarily have the method of payment to buy that ticket online, right? That's something that with the revolution that's happening in the industry of payment methods, I think that's another source of upside that there are a lot of startup companies, a lot of fintechs that are coming up with ways of selling.
E-commerce without you having to use a credit card. Somebody told me before the meeting that 40% of Uber payments in Brazil are done in cash. It's basically in the world, something that works primarily with credit cards, but in Brazil it needs to work with cash, otherwise you don't get to serve a huge chunk of the Brazilian population. The aviation industry in Brazil today doesn't serve that population very well because most of the sales are done online, and that requires a credit card with a pretty decent credit limit. That's another source of upside. It'll be on passenger revenue, on ticketed revenue, but there's a huge part of the population that we're not serving today collectively.
Hi, guys. Rogério Araujo from UBS. Thanks for the opportunity. I have a couple of questions, I think, to Abhi. There has been indirect competition now in some of the routes that Azul used to fly alone, from MAP Passaredo in Congonhas. The states with these ICMS benefits, stimulating a little more regional flights. My question is, what is Azul's strategy in those routes? How relevant they are? On Azul's routes in Guarulhos, I think Abhi already gave an idea on the relevance, on those routes specifically, how competitive is Azul versus the other major players in terms of costs? If you could give us any kind of number. On the revenue, on the ticket fares on these routes, do you charge more or less the same as the players? That's it. Thank you.
Thanks. In terms of some of the new regional routes, of course, we have Passaredo, MAP starting in Congonhas. We had Gol announce early in the year, about three or four of our cities that they're flying to GRU. Overall, it's pretty small exposure to us. It's between 1% and 2% of our ASKs. It's not something that I'm worried about. It's not something that we're thinking about every day as what should we do? One thing I will say is that we will be competitive. We will be competitive in areas where we have competition. We will extract premiums where we dominate the market. In terms of what's our strategy, our strategy is to use our fleet flexibility.
I think that when you compare the trip cost of an ATR to a 737-700 or even an Embraer, we have a significant trip cost advantage due to our fleet flexibility. We're able to still provide a much better level of service to these cities using the fact that we can fly four ATRs a day instead of one 737-700. That gives the customer a lot more options to go and come back the same day, a lot more connecting options, a lot more flexibility. It's not something I'm thinking about on a daily basis. We will be competitive, for sure. It's not something that I think is going to affect our numbers on a global scale, on a macro scale. We will do what needs to be done in terms of being competitive.
Of course, we have the great advantage, which is our fleet flexibility. In terms of GRU, Alex said it, our A320neos today have the lowest CASK in Brazil, certainly lower than a 737NG or an A320ceo. We are the furthest along in terms of the fleet transformation. We have A320neos flying in GRU, to some of the longer haul destinations like Recife, like Fortaleza, like Salvador, like even Porto Alegre. They are the most efficient aircraft, and that gives us a competitive advantage in terms of these highly competitive markets. As I said, it's number 4 for us in terms of departures. It's not a hub for us. We do it for the local demand. We will be competitive. Again, it's a competitive market. We will be competitive.
If you look at some of the travel agency data, we've still been able to maintain the fact that we have the highest fares and higher fares in Brazil, even though we have these competitive markets. There's this pricing and then there's yield management. I don't want to get into too specific, but, in short, A320neos are by far the most efficient aircraft today flying in Brazil domestically. We have them flying in GRU. That gives us a competitive advantage, and we will be competitive in competitive markets, and the customer will choose us based on our product, experience, on-time performance, all those things.
Abhi shared this slide. I think it's really important. The Ribeirão Preto to Campinas example. Our competitor is flying now Ribeirão Preto into Congonhas. Probably a good market, but our customers aren't going to São Paulo. This proves they're not going to São Paulo. 94% of them are connecting throughout the entire network. Do we lose maybe 1 to 2 customers on a flight based on what they're doing? Probably, but it's so insignificant when you think about Azul is carrying 100,000 passengers a day now. It's very small in the big scheme of things. You're talking about an airline that's been in and out of bankruptcy several times. Really small on a relative basis. I think together, Passaredo and MAP, I don't know if you cobble them both together, whether they have 10 aircraft or not.
