NOMPU SIZIBA: Lift Airline launched its services from Johannesburg to Cape Town in early December, 2020. The founders were brave enough to start this service in the middle of a pandemic – so how have they fared so far? How competitive has the aviation landscape been, and how concerned are they that jet fuel prices are now up on the back of high crude oil prices?
Well, to fill us in on the latest I’m joined on the line by Jonathan Ayache, a co-founder at Lift Airline. Thanks very much, Jonathan, for joining us. Lift has been running for the past few months now. Just remind us of the routes that you currently do, and what sort of traction you have had so far in terms of passenger-number growth and so on.
JONATHAN AYACHE: We launched initially in December with Johannesburg-Cape Town and Johannesburg-George routes. At the moment we only have Cape Town live. We pulled back on the George route as the Garden Route went into the high level of lockdown.
It’s been obviously challenging launching an airline in the middle of a pandemic, and we’ve been blown away by the traction. In December we moved over 30 000 people, and that’s off the back of selling for just around a month. We launched ticket sales on November 10, and our first flight was on December 10. So far the feedback has been phenomenal. In January we were able to hit 100% on-time performance, and we were very, very close to that in February as well.
NOMPU SIZIBA: What about the George strategy – when are you going to reinstate that? Of course, it wasn’t stated in the first place, but when are you going to start that route?
JONATHAN AYACHE: The truth is, agility in this time is going to be the name of the game. Actually, we weren’t planning on launching with the George flight in the months leading up to our launch, but we saw an opportunity. We spun it up very quickly. It was always planned to be a seasonal route and, I think with the increased restrictions coming in at the beginning of January, we just made the call to pull that a little bit earlier. We’ll look to relaunch it, depending on whether there’s the demand, and for seasonal for seasonal spurts. We will look to relaunch it, but we’ve no plans as yet on exactly when that’ll be.
NOMPU SIZIBA: With the country now back at Level 1, have you seen a change in travel appetite at all, or do you think is still too early to say just yet?
JONATHAN AYACHE: I still think it’s an extremely challenging environment. In the last few weeks and months we’ve seen operators across the board reducing their capacities, operating maybe at 30 or 40% of what was originally published as flights that they would operate. It is promising. We are seeing an uptick in demand with the public holidays coming up in March and then Easter. So we’re quietly optimistic.
But again, our business model is one that is flexible, and we can scale up and scale down as we see demand pick up.
NOMPU SIZIBA: How many aircraft do you guys have?
JONATHAN AYASHE: We’ve got three available to us. Our partner Global Aviation, has a fleet of six to eight, and we can use those if we see demand pick up through the course of the year, or in the next 18 to 24 months.
NOMPU SIZIBA: So has the local aviation landscape proved to be more competitive than you’d perhaps initially anticipated?
JONATHAN AYACHE: I think we always saw that there were very strong operators in the market. And, while it does seem like a crazy idea to launch when we did, we saw that there was this opportunity. Obviously at the time Comair was not operating, and SAA still isn’t. But, beyond that, Covid provided us with the timing.
Beyond that, we saw an opportunity to create something different in the aviation space, which has largely become commoditised. People purchase based on price, which obviously we understand.
But there’s an opportunity to provide a better experience and put people at the centre of how we operate. So for us the key thing we want to offer is flexibility, which we see as critical, especially during this time. We never understood why that should be something that you need to pay a huge amount for, or something that needs to be very difficult for you to do. I think that’s the philosophy that we’re coming in with.
So for us, it’s very easy. If you want to change a flight you can do that up to 24 hours before, free of charge. You can do it online and you don’t have to fuss with vouchers. If you cancel or change your flight the money’s credited into your Lift wallet instantly.
NOMPU SIZIBA: That’s quite a calculated risk, I would think. Has it paid off?
JONATHAN AYACHE: Well, it has. To your question around demand, especially over January when we saw that increase in restrictions, we saw a lot of people making use of that feature, changing their flights. A lot of people pulled their return journeys earlier. And the usage that we saw there is indicative of the fact that it is something that people value. So yes, there’s a potential cost or an opportunity cost in not charging for it.
But our bet is that people are going to choose us because we’ve got that available. We give them that certainty, and they’re not stressed. The trouble is that life in general is stressful enough without all of these added complexities. We’re really just trying to make air travel as stress-free as possible.
NOMPU SIZIBA: When you started, jet fuel would have been a lot cheaper on the back of crude oil being around $50/barrel, but now we see that above $70/barrel. How tricky is it to manage those issues that you can’t control, but which are pretty significant in terms of your survival.
JONATHAN AYACHE: Obviously jet fuel is one of the larger direct costs that we’ve got. We monitor it very closely. When we modelled it, we weren’t betting that it would stay at $40 or $50/barrel. We took into account that it would increase. But thankfully our load factors or occupancies on the plane have been higher, which have helped offset the higher oil price.
NOMPU SIZIBA: Okay. Just in terms of going forward, are there any concerns that business travel may well have been permanently cut, because obviously the likes of Zoom and other electronic meeting setups are believed to be able to do the job?
JONATHAN AYACHE: Oh, that’s the million dollar question. I think what we’ve seen is that there is a new normal – I’m sorry to use a cliché term – but there’s a place for Zoom and that has changed things. The truth is it’s never going to replace in-person interaction. Yes, things will change and maybe we’ll see fewer [changes]. Our bet is we’ll see fewer business trips and more deliberate trips. So instead of going up maybe twice in one week, I’ll make sure that I can, by meeting more efficiently, go up once. But I don’t think we’ve seen the end of business travel.
I also think that we’ve already started seeing new trends in remote work. People are now moving into smaller cities or moving from Cape Town to Joburg, working remotely, and flying up when they need to. So I think there will be different trends and different travel patterns that we’ll see, but it’s definitely not the end of business travel.
NOMPU SIZIBA: Since you’ve started, how many jobs have you managed to create? Presumably you were spoilt for choice in terms of experience because of the damage that was caused to the local aviation sector and the impact on jobs.
JONATHAN AYACHE: Absolutely. As you said, I think one of the keys to our success is that not only were inputs very low – as you can imagine with a lot of aircraft being parked –but we had the pick of some of the best people from the industry with decades of experience. So, between the jobs we’ve created and the economic opportunities we’ve created it’s not just that we’ve hired people, but we’ve also deliberately partnered with a lot of local players in the industry.
If you’ve flown with us, you would have tasted that we’ve got partnership with Grumpy Snacks. You have delicious snacks that we provide free of charge on board. We’ve got a partnership with Bags of Bikes, again another small business based in Cape Town. By supporting them, we’re also creating those economic opportunities more broadly.
NOMPU SIZIBA: Just in terms of the number of jobs, how many jobs have you created?
JONATHAN AYACHE: I want to say over a hundred jobs so far. We’re starting small but, again, it’s one route so far. As we see demand pick up again that number and those routes will increase as well.
NOMPU SIZIBA: Just to wrap up, the million-dollar question: your expectation for how the sector is going to fare in 2021?
JONATHAN AYACHE: We’re quietly optimistic that, with the uptick we’ve seen and with the rollout of vaccines, we all going to see a recovery. We’re not betting that the market’s going to be back to pre-Covid levels for a while, but the truth is the market is big enough to be sustainable, even with that recovery taking a little bit longer.
NOMPU SIZIBA: That was Jonathan Ayache, a co-founder at Lift Airline.