- Comair suddenly announced late on Tuesday evening that it has had to suspend all its kulula.com and British Airways flights.
- Its new owners need to secure more money to fund its operations.
- A competitor believes its woes could have been avoided by a more realistic ticket pricing strategy.
Comair’s current woes – resulting in its suspension of its flights due to a lack of money – may be the result of, among other things, adding too much capacity and selling tickets too cheap in pursuit of market share, according to a competitor.
“Comair, in my view, [was] unrealistic,” CemAir CEO Miles van der Molen told Fin24. “They added massive capacity at below cost to try get market share. Either the market needed to grow unrealistically to fill the capacity or someone needed to exit. At record fuel prices it was always going to be an expensive strategy.”
Van der Molen said that domestic ticket prices had to increase to reflect new cost pressures, which will help to create a more stable, investable and reliable aviation sector.
Comair, which says it controls about 40% of SA’s domestic aviation market, owns kulula.com and operates British Airways flights domestically and regionally under a licence agreement.
The company went into business rescue in May 2020. A consortium – comprising former Comair board members and executives as well as the South African-born, US-based founders of the Monster energy drink Rodney Sacks and Hilton Schlosberg – was chosen as preferred bidder to buy the company.
The consortium is running the company, but with the business rescue practitioners still having the ultimate say. Comair will remain in business rescue until it gets enough funding to emerge as a viable business, otherwise the rescue practitioners will have to wind it down.
The company has been hit by a five-day suspension of its flights by SA Civil Aviation Authority in March after what it called “a series of incidents”, including issues with the landing gear indicator on one of the flights. Sky-high fuel prices have added to its woes.
It has now suspended flights and ticket sales pending new funding.
Because Comair informed customers of the suspensions on Tuesday night, and told them not to come to the airport, it seems chaos was largely averted at airports on Wednesday.
On Wednesday morning there were mainly stranded international passengers who had domestic connecting flights on British Airways at OR Tambo International Airport.
Comair said kulula.com customers on suspended flights have the option of a credit, for a later flight, or can request a full refund of their ticket value. As for British Airways, the airline’s “book with confidence” policy will apply. It means you can change your dates, destination or even cancel if you need to, with no additional fees.
“We are experiencing high volumes of queries and may not reply to emails immediately,” Comair cautioned.
The company was criticised on social media for running cut-price ticket sales promotions for the past week in the run-up to the suspension of flights.
Advertising Standards Authority must come this side. I wanna show them something… ?????????? pic.twitter.com/DKxrHOymVV
— Maggs Naidu ?????????????????????????? (@maggsnaidu) June 1, 2022
“Comair conducts regular pricing specials on an ongoing basis. The most recent price special was planned and implemented a week ago. Once it became evident that our operations would need to be suspended, we closed the sale. Importantly, Comair does not receive the cash from sales until the air service is provided, so the cash is safe for passengers to claim a refund,” said Comair.
According to FlySafair CEO Elmar Conradie, the airline is trying to help stranded Comair passengers, but it has limited capacity since its own flights are selling out fast.
CemAir confirmed on Wednesday morning that it has increased its scheduled flights on the Johannesburg to Durban, Johannesburg to Cape Town, Cape Town to Durban, and Johannesburg to Gqeberha routes.
LIFT, owned by Global Aviation, one of the members of the strategic equity partner of SAA, the Takatso Consortium, said in a statement that the current situation of Comair is very unfortunate, and it understands it is stressful and frustrating for passengers.
“We will do everything we can to assist those stranded as we look at adding additional flights,” says Jonathan Ayache, co-founder and CEO of LIFT Airline.
‘Upset and scared’
Comair employees told Fin24 that they have been left feeling “upset and scared” about the future of the company after they were informed late on Tuesday evening that all its kulula.com and British Airways flights were suspended until the necessary funding can be obtained.
“Just two months ago we were told the company is doing well,” an employee told Fin24.
Employees will retain full employment rights for the period of suspension, however, no staff are to report for duty unless advised by their managers to do so.
Employees were also informed that Comair’s business rescue practitioners advised that the process to have the necessary capital “is in progress and that there is reason to believe such funding may be secured”. Once received, the airline will be able to recommence operations.
Derek Mans, Solidarity’s sector coordinator for defence and aerospace, says the union is very concerned about Comair as it has been working closely with the business rescue process.
“It is sad to see the current state the company finds itself in. Comair has a sound business plan. It is not always easy to comment from the side, but Comair has two strong brands and to see them in their current state is not nice. We will offer assistance where ever we can,” says Mans.
The Competition Commission announced on Tuesday afternoon that it is meeting with the leadership of the competing airlines “to engage them on the implications of Comair’s decision to suspend British Airways and kulula.com flights.
Get the biggest business stories emailed to you every weekday.
Go to the Fin24 front page.
Source by www.news24.com