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FlySafair hopes for a profit in second half

Oct 09 2016 06:30
Justin Brown

FlySafair expects to turn a profit in the second half of this year, despite fighting a price war with SA Airways and Comair, its two key rivals in the local domestic space, FlySafair CEO Elmar Conradie said.

“We are close to break even and we should make a small profit in the second half of this year,” Conradie said during an interview at FlySafair’s offices at OR Tambo International Airport near Johannesburg.

The company launched its inaugural passenger flight in October 2014.

The company behind FlySafair, Safair, has been a player in aviation for more than 50 years and has mainly been involved in maintaining aircraft and moving cargo.

Some of the work that Safair has done in the past is flying food for the UN World Food Programme and going to Antarctica as part of its commercial operations.

The company has 17 aircraft of which eight – three Boeing 737-800 jets and five Boeing 737-400 airliners – are permanently used for FlySafair’s passenger business.

FlySafair has had safety incidents since launching, and Conradie said that Safair held itself to high safety standards, but these incidents do happen and FlySafair wasn’t the first airline to have oxygen masks drop mid-flight.

The existence of social media led to these incidents being sensationalised, he said.

Conradie said that since its launch, FlySafair – which employs 650 people – had moved more than 2 million passengers.

Among the low-cost carriers, Conradie estimated that FlySafair had achieved a 25% market share compared with Kulula’s 40% and Mango’s 35%.

Conradie put FlySafair’s total domestic market share at 11%.

Conradie said FlySafair was expecting to move 2.5 million passengers next year. This compares with the 5.4 million passengers that Comair moved in the year ended June through its British Airways and Kulula brands, and the 9.3 million passengers that SA Airways and Mango moved in the year ended March 2014.

In August, FlySafair on average completed 31 flights a day and 972 flights a month.

An interesting part of FlySafair’s offer is that you can buy a basic ticket – without food, drinks and luggage – and then build on it by deciding on the other items you need to buy. This reduces the cost of the airline ticket.

Kirby Gordon, FlySafair’s head of sales and distribution, said this configuration was based on the model used by Irish airline Ryanair and US carrier Southwest Airlines.

Gordon said FlySafair had a 25-minute turnaround policy for its planes to maximise flying time and reduce costs. The airline flies 10 routes, which Conradie said was more than its rivals, and to seven local airports.

Last month, Comair CEO Erik Venter said that he predicted that another local airline could go under as prices were depressed because of an oversupply of capacity.

Venter said that for everyone else to stay in business, one of the airlines would have to go belly-up – or airfares would need to increase.

Conradie agreed that the local aviation market was “overtraded”.

“Airfares are at their lowest in about six years,” he said. Gordon said that, on some routes, the entry of FlySafair had reduced ticket prices by 39%.

Conradie said the drop in airline ticket prices would ultimately boost demand.

About 15% of FlySafair passengers had never flown before, so the airline’s pricing was opening up a whole new market of travellers, Gordon said.

“We could be dipping into the bus market,” he said.

Conradie said FlySafair was privately held by a local investor, a BEE partner and ASL Aviation, which is based in Ireland.

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