You're talking about 10 ATRs and trying to fly this stuff. They don't have the network effect to connect the network. Just look at what we do out of Cuiabá and what we do out of Recife and all that regional traffic in and out of those cities makes a big difference. The network that makes it work. It's not just flying in and out of a city. You need to have that network effect that makes it work.
Thank you. Very quick question on the routes that Azul flies alone. I think that you mentioned 70% in terms of routes. In terms of ASK, do you have that today and also at the time of the IPO? Thank you.
I think in terms of ASKs, it's 83%, Andrea, in terms of dominant. The number has only gone up, actually, because if you look over the history since IPO, where we've gotten more dominant over the last couple of years is Belo Horizonte. We've increased our dominance in Belo Horizonte, and Recife, we've increased our dominance. I believe it's 83% right now, and I don't know 2015, but the number was lower. We've actually gotten more dominant over the last couple of years, thanks to the network, thanks to the strength of the network and the efficiency of the A320, just makes it very hard to compete.
It essentially fluctuates between high 70s, low 80s, regardless of whether you look at it as % of routes, % of ASKs, or % of revenue.
Thank you.
Hi. Renata from Itaú. Here. We saw both Copa and JetBlue announce non-impairment of their fleet of E-Jets. Do you plan to do something similar, and can you talk a little bit about how difficult it is to sell the E1s?
I'll kick it off and pass it to Alex. The problem is when you're trying to sell an aircraft, you can't talk bad about an aircraft, Renata. That's one of the challenges that we have. I think, first of all, 80% of our aircraft are leased, okay? Are E1s. The problem goes away naturally over the next four years. What we're trying to do is try to accelerate that and have it happen over the next 24 months. Certainly, I'll let Alex talk to the accounting aspect of it, but to the extent that we can do that, JetBlue's done it, Copa's done it. We have a larger fleet. Our number would probably be bigger, obviously, but the return, the payback is in less than 12 months if you did that.
We're actively, we're aggressively looking to place those aircraft so that we can get significant uptick in margins as a result.
In terms of economics, the first important part is, the E1 doesn't work for us, right? A lot of it is because fuel prices in Brazil are very high. We pay 50% more per liter of jet fuel than American Airlines, American carriers or European carriers. We can't have an E1 that's cheap enough for us to want it, but there are carriers in the northern hemisphere for whom, if you get it cheap enough, the aircraft makes sense, right? That's the opportunity that we're finding. Last year, you saw that we sold roughly half a dozen of E1s. That's the type of opportunity that we continue to explore. The difference now is. Let me talk about the cash basis first.
On a cash basis, if we have an owned aircraft, we normally sell the aircraft for more than we have debt on the books for, right? When we get rid of the E1, we actually raise cash. Then going forward, if we can replace that E1 with an E2, the profitability of the E2 is much higher than the profitability of the E1, right? With a leased aircraft, like John said, the aircraft has a date in which it goes away naturally. We're trying to accelerate it. That normally means we need somebody to sublease it to, right? We can't obviously get the same lease as the rent that we pay on it, but we don't need to, right?
If we just get a fraction of that rent, it's already enough for us to be indifferent between keeping the E1 or getting rid of the E1 and accelerating the E2, right? Either way you cut at it, even if it's an owned aircraft or if it's a leased aircraft, once we decide to get rid of the aircraft, that means that it's economically beneficial to us. You can rest assured that we will generate cash, and it will increase profitability. Now, with IFRS 16, every aircraft is treated as an owned aircraft. Every aircraft is on the balance sheet. On a book basis, when you look at the book value of the aircraft, the aircraft today is trading at lower than what we have it in the books for, but that's essentially irrelevant. It's what already happened last year, right?
Last year when we sold the E1s, in Q2 of 2018, I think, we generated cash because we sold it for more than the debt. We had to take a book loss on the aircraft. That's probably the way the economics work going forward as well.
We're pretty impatient. We want to flip this fleet as quickly as possible. You'll see the E2 today. It's a pretty amazing aircraft. The economics are so great that, man, the faster we could do it, the better.
If any of you want to burn your annual bonus on an E1, we can-
You work for Itaú. They pay well.
Yeah.
