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Back in June 2000, when Constantino de Oliveira Jr.'s dream of owning a successful discount airline was still an unfinished business plan, the Brazilian former racing driver went on a fact-finding trip to the U.S. and Europe. On the first day of a scheduled 10-day tour of some of the world's best-known airlines, he and three associates walked into Ryanair's headquarters outside London and saw a sign declaring no travel agents allowed. The message could not have been clearer if it had been written in big letters across the sky: Ryanair was different.

Oliveira instantly got it. "It helped me understand that there was another way of doing things," he recalled recently at his office near São Paulo's Congonhas airport. "We could do it, too." He knew what he had to do: go right back home and get his business in the air. He let his colleagues make the rounds of the cockpits and boardrooms of Southwest, easyJet and JetBlue, while he headed home to São Paulo. Seven months later, in January 2001, Gol airlines took to the skies, with just six planes and seven destination cities. Gol now boasts 27 planes in snazzy orange, travels to 38 destinations, and has captured 22% of Brazil's domestic passenger market. In December, it launched its first flights to Argentina, and hopes soon to add routes to Bolivia, Chile and Uruguay. Profits last year topped $145 million, and the firm's IPO last June raised $281 million. Its market capitalization: $2.9 billion, twice that of American Airlines.

What's the secret? Oliveira, 36, says it was simply "taking a bit of Southwest, a bit of Ryanair, a bit of JetBlue and easyJet and tropicalizing them for the Brazilian market." That doesn't mean stewardesses sashaying down the aisle with fruit on their heads like actress Carmen Miranda, but there is a specifically Brazilian flavor to Gol's model. In a continent-sized country where even the 50-minute hop from Rio to São Paulo costs more than the monthly minimum wage, Gol began by offering fares up to 25% less than its rivals. Flights taking off in the middle of the night or touching down several times on the way did not deter passengers, even if their only previous experience of long-distance travel involved days spent jammed up against a bus window. "Around 10% or 11% of our passengers are flying on planes for the first time in their lives," Oliveira says. "People think a low-cost airline is for poor people, but it isn't. It's for people who have an eye for competitive prices. People here, people of all classes, traditionally look after their money better."

That includes Oliveira, the son of a bus-company owner who went on to build a transportation empire. He knew that keeping costs low was crucial; like many discount airlines, Gol sells its tickets on the Internet and dispenses with fancy menus. Oliveira also got lucky. Analysts say he was fortunate to start up at a time when Brazil's government was encouraging new businesses. The privatization of telecom companies and the rapid growth of the Internet made communications easier and cheaper, while layoffs at competitors Vasp and Transbrasil provided him with a pool of experienced workers.

But Oliveira's secret weapon was Boeing. Conventional wisdom dictates that budget airlines are best built with budget planes. But Gol got off the ground with six new aircraft, four of them brand-new 737-700s and 737-800s from Boeing. Developed in the mid-1990s, the new-generation Boeings are among the most economical jets on the market. Their reliability helps Gol keep each plane in the air an average of 14.3 hours a day, a good three hours longer than its closest rival.

Gol's enthusiastic embrace of Boeing's phased maintenance program — in which engineers repair and review planes every time they touch down, rather than at the end of set periods — has helped slash maintenance costs by preventing the need to haul planes off to hangars every year to be serviced. Gol has firm orders for 26 new Boeings by 2009 and has options to buy another 37 through 2010. All of them will come made to the company's own specifications — the first time Boeing has agreed to tailor planes for a Latin American airline. John Wojick, Boeing's vice president for Latin American and Caribbean sales, says: "We worked very closely with Gol to come up with a solution for them. Gol is a very, very important partner for us."

Another vital factor is personnel. In a country where customer service is often lacking, Gol impresses on its 3,300 employees the importance of teamwork. When pilots enter flight simulators for their annual refresher course on emergency procedures, cabin crew accompany them so they will have a better understanding of what the pilot is going through. And to prevent cliques and promote a team spirit onboard, every four-member cabin crew consists of two newcomers and two veterans whose experience was gained at different airlines. For consumers, the airline offers a Web check-in service. Even Oliveira does his bit; once a month, he hosts a sit-down lunch with 10 members of staff drawn at random from employment rolls. And as a sweetener, a profit-sharing program last year gave employees bonuses equivalent to an extra four months' salary. "The thing that most impresses me about Gol is their whole culture," says Bobby Booth, the Miami-based editor of Avnews Latin America, a monthly newsletter that covers regional aviation. "Everyone thinks about this business as 'capital intensive.' Southwest and, I believe, Gol, have proven that it is also 'people intensive.'"

Brazilian passengers seem to like it, too. Just ask Gol's competition — what's left of it. By capturing almost 5% of the passenger market in its first year, Gol helped hasten the demise of Transbrasil, which folded 11 months after Gol's inaugural flight. Its growth in the years since also helped bring down Vasp, which grounded its planes in December after seeing its market share drop from double figures to less than 1% in under a year.

The situation is only slightly less disconcerting for Varig and TAM, the legacy carriers who between them control two-thirds of the Brazilian market. The two companies quickly understood Gol's threat and launched merger talks in late 2002, hoping to find strength in numbers. Those talks failed, and both companies are now desperately searching for ways to fend off their leaner, younger rival. Varig's $2.3 billion debt is guaranteed by the Brazilian government, but it continues to suffer. In December, it lost its top spot on the moneymaking Rio–São Paulo route to Gol's lower price. To stay competitive, the company has had to cut routes, planes and 3,000 jobs, the latter through early retirement and other incentives.

TAM, on the other hand, is going the copycat route. It has all but abolished paper tickets and its costs are falling closer and closer to Gol-like levels. TAM grew 23% last year, only five percentage points less than Gol, a fact TAM ceo Marco Bologna unashamedly puts down to the firm's if-you-can't-beat-'em-join-'em strategy. "We are looking at Gol and copying some of the things they are doing," Bologna says. "Gol showed that you can eliminate the fat without cutting out the muscle. If we can cut costs, maximize [use of] our aircraft, and cut overheads, then TAM will end the day with costs only slightly higher than Gol. This is how we are going to compete."

Oliveira believes there's nothing but blue skies ahead. "Why am I so convinced that we can popularize air transport?" he muses. "Because in Brazil, 130 million passengers went by bus in 2002. If you count the millions who go by car, and make going by air the alternative, the potential is enormous." And Gol will be there to take advantage. This is one orange revolution that is here to stay.

• ANDREW DOWNIE | Sao Paulo
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