72 years later, Comair still running profitably, can SAA learn anything?
27 Sep 2018 CURRENT AFFAIRS
By Owen Nkomo
Leader in local routes
Comair, which operates through Kulula and a license agreement with British Airways in South Africa, has recently issued their best financial results since the company started. This is despite a hostile environment with sluggish economic growth, high unemployment, and depleted consumer spending. The airline has managed a decent Seat occupancy of 76% , just 4% below global average.
This has been achieved through dominating local routes ahead of competitors, including SAA! Shocking in light of the fact that SAA & AirLink is a national carrier. Locally Kulula is a well-received and affordably priced airline, hence it does well. For longer haul regional and local flights, British Airways planes are used by Comair, and are favored relative to SAA. Why? Price and Experience.
Long-standing management with a commitment to strategy
The management teams at Comair, have been fairly consistent, and this has allowed them time to achieve their strategic goals, from implementation to monitoring. SAA, on the other hand, has had a huge turnover of CEOs and senior managers. It is also very prone to political interference at the management level. We all know how it was forced to abandon a route to India in favour of a Middle Eastern carrier a few years back, with politics being sighted for the decision. (Did someone say, Guptas?).
Other products and services
The company also has other sources of income, such as Slow Lounges, training facilities for pilots, both internal and external pilots. A well-0run catering services business is also part of the Comair stable. SAA does have these other services, but, remember years ago, a certain CEO of SAA was accused of giving his wife services contracts at SAA. Failure of proper governance structures at the airline continues to plague the airline, delaying any hope of success. Comair’s execution on these services is world class. Hence their success.
Smart contracts and flexible management decision making
As a privately run, shareholder-focused airline, management is able to make flexible and appropriate decisions. One decision that SAA needs to urgently get the government to support is the restructure of its leased airline agreements which cost the airline more money than the airline makes. These have to be challenged at the highest court in the land in the interest of taxpayers, or SAA will forever depend on government sureties’ and guarantees to survive. A national carrier with far more resources than Ethiopian Airlines and a potentially stronger balance sheet should be the one buying other African airlines, instead, Ethiopian Airlines is a better run airline!
Most of the people you know, hardly use SAA when traveling locally, because it is very expensive. Whose interests does the existence of SAA in public enterprises serve? It might be best to privatize it, and list it so it competes with Comair, flight for flight.