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New heights for cheap seats


Competition has driven innovation in South Africa’s low-cost airlines

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Jan 14, 2008

Next to e-mail and online banking, the biggest convenience of the Internet age is low-fare airlines.

This is a nice market in South Africa with kulula.com, 1Time, Nationwide and Mango accessible at the click of a mouse.

Last weekend, I picked 1Time for a trip to Cape Town. The flight was everything I wanted: cheap and punctual. A bonus was that it turned out to be more comfortable than the economy classes of the full-service airlines I’ve flown on. The 60 percent cheaper ticket excludes airline food — but that’s a great deal if you hate the stuff anyway.

Satisfied as I was with 1Time’s service, I had second thoughts about my choice after spending a morning in the office of kulula.com boss Gidon Novick.

I discovered that if I had flown with kulula.com I could have departed from Lanseria rather than OR Tambo, which would have knocked an hour off the total travel time. And, as a Discovery Vitality member, I could have got a discount of between 15 percent and 30percent — and I would have got to fly in a brand new Boeing 737-400.

Novick is joint chief executive of JSE- listed Comair, which operates two airline brands in southern Africa: full- service British Airways and no-frills kulula.com.

With a R17-million profit on R2.2- billion revenue last year, Comair is one of the three most profitable airlines of its size in the world.

It has a strategy under way to reduce its overheads further. A key part of this is switching from leased MD82 aircraft to owned Boeing 737-400s. Standardising on one aircraft helps cut training and servicing costs.

According to Novick, the newest planes gives Comair several competitive advantages. They are more fuel- efficient and give fewer technical hassles.

Comair has invested in two 737 flight simulators to establish an in-house flight academy. This has turned training 737 pilots for foreign airlines into a sideline business.

Novick said: “I took my five-year-old son into the flight simulator and flew him around Table Mountain. It’s so realistic, he didn’t understand we didn’t really take off. He later asked my wife: ‘Mommy, how did we get through the wall’?”

Comair is investing in a fleet of 24 aircraft, of which 60percent are allocated to BA, though it carries about the same number of passengers as kulula.com. The full-service brand offers more flights which are less packed to justify higher ticket prices.

Novick said: “When we launched kulula.com six years ago there were fears it would take passengers from BA. That never happened. Low-fare airlines have increased the market to double the size it was back then.”

According to Novick, South Africa’s low-fare market is far more open and competitive than Australia’s, which has only two low-fare airlines: Quantas’s JetStar and Virgin Blue.

The competition here has driven innovation. One of my reasons for picking 1Time was that I needed a hired car, and 1Time’s website offered a packaged deal with Avis.

“We have a similar deal with Imperial, which we launched two years before 1Time,” Novick said, making a note to make this alliance clearer on kulula.com’s website.

Buying hotel accommodation, hired cars and air tickets as one bundle online is increasingly popular. kulula has tested this market by selling Mauritian holiday packages, and is in the process of getting smaller, independent hotels linked to its website.

“We’ve grown from being an airline site into a travel portal,” Novick said.

kulula.com is already ranked as South Africa’s biggest e-tailer.

Comair is looking north for growth. It secured rights to fly to London recently, which it will lose unless it gets the service running within a year.

Its network includes most southern African cities and it plans to extend its reach to the rest of the continent.

Novick said: “The challenge is to get around the protection of the air routes. Here we have been getting a very favourable response from our government. In the past, there was a lot of protection of SAA. Now we are seeing a more liberal policy.”

thetimes.co.za

Competition has driven innovation in South Africa’s low-cost airlines
airliners.net



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