Good morning, everyone. Thiago Cassab from Credit Suisse. Just a quick question from my side on international flights. I would like to know if you could please tell how you decide between doing an international flight by yourselves and doing a code share agreement, interline agreement, and so on.
Thiago. Yeah, for us, most of our international is long-haul wide-body. We have very little international in South America, just two and a half flights a day to Buenos Aires, basically. For us, first of all, if we think it's going to be important to our network, it adds value to our network, and that's where places like Campinas to Lisbon or Campinas to Orlando, of course, add a huge amount of value to our network. Can we make money on the route? Is the route going to be profitable? We launched Campinas to Porto, which I think is going to make money. It is making money. It's a good route. It's pretty conservative in that way. Do we have connectivity with a partner beyond? Is there a big enough local demand?
For example, N.Y. has been on the list ever since we started in 2015. There's a reason we're not flying to N.Y. today. We easily could start flying to N.Y. if we wanted to. The timing has to be right, and so far I haven't felt like the market really has been there for us to support a N.Y. flight. Maybe it will in the future. We've been pretty conservative in terms of our long-haul flying. Again, as I said, give us every chance to be successful. A lot of connectivity with partners beyond when you get there, high utilization of aircraft. Another reason that N.Y. is difficult is because you have to use two airplanes. They usually only fly at night. We fly to Orlando, we go and come back with the same airplane.
Lisbon, we go and come back with the same airplane. You want to have high utilization to make it as efficient as possible. Markets that we do well. Azul internationally does very well on the high-end leisure side, second homes, Disney vacations, all that kind of stuff. It just has to fit into our network and have every chance to be successful. It's a pretty low-risk strategy. The interline codeshares that we have today are long-haul carriers already flying to Brazil, and they need connectivity in Brazil to Curitiba, Porto Alegre, Goiania, Vitoria, all those kinds of places that we do primarily in GRU.
In terms of our long-haul strategy, one reason we haven't expanded so much in South America is there's a lot of capacity already, and it's very volatile, and now you have the low-cost guys like Sky and JetSMART pouring capacity into Santiago to Brazil or Argentina to Brazil. I actually think it was a good decision for us to be pretty conservative in that sense. It has to make sense for our network. It has to make money, most of all, and overall, it's pretty low risk. We try.
Thank you. Oh, great. Thank you guys very much for the event today. Josh Milburn from Morgan Stanley. I also had a question on the international side. It seems a key message today has really been that, well, one, you've highlighted the resilience of your business model and with respect to capacity, that you're very much taking the long view on the domestic side. I just wanted to ask to what degree that also applies to international, if at this level of BRL that could mean some cutbacks in your plans to grow next year. Just some color around that.
Yeah. It is a long view. We've been very conservative, for example, in the timing of our A330neo deliveries. Just the second one now is going to come at the end of the year. We've tried to space those out as much as possible. We haven't opened a new destination. Well, Porto was this year. That was it. We are not really looking at more than one new destination, if that, per year. Very low exposure to Argentina and South America, which I think is going to be very tough over the next couple of years. Yeah, it's a low-risk, conservative strategy. We'll do what makes sense. I don't want anybody at Azul to over-rotate over let's launch this international market because we have to, because it's so important, it's so strategic. I don't see that.
If it's going to make money, if I think it's going to do well, the timing is right, I think we'll do it. What we have today, which is Campinas, Confins, and Recife to the U.S., Orlando and Fort Lauderdale, I think is a good franchise. We have Campinas to Portugal, which allows us access into all of Europe. I think what we have today is a pretty good franchise, and we'll sort of take it as it comes. We adjust utilization and things like that. Fort Lauderdale, we used to fly double daily. Now we've dropped that down to nine times a week, for example. We'll make those adjustments as needed. Lisbon in the winter will come down because the winter season, things like that. That's the idea. Overall, the focus for me is domestic.
There's no question about that, and international, we'll just take the opportunities as they come.
Hey, Josh, just to add to that. I'm from Connecticut. Abhi lives in New York, Jason lives in Connecticut, David Neeleman lives in Connecticut. The pressure for New York, you would imagine has been very high, but I think it shows the discipline as a management team to not do that before it's ready. I think that we've pulled back when we need to pull back. We'll add capacity when we need to add capacity. I think that the strategy that we have to fly Confins to the U.S. and Recife to the U.S., it's not sexy to fly from those destinations, but it works because it's from where we're strong and we have connectivity to where our partners are strong and to where they have connectivity. That's really important is the connectivity that makes it work.
