The South African airline industry has had a very colourful and interesting selection of carriers. Now they really seem under pressure. Earlier in 2012, airline Velvet Sky went into liquidation. The action was launched by oil company BP over unpaid bills.
At the end of August, the carrier 1time which is estimated to have 15 per cent of the SA market, filed for “Business Rescue” . This arrangement protects the airline from any creditor forcing it into liquidation while the new management team tries rescue the carrier. 1time (which means in South Africa: “for real!” has a debt of over 320-million South African Rand (almost 40 million US Dollars). Shares in the parent company 1time Holdings slumped by half their value following 12 months of free-fall.
1time is the third contendor in an airline industry dominated by two players: South African Airlines and their subsidiary Mango and British Airways and their subsidiary kulula.
Launched February 2004 1time was South Africa’s first low cost carrier. Upon entering the market, 1time Airline claim they have undercut existing airfares by up to 50 percent. The only negative were some who said 1time was called that because you would only fly them one time!
Following the August Business Rescue announcement, 1time’s marketing director Refilwe Masemola said “business rescue was certain to succeed as most of its customers and suppliers were “fantastically loyal”. A symbol of this was the launch of a Facebook page (9-1-1Time) supporting the airline. The page now has over 1600 likes -which is not huge but heartwarming no doubt for management and employees. The comments on the page have been overwhelmingly positive, supportive and encouraging.
Unfortunately rescue is hampered by their fleet of very fuel inefficient McDonnell Douglas planes. They have an average age of over 24 years. 1time has vowed to cut out unprofitable routes and so far have closed one.
They have also stated they have identified “operational inefficiencies”. One would think you might have found those months ago. Last week, 1time said that 15 percent of its workforce will need to go. To my thinking, that won’t help with company morale, may affect customer service and does nothing about the fuel inefficient fleet, especially with their competitors moving to newer planes. For example kulula will have a one of the youngest fleets in Africa with eight brand new 737-800s.
1time have recently announced that load factors had risen to well over 70%. This sounds way under what they should be. Easyjet, last quarter had a 2012 load factor of 89.1% and Ryanair sat at 88% for August. In addition, 1time said that corporate customers have also been significantly increased their bookings. Someone wants to keep this competitor flying! The question is of course, “is this enough?” or will 1time run out of time and become another lost carrier in 2012?
South African Logo Image: Kyle Hwang