THE current price shoot-out in the
domestic airline market is likely to
leave at least one of the country’s
low-cost carriers mortally wounded,
predicts Erik Venter, ceo of Comair.
A stagnant economy, plummeting
tourism numbers due to restrictive
visa regulations and overcapacity of
airline seats thanks to the entrance
of FlySafair and Skywise, have seen
domestic ticket prices plummet as
kulula and Mango up the competitive
stakes.
“Losses at the moment are
spectacular,” says Erik. “The domestic
market is not growing. Nobody can
afford to lose passengers. The
economy is so stagnant that it’s a fight
for every passenger. I suspect that
someone will go. Comair is running
at a loss at the moment but we can
carry on forever because we own our
aircraft, but it is ruining our profits.”
He says Comair plans to sit tight until
the economy improves and diversify its
business.
Mango ceo, Nico Bezuidenhout, says
the market is overtraded, marked by
a 13% capacity growth versus 8-9%
passenger growth on its domestic
routes. “The average cost of a ticket
today is cheaper than in 2000.” He
says Mango is refining its business,
innovating and consolidating.
FlySafair ceo, Elmar Conradie, says
Mango and kulula have dropped their
inclusive fares to unsustainable levels
to compete with FlySafair’s “unbundled”
fares, which exclude baggage. “The
problem is that we are all competing for
the same passengers. Nevertheless,
we’ve had tremendous passenger
growth of 12% on our routes and our
focus is to consolidate that.” FlySafair
in December adds three B737-800s
to its fleet of five B737-400s. It has
installed thinner seats that don’t
recline and are lighter, which lowers fuel
and maintenance costs.
Skywise joint ceo, Johan Borstlap,
says the carrier can sustain the current
airline bun fight for a while because it
has strong shareholders, but plans to
get out of the domestic market and into
the regional market as soon as it can.
“Our bottom-line is thin. We are just
breaking even. Our entry was met by a
25% drop in fares and everybody felt it.
It will stabilise and we expect a good
season coming up, but Africa is our
opportunity. We are looking at flights to
Zambia, the DRC and Angola.” Skywise
raised eyebrows in late October when
its aircraft were temporarily grounded
because it failed to honour outstanding
payments to Acsa and ATNS.