Thank you.
Yeah. Good morning. Thanks. Dan, here with a follow-up. Can you talk about how you're working with Avianca at this point and just kind of address the relationship, the business agreement, how that's developing. Is that an opportunity or not? You can just elaborate a little bit there.
To clarify, the Avianca is Avianca Colombia, not Avianca Brazil. We just announced a codeshare with Avianca Colombia, hoping to get good traffic from those guys, flying from Bogotá to GRU, basically. That's sort of just a basic codeshare commercial agreement. In terms of a broader Of course, there's news out there about JV3, right? Which is United, Copa, and Avianca. Initially in JV3, there was no Brazil because there were no Brazilian airlines. The opportunity really is to add Brazil to that network, and that would be Azul. We are in conversations about JV4, so imaginatively as we call it. These things, joint ventures are all actually about running a business together, right? You're not merging anything, but you're running a business together.
There's a lot of discussions that have to happen in what is each airline's role in running that business together. You share in the risk, and you also share in the upside, hopefully upside. Most joint ventures have shown over time that they do work and they do work very well. Each sort of player has to decide for themselves whether the participation in that joint business fits with their strategy, either their long haul or short haul or whatever strategies that they have. You kind of have to project out 10 years, what you think Azul will be and whether that fits into what this joint business, whether that's capacity, whether that's commercial, pricing, whatever it is. We're in those discussions right now. I think it takes some time to figure it out. It certainly is a possibility. It could not happen.
It could happen. It depends how the conditions are on our entry into this joint venture, whether Copa, United, and Avianca are okay with it, whether they like it, they don't like it. Kind of each player has to make up their mind. In general, you're looking for benefit to the consumer and benefit of running sort of U.S., South America as a joint business. We're in discussions. I don't really have a timeline on that, and we'll kind of see if it fits. For right now, it's codeshare, and then we'll kind of see how these discussions progress.
I think one thing we always talk about is the huge opportunity, to be very transparent, is between Brazil and the U.S., right? It's with us and United. I think we have primarily an audience of Brazilians here, so I'd like to try something out. Raise your hand if you've ever been to Miami. Raise your hand if you've ever been to Bogota. For those of you on the webcast, it's a 10 to one ratio of Brazilians have been to Miami and Brazilians have been to Bogota. There's upside, of course. Every little bit of revenue and demand counts, but I think what we're most excited about is the opportunity between Brazil and U.S., Brazil and Europe. That's where the vast majority of traffic is.
Good morning, everyone. This is Lucas from Morgan Stanley. Thanks for taking my question. Abhi mentioned in his speech about a flat unitary revenue for third and fourth quarter this year. I just wanted to hear, there's a mix effect on that. I wanted to hear your thoughts on how you're seeing the same route basis or a route that you don't have an upgauging effect, what you're seeing in terms of unitary revenue. Thank you.
Yeah, it's a good question because the mix effect is for the airline as a whole, right? The average ticket for A320 is much higher than an Embraer. When you look at route-to-route markets, VCP Salvador or VCP Recife, that used to be Embraer is now A320. When we first went on the road on the IPO roadshow, before we even really started flying the A320s, we said, "We think that on a same route basis, the A320 RASK could be down as much as 15%, while the CASK is down 29%." What we've seen really operating the airplane and especially with the way the connectivity has worked out in the network is we're probably doing better than 15%. I would say high single digits or very low double digits.
That's been the extra source of unit revenue that we've been able to show last year as well as this year. The A320 has performed better in terms of unit revenue on a like for like route basis. We thought it was going to be around 15 when you first went on the road. It's probably closer to 10.
A lot of that's just because of the connecting demand that comes in, right? The local demand, the fares have stayed the same, if not have gone higher. There's a lot more connecting traffic that we are able to flow through the entire system with the A320s that we now have.
A lot of things.
Thank you.
