Domestic airlines operating at 6% capacity – FlySafair CEO

Business and essential air travel not enough to keep airline industry afloat.
The CEO of privately-owned airline FlySafair says 'if the state provides support for some airlines, it should provide support for all airlines' hit by the Covid-19 economic fallout. Image: Moneyweb

Demand for local air travel in South Africa remains “greatly constrained” with active airlines operating at just 6% of domestic capacity, Elmar Conradie, the boss of FlySafair has warned.

Responding to Moneyweb queries, Conradie said current low demand amid the Covid-19 pandemic and travel restrictions “isn’t enough to keep the industry going indefinitely”. He stressed that government support for the industry as a whole is needed.

Read: Mango, FlySafair, Airlink and Cemair to take flight in Level 3

“There’s really not much demand at all. It has also fluctuated greatly from day to day and week by week, which makes it difficult to match capacity with demand … FlySafair is pushing the boundaries to engage as much of our capacity as possible while keeping our operations viable,” he said.

Elmar Conradie, CEO of FlySafair. Image: Supplied

“Profitability is a long way off at this stage. We are aiming for survival for now so that we have a chance at recovery when things return to normal … We are fleeted and staffed to operate upwards of 84 flights a day, but we are currently operating a quarter of that,” Conradie added.

He said FlySafair’s current aim is to keep the operations at hand cash positive, however, he noted that leases on the stationary aircraft still need to be covered.

“There’s no way we can come even close to finding profit while only utilising a quarter of our assets,” he noted.

FlySafair and SA Airlink are the only two major privately-owned airlines to be operating scheduled domestic flights currently in South Africa. Comair remains grounded as it struggles through a drawnout business rescue process.

Read: Comair not insolvent and can be rescued – BRPs

State-owned SAA also remains grounded amid a business rescue and further multi-billion-rand government bailout plan. However, SAA’s low-cost subsidiary, Mango, is operating and competing directly with FlySafair amidst awful market conditions.

Under current Level 3 Covid-19 lockdown restrictions, only business and essential air travel is allowed. Domestic leisure travel, both inter-provincially and within a province, is still banned.

While the Tourism Business Council of South Africa (TBCSA), tourism and hospitality businesses themselves and other organisations have called on government to allow for domestic leisure travel, Conradie stopped short of this in his response to Moneyweb.

Read: Domestic leisure travel ban raises ire of tourism industry

“We, like every citizen in South Africa, want our government to do the right things. If restricting movement for now remains the right thing to do, then we believe that the state should look to do the other right thing, which is to provide support for our industry through meaningful interventions,” he said.

“If the state provides support for some airlines, it should provide support for all airlines,” added Conradie.

“The aviation industry, by its nature, is incredibly vulnerable under these [Covid-19] circumstances. It is also an essential infrastructure to the economy: directly affecting the tourism sector, but also enabling many other sorts of businesses across our economy. We strongly believe that an investment into our industry would be a meaningful investment into the recovery of the larger South African economy,” he said.

Conradie stressed that financial relief for the airline industry did not have to come through “massive cash injections” but possibly through “temporary subsidisation” or discounting of aviation-related fees.

“Fees for services rendered by state-owned companies form a large part of the cost-base of operating an airline. These include the Air Traffic Navigation Service (ATNS), South African Weather Service (SAWS), Airports Company of SA (Acsa) and the South African Civil Aviation Authority (SACAA). These entities are all profitable, but also have the capacity to raise capital if needed against government guarantees, which would provide far more favourable terms than a private company could raise on the open market,” he explained.

Conradie said FlySafair employs around 1 131 people. The airline has a fleet of 17 aircraft and currently operates 10 domestic routes in the country.

“All of our staff are presently working, but we are all working on reduced hours for reduced salaries. We have not initiated any Section 189 retrenchment processes and aim to avoid doing so for as long as possible,” he added.

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The government doesn’t give a flying f@#k .lol

It’s not asking Government to assist, it’s our money! Why must the taxpayer subsidise the airline industry when many don’t even fly?

The whole thing is in a mess and now they want to put new shoes on the table with SAA?

We’re being slapped by the truth and kissed with a lie

It’s taken the ANC less than 25 years to to turn this entire country into a rat hole and why?

GREED, more GREED.While all other sins are old, GREED amongst the ANC comrades stays forever young

But our proud ‘State Airline’ is going to fly and make a profit. Rightt!

It hopes to break even after 3 years – the notion of a profit is far-fetched.

Is there a private funding mechanism to support private airlines like Safair? i.e. a non racist and un-corrupt
If there isn’t, one should be setup – think people would support it. Would be a middle finger to SAA debacle.

The way in which Mango, a state-owned business as SAA – received R1bn recently from government to give it a boost in the Covid19 pandic while all other airlines were flatly ignored despite sharing the same fate as Mango, was highly cynical on Pravin Gordhan’s part.
The ONLY solution is: now that SAA is no longer in business rescue, a jilted creditor should sue it NOW and explain to the court how the voting rights were rigged.
Meanwhile, never use Mango or SAA!

Government airline strategy shaping up nicely. Soon there will only be SAA left courtesy of the taxpayer. Politicians free flights taken care of and no need to compete against pesky private airlines. A communist utopia!

Yes, Gordhan IS a communist, why else!

They must ask the taxi owners on how to force government to listen to them?

The ANC’ s plan for the new SAA’s success is so obvious! Get rid of the competition, give the consumer no choice but to have to use the national carrier and “hey presto!”
When will they learn that competition is a positive and BEE policies are racist.
Support companies in our economy to succeed and be valuable tax payers to balance the books!
We are not yet a Socialist State – We are a Democracy ….so let’s behave like one.

End of comments.

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