A new domestic South African airline has launched, betting on low operating costs and oil prices to withstand an industry crisis that has left national flagship SAA struggling to survive and sunk other low-cost carriers.
The new carrier, Lift, part-founded by former Uber Africa executive Jonathan Ayache and Gidon Novick, who ran low-cost flyer kulala.com, said it planned to avoid a cash-heavy operational model that hit its rivals.
“We’re fortunate, operating costs are as low as they’ve ever been. Obviously that’s subject to the exchange rate,” said Novick. “Oil prices are pretty low. Aircraft values have almost halved, and people costs are also low, so we see a real opportunity.”
The rand is its firmest in 10 months against the dollar. Global oil prices crashed to a two-decade low in April, only recently returning to pre-COVID-19 levels near $50 per barrel.
Lift will fly 4th generation Airbus A320 aircraft leased from Global Aviation Operations, a South African-based charter firm. All of Lift’s seats will be economy, and will operate between commercial hub Johannesburg and tourist favourite Cape Town.
It will compete directly with the state-owned South African Airways (SAA) subsidiary Mango, market leader kulala.com, and FlySafair among others.
Like their global peers, they have struggled this year due to the COVID-19 pandemic, related lockdowns and restrictions on travel. The health crisis exacerbated SAA’s problems. It entered business rescue – a local form of bankruptcy protection – last December after almost a decade of financial losses.
Comair is also in business rescue while SA Express is in liquidation.
On Tuesday, The International Air Transport Association (IATA) said passenger demand continued to disappoint. African airlines’ traffic sank 78.6% in October from an 84.9% drop in September.
Lift, however, is betting on a return of tourists and business travellers, and what it sees as historically lower entry costs. Lift would not say what passenger numbers it was targeting. – Thomson Reuters Foundation.