Hi. Sorry. This is Bruno Morin here from Goldman Sachs. I have a follow-up question for John. You have commented on the reasons why you think your model is hard to replicate, all the investment that has been made. On the other side of the story, we have margins which are quite high in the Brazilian domestic market. Some progress has been made on the regulatory front. Do you think in three years we're going to see only three relevant players in the Brazilian market? Do you see a new player entering the market? Maybe not necessarily in your routes because your model is harder to replicate than of the other two relevant players. Curious to hear your thoughts on the upcoming years given the improvements that have been made even though the challenges are still there.
Bruno, I think you're going to have three relevant carriers in Brazil three years from now, four years from now, five years from now. I think it's very difficult. You need a lot of capital to come to Brazil, but there's a lot of laws that need to change. You and I have talked about this in the past, but for example, Santos Dumont closes on a pretty regular basis. When Santos Dumont closes because the man upstairs decided to close Santos Dumont for whatever reason, the airline is responsible for the food, the transportation, the hotel, and access to internet.
Thinking that you can have a low-cost guy show up and say, "Hey, I'm going to now skim and try to fly in this market," the first time that an airport closes or they have a maintenance event, that airline gets themself in a significant amount of trouble. Brazil is still a very litigious society, okay. Our partner, United Airlines, has 3% of their flights in Brazil, but it's 80% of their civil claims. I think the only way that it really changes is if those laws change in the future. There's significant barriers to entry in Brazil today. The fact that fuel cost is so high is a barrier to entry. The fact that there's no secondary airports is a barrier to entry because you have to come and compete where everybody else is competing.
It's not like Europe where you can fly to a secondary airport and get no landing fees. Even still, landing fees here are such an insignificant part of the total cost equation. When you throw fuel as being so high and then you throw all of the other charges that you have from a cost perspective, where a ULCC could be more efficient, it's a very thin margin. The other thing I would say is I would challenge you and the airline analysts in the room to find me a country where a ULCC had success when the product was already unbundled, okay? You can take a look what happened with Ryanair and EasyJet in Europe. The product wasn't unbundled. You can take a look what happened in the U.S. with Spirit before the product was unbundled at all the U.S. carriers.
What's happened to Spirit and Frontier once the other products were unbundled, it really limited their ability to grow. Volaris, really great airline early on and great success, once everything was unbundled, a lot more difficult. Brazil has a lot of unique challenges, and I think that if you take a look at it, and it's extremely competitive market. I think you need to separate what the government is saying versus what some of the reality is. What's the third largest airline in Germany? You can't name it. What's the third largest airline in the U.K.? You can't name it. What is the third largest airline in Colombia? There's high concentration in these countries, and if you take a look at the U.S., there's four airlines in the U.S. today that's what? 90% of the ASKs?
Over 80% in the United States, which is a market that's 10x what it is in Brazil today. If somebody wants to show up in Brazil with over $1 billion worth of capital and wants to fight a long way to kind of try and get a significant amount of market share here, then certainly it's possible, but a lot needs to happen, Bruno, for that to take place. The laws need to change. A lot of capital needs to come into place, and I just don't see it in the short term. It doesn't mean somebody won't try. I'm sure somebody can raise $50 million, get a few aircraft, and try to make a run at things, but it's very difficult here in Brazil. Take a look at us. We fought for 10 years to make it work.
Azul, over our history, has lost more money than we've made, right? We've just started making money after a decade after putting this entire network together. You also have a Congress in place in Brazil today that says, "Hey, you can charge for bags. Maybe you can't charge for bags. You can charge for bags. Maybe you can't charge for bags," right? You're talking about taking a 15-year view on making a capital commitment. There's this new industry in Brazil today, which is if your flight gets canceled, I'll give you BRL 1,000 right off the bat. There's a lot of things in Brazil that make it difficult. That's okay because that creates barriers of entry for our business going forward. I think it's very difficult for all the reasons that I mentioned.
Hey, Savi with a follow-up. Just maybe, Alex, to your point about not getting credit for the TAP. I understand the argument for it having built a nice strategic area that some other competitors might actually want to own or invest in. Beyond that, what we saw in the video was almost like a growth to profitability. Could you just talk about what really is the strategy there and if the profitability is improving?
