New low-cost airline for South Africa
Kulula founder and former Comair CEO Gidon Novick plans to launch a new low-cost domestic airline in South Africa.
Speaking to CNBC Africa, Novick said he sees opportunity in the difficult situation which the travel and airline industries find themselves in.
The plan to launch a new airline comes amidst the collapse of SAA, Comair being in business rescue and the travel and airline industries being in dire straits.
Novick, however, is upbeat about the opportunity and need for affordable in air travel in the new COVID-19 world.
He said to optimise South Africa’s tourism potential, efficient and effective air travel is a crucial ingredient.
“There is a unique opportunity now. The competitive playing field has been completely changed and there is a chance to do something special,” said Novick.
Novick said the differentiating factor for the new domestic airline will be efficiency.
“The airline industry is a difficult and inefficient industry, particularly when you have state-funded airlines in the mix,” he said.
“In the current depressed environment, the input costs to start a new airline are at record low levels.”
He said it is now possible to build a platform from the ground up that is super-efficient which will translate into low pricing and affordability.
“Affordability is the name of the game – people and businesses are not going to have money and will be very price conscious,” said Novick.
He said they are basing their business model on a smaller industry and their timing will be very conservative with a long runway to get into the industry.
Talent and funding
Novick said there is currently an abundance of incredible talent in the airline industry who are available to build a new airline.
“These are talented and experienced people – pilots, management, marketing and sales professionals,” he said.
Commenting on the funding to start the new airline, he said it will not require as much capital as people expect.
“People are used to seeing billions as the required capital for airlines. Our reality is that it does not require billions,” he said.
“It is curious to us as to why the state would be called upon to put in billions more into an industry which has clearly been incredibly costly.”
He said they do not need massive amounts of capital to get started, adding that all their investors are local.
“I like to be with South Africans who believe in South Africa. I am one of them,” he said.
“We have the most incredible tourism product in the world, and we should be one of the top tourist destinations globally. If we play our cards right, we will be.”
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