86

T
he decision by FastJet to postpone
its domestic launch in South Africa
originally slated for July last year
gave Comair breathing space to
consolidate its network and prepare for
the arrival of four aircraft in 2015.
Chief executive Erik Venter remains
sceptical that the low-cost model can been
rolled out across Africa, so he is resisting
the urge to deploy low-cost unit Kulula in
neighbouring countries.
But Comair will have to keep on its toes
in the fast-evolving competitive
landscape. Flag-carrier South African
Airways (SAA) has embarked on a long-
term turnaround plan likely to involve
elevating the role of low-cost subsidiary
Mango while FastJet is set to become a
regular fixture in the country with its Dar
es Salaam-Johannesburg route.
Venter argues that both carriers have
fallen foul of South African law either
on anti-competitive or foreign ownership
grounds and he has no qualms about
proving his point in court.
SAAs 5 billion rand ($490 million)
government guarantee has already been
the subject of legal action by Comair. We
just have to wait for a court date, Venter
said, reiterating his long-standing belief
that state support allows the flag-carrier
to undercut fair market prices.
Pouring cold water on SAAs 20-year-
turnaround plan, he warned that recently
appointed chief executive Monwabisi
Kalawe will have his work cut out at the
state-owned entity.
Hes going to be immensely
challenged. If youre coming into a
company thats already running
reasonably well, then its ok to come from
an external industry and just pick up the
reins, Venter said in reference to his
counterparts lack of airline experience.
Comair is a rare success story in South Africas troubled aviation
market. Chief executive Erik Venter talks to Martin Rivers about
his strategy for staying one step ahead of the competition.
But coming into a company in such
disarray, and not having industry
knowledge, is going to be a
monumental challenge.
Nor does FastJet escape his
criticism, despite the initial
postponement of its entry to the
domestic market. Complaining
about the structure of its
upcoming South African subsidiary
which will be 75% owned by a
consortium linked to Edward Zuma,
the son of the countrys president
Venter said the deal almost certainly falls
foul of South Africas strict foreign
ownership laws.
If the South African Civil Aviation
Authority does its homework and says
that FastJets structure is not compliant
with the Civil Aviation Act, then we wont
need to do anything, he said. But if the
Civil Aviation Authority doesnt taken
adequate action, then we might have to
get involved.
K K K K K
His objection stems from foreign
ownership regulations that oblige the
holders of domestic air operators
certificates (AOCs) to be in active and
effective control of their airline. At the
end of the day it all boils down to whos
ultimately in control, the chief executive
said. Venter believes that London-based
FastJet PLC as opposed to its local AOC
partner, Federal Air would be calling the
shots behind the scenes.
Although he accepted that liberalising
foreign ownership could be a positive step
for the continent, he stressed that
changing the law only makes sense for
South Africa if done in tandem with other
countries.
Reform would have to be applied
across the continent before we could
accept any changes in South Africa.
Wed need a reciprocal change on the
other end of the routes, he insisted.
This would have to be a global
initiative. It cant be changed one
country at a time. We cant open
ourselves up to foreign carriers
taking over [in South Africa] if we
dont have the same advantages.
With flag-carriers across the continent
still trying to protect their home turf,
such reform is a distant prospect. In its
absence, Comair will continue
challenging perceived breaches of the law.
Beyond preparing for litigation,
however, Venter is busy pushing ahead
with his airlines fleet renewal. Comair
currently operates a fleet of nine Boeing
737-800s, 10 737-400s and seven 737-
300s across its low-cost Kulula and full-
service British Airways brands.
Four of the -800s were delivered last
year, with the final instalment of four
more units scheduled for 2015. Once they
have arrived, Venter said he would
gradually phase out the -300s.
They have reached the end of their
rational economic life, he explained. We
will end up with a fleet of all -800s and -
400s. And slowly but surely well migrate
to all -800s. But it will take a while.
Venter has no interest in switching
type, insisting that Comair has had
fantastic service from Boeing and
describing its products as the right
aircraft for Africa. With Comairs loyalty
to Boeing affirmed, he said that re-
engined MAX aircraft are now in his
sights.
The next step is to start looking at the
next tranche of new -800s beyond 2015,
Venter noted. Highlighting Comairs
COMAIR STAYS ON THE
FLIGHT SIDE OF THE LAW
We cant open
ourselves up to
foreign carriers taking
over in South Africa if we
dont have the same
advantages.
ERIK VENTER
SOUTH AFRICA
FOCUS ON
SOUTHAFRIC
87
DOMESTIC
options for eight more -800s, he
continued: We will be having some talks
with Boeing I suspect they will probably
become 737-800 MAXs. What weve
typically done is had options on a number
of aircraft beyond our immediate order, so
that we can flex to whatever the market
does.
Although the fleet is being renewed,
Venter is wary of plotting regional
expansion for Kululas domestic network.
His scepticism about the pan-African
low-cost model contrasts not only with
FastJet but also SAA, whose Mango
subsidiary launched charter flights from
Johannesburg to Zanzibar in March
2013.
K K K K K
Theres a few projects were looking
at, he said cautiously. But trying to
operate a low-cost model in Africa is
virtually impossible. All the distinguishing
marks of low-cost carriers around the
world just dont work in Africa.
Closer to home, SAAs strengthened
codeshare partnerships could take market
share away from Comair. Venter has
responded by holding very high-level
talks with International Airlines Group
(IAG), the parent company of franchise
partner British Airways. Were watching
what IAG is doing, he confirmed. But at
the moment were still very much in the
franchise camp.
Having been profitable for 67
consecutive years, Venter said Comairs
foremost strength is stability in its
boardroom and workforce. Weve only
had four CEOs, and many employees have
been here for 20 years, he noted.
Continuity in the wider marketplace,
however, may prove elusive.
Trying to operate a
low-cost model in
Africa is virtually
impossible. All the
distinguishing marks
of low-cost carriers
around the world just
dont work in Africa.
ERIK VENTER