I think a lot of the story is similar to Azul, but with the added benefit that they are starting from a position of, I think, even more upside than we are. I think Azul is an airline with above average margins already, and the fleet transformation is going to allow us to expand margins even further. TAP is starting from a much lower margin position with a higher cost structure with a network that was not built for profitability. On top of that, they will also have the fleet transformation that we have. They have a competitive advantage within Europe. Because their costs are much lower than other kind of network carriers in Europe. The cost of living and labor costs in Portugal in general are much cheaper, much lower than anywhere else in places like Germany or the U.K. or France.
They also have a competitive advantage on the cost side. I think it's a lot of, it's the geographical position, it's the cost structure, it's the fleet transformation, and it's the airline being run and being taken from an airline that was kind of below average. If you just believe that it'll get to average levels of profitability, it's a huge amount of value that's created, but then there's all the other things on top of that as well.
Just to be clear, that is a 74-year-old company, and they have 100 airplanes, right? When you talk about 53 new aircraft, most of that is replacement aircraft. They're taking out A319s and putting in A321s, a lot of growth associated with that, but the fuel burn on the A321 is the same as the A319. That's what's happening. They're getting rid of A340s. They were flying A340s to São Paulo, now they have A330neos. It's a lot of that type of transformation, and it's a very strategic location. I just want to remind you, a third of all seats to Brazil and to South America are on a TAP Air Portugal aircraft today.
If you're in the U.S. and you want to go to Italy, you can connect over London, you can connect over Spain, you can connect over a lot of places. Why not Lisbon, right? As Alex said, if they have a lower cost structure than the other carriers, it's a strategic advantage for them. If you take kind of looking forward to what Delta's doing and maybe the model in five, 10 years is mega airline model, they have a very strategic position in the South Atlantic and in Africa that's very enviable for a lot of people in Europe.
Makes sense. Thanks.
We have one question from Mike Linenberg from DB. He is wondering how the ramp up of the Ponte Aérea is going so far, and also asking if we plan to fly the A320neos there.
Air Bridge.
Of course, I won't publicly comment on the air bridge revenue because I'm sure my friends are listening. What I will say is, the important part about the shuttle for us is we have a lot of customers flying Azul for the first time, right? Azul did not really have a strong presence in São Paulo, certainly not in Congonhas, we're able to access a lot of customers for the first time. It's going well. I think that they're liking the service. We've already seen repeat traffic on the route. What I'm really hoping for is that the route itself is going to do well. I'm very confident of that.
More than that, I really hope it becomes a gateway for us to access some of these customers, whether it's in our loyalty program or our flights out of GRU or even, I'm sure these air bridge customers go to Miami a couple times a year or Orlando or Portugal, and I really would hope that now we're in their universe, and that helps us attract them to VCP to fly nonstop to the U.S. or Portugal. The route's going to be fine. I'm not really worried about that, more exciting for us is being in this sort of historic route and really having customers fly Azul for the very first time brings them into our ecosystem, whether it's loyalty or international, other domestic routes. I think that's really what the benefit is going to be.
I think the very public fight in the press actually helped us. There's a lot of people that know about Azul today because of the fight that happened in the press over the last few months, and it's been kind of top of mind. A lot of people want to try us. I think that actually benefited us going forward.
Last question over here.
Hi. It's Paula Santos from Bradesco BBI, and I just have a question regarding the Correios. Would it make sense for Azul to participate in a consortium to acquire Correios?
No. I think the joint venture that we looked at with the Correios was to take their air business and kind of join it with some of the assets that they have. I think there's a lot of other exciting models out there to add to our Azul Cargo business that we can kind of be a plug-and-play for any e-commerce player. I think their market share continues to go down every single day. There's new solutions in the market to replace what they're doing today. In the short term, no. It'll be interesting to see what happens to them, to see who takes it over. If it does get sold, then maybe there's a possibility to partner with them in some cities. They are the only company that serves all cities in Brazil today.
They do have some strategic importance, but as far as us acquiring the Correios, it's something we've never even thought of.
Thank you.
Okay. Thank you, everyone. I think we need to leave now to go to the Viracopos Airport. You can take a quick bathroom break, and then the buses are ready up front. Thanks a lot for coming. Those of you who are going to São Paulo, please talk to us. We'll find out a way to take you back there. Thank you.