Comair CEO On Fleet-Replacement Strategy

South Africa’s Comair appears to be succeeding in a difficult operating environment thanks to cost containment and diversification.

At a time when very few African airlines are surviving, let alone making a profit, South Africa’s Comair appears to be flourishing. Daniella Horwitz speaks to Erik Venter, Comair CEO, about the company’s two-pronged approach: cost containment and diversification.

The South African economy is under huge pressure, and national carrier South African Airways is in dire straits, yet Comair made a post-tax profit of 199 million rand ($15.4 million) in 2016. To what do you attribute this?

I put this down to rigorous discipline on cost containment, effective revenue management and investment in technology to improve efficiencies, and diversification.

While the airline brands (British Airways operated by Comair and kulula.com) still account for a substantial portion of the group revenue, Comair is a diversified company spanning airline lounges, pilot and crew training, travel, hospitality and car-hire reservations and catering.

The offerings include:

■ In addition to SLOW (airport lounges), which we are expanding, we run lounges for two international airlines.

■ The Comair Training Center offers cabin crew and pilot training to a number of airlines.

■ Comair is the biggest renter of motor vehicles after the insurance sector and EuropCar’s largest customer.

■ Food Directions started in 2012 to supply meals for the airline brands. It enabled us to simplify processes, increase control and reduce costs.

The group businesses are beneficiaries of the operational efficiencies that are essential to remaining profitable in the notoriously thin-margined airline business.

What are the reasons behind the current fleet-replacement strategy involving the Boeing 737-8 MAX and 737-800 aircraft?

Comair

Erik Venter, Comair CEO

The fleet-replacement strategy is first and foremost about operating more efficiently. Its purpose is to help contain operating costs—and reduce the fuel and maintenance bills. The new aircraft are 7% more fuel-efficient than those they have replaced, 7% more cost-efficient, and they have lower maintenance downtime.

We are proud to say that we are now Boeing’s biggest customer in South Africa.

Can you tell us about Comair’s proposal to Botswana to operate a state carrier?

Comair submitted a proposal to operate a new state carrier in Botswana but has no interest in acquiring Air Botswana.

Where does Comair position itself in the local and international market?

We have two airline brands. British Airways operated by Comair is a full-service offering providing a choice of business and economy cabins on South African domestic routes, as well as routes to Namibia, Zambia,  Zimbabwe and Mauritius.

Launched in July 2001, kulula.com was South Africa’s first low-cost brand. It is now the market leader in affordable, easily accessible air travel and flies to six South African domestic destinations. It offers a single economy cabin, and refreshments can be purchased on board.

What are the particular challenges faced in Africa?

The main challenge for commercial airlines in Africa is competing against unprofitable state-owned carriers that are sustained through government bailouts. This skews the playing field, limits competition and ultimately is not in the best interests of commercial aviation in Africa or the flying public.

There is a lack of training and skills in the African aviation sector. How is Comair working to overcome this?

Started in 2000, the Comair Training Center provides a variety of training for flight crew and aspirant and current cabin crew and cabin controllers. It offers cabin crew and pilot training to a number of African airlines. We even train pilots for the Indian Air Force.

The facility operates four flight simulators for various configurations of 737s, offering advanced pilot training for our own flight crews, other airline operators and private clients.

A 737 fuselage is used to provide a full, immersive training experience for students including evacuation drills. The aircraft is equipped with bulkheads and stowages, smoke simulator, communications system, passenger and crew seats, doors and slides, galleys and a flight deck.

In addition to our own crews, we’ve built a client base of airlines from African countries as well as the Middle East, South America, Indo-Asia and the Far East.

What are the key elements of Comair’s maintenance strategy?

Comair’s current maintenance strategy is one of outsourcing. Comair outsources 100% of all its maintenance, including CAMO and engineering services, to SAA Technical.

What do you foresee as the next big challenge for your airline maintenance team?

With the 737 MAX on the horizon, ensuring that we are ready and we have all the necessary partners contracted to ensure a smooth entry into service.

What technologies have you recently invested in to support your MRO teams?

No significant technology, as the MRO IT function is also outsourced.

What does Comair look for in an MRO partner, be it a supplier, logistics or service provider?

Relationships are key. It is important that our partners understand our business and can provide the solutions we require at the right price, turnaround time and, of course, unquestionable safety.

What is the biggest aftermarket requirement for African MROs?

As the African market grows and moves into newer-technology aircraft, being equipped to meet the maintenance requirements, especially for base maintenance and engine/APU/landing gear services is very important. Many African MROs have collaborated with European partners, and this is improving the throughput of these facilities. With the lower labor rates, there is a huge potential to capture significant work for Europe, but facilities need to be equipped to handle a large influx of work.

What is your advice to African commercial aviators?

Think very carefully about starting an airline. It’s a highly regulated, low-margin industry that is skewed when governments repeatedly bail out carriers that are unprofitable and unsustainable.

What is your plan for 2017 and beyond?

To continue to operate efficient, profitable airline operations and grow our diversified business.

 

Comair Factfile

History: Started operations in 1946.

Fleet: 19 owned and six leased Boeing 737 aircraft.

Relationship between Comair, Kulula and British Airways: Comair Ltd. is a JSE-Listed, South African-owned and -managed aviation and travel company.

Founded in 1946 as a charter company, it has evolved over the past 70 years to become a diversified group, operating airline, training, catering and hospitality brands.

In 1996, Comair became a franchise partner of British Airways and operates in South Africa across the British Airways domestic and regional franchise and no-frills kulula.com brands.

Headquarters: Near O.R. Tambo International Airport, Johannesburg.

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