SA’s flyboy sets his sights on African dream
From starting Mango to two stints at SAA, Nico Bezuidenhout’s flying high in the aviation business
ALMOST a year and a half ago, Nico Bezuidenhout walked out of Airline Park at OR Tambo International.
He’d established one of South Africa’s most successful – and definitely one of the quirkiest – low-cost carriers in Mango 10 years before and seen it become profitable from the third year onward, cornering a quarter of the domestic market. He’d also taken the poisoned chalice of the trade – stepping in as acting chief executive of the parent South African Airways – not once, but twice.
Bezuidenhout, the wunderkind who’d promised so much at the struggling state-owned enterprise, walked straight into a job with Fastjet, an African low-cost operation based in Zimbabwe and Tanzania that was supposed to be a clone of Stelios Haji-Ioannou’s Easy Jet, but was instead haemorrhaging money at an eye-watering rate of US$68 million (R950m).
The business, operating out of Gatwick in the UK, had a huge staff of expats running a fleet of Airbus A319 aircraft.
Bezuidenhout’s first task was to stabilise the business.
“It wasn’t unlike SAA,” he smiles. “We had to sort out the aircraft type, they were using the wrong tools for the wrong job, which the market couldn’t sustain.”
The A319 fleet were replaced by the smaller Embraer E190, taking the seats from 145 to 104.
“When I took over the load factor was 48%, we pushed that up to 83%, just by using smaller aircraft,” he says.
But that’s not all; smaller aircraft meant some routes, like Joburg to Harare, could be boosted by more services, rather one aircraft flying in and out every day. They’re also cheaper to run.
Be zuidenhout promptly relocated the head office to Joburg, slashing costs there by half, got rid of the expats in Tanzania and Zimbabwe, cutting staff from 300 to 200; renegotiated contracts with local suppliers and, in his first six months, reduced losses by 57%, pushing up revenue by 30% at the same time. He replaced the staff with many of his management team who had helped make Mango what it is today and been at his side in the tough times at SAA – and then followed him to the other side, literally, of OR Tambo International Airport.
“They’ve got between 15 and 25 years management experience each – they’re a strong team,” he says.
Fastjet might have been a financial disaster, but its service levels in its markets were among the best in Africa. In June it won the coveted Skytrax award as the best low-cost carrier in Africa and last month was recognised in the same category at the World Travel Awards.
“Awards don’t pay bills, but they do indicate consumer sentiment – and consumers do pