Comair: Ticket prices to fall

Johannesburg - Airline company Comair says it aims to generate 50% of its profit outside the airline business in the next five years.

"The aviation market is not a very rosy picture," says Comair joint CE Gidon Novick.

Novick says non-airline business contributed about 15% to group profits. The company acquired kulula Travel and kulula Connect in the past financial year, while it's had the credit card business for a number of years.

"The goal is to be less reliant on the aviation business and be a broad tourism group," says Novick. "Unfair state competition is the main reason we want to have options (outside of aviation)," says Novick. He was referring to state subsidisation of South African Airways (SAA).

Another major reason is the volatile fuel price. High petrol prices in 2008 not only helped halve Comair's profit, but also played a part in reducing the domestic airline market by 5%, according to Novick.

However, he says Comair managed to "hold onto" its share of the market. "We are also winning lots of corporate business," says Novick.

In the course of the year, Novick sees domestic aviation prices falling on the back of the reduced oil price. "Prices are coming down already due to the low fuel price; they're at least 10% down from the peak last year," says Novick. He says they should fall further towards year-end.

On the airline industry generally, Novick says the slowdown has affected high-end leisure destinations like Mauritius rather severely.

"Mauritius is taking strain because of reliance on European arrivals," says Novick. But there's a positive side to the Mauritius story. Reductions in seat capacity by the major European carriers to the island have helped improve prices on the route.

- Fin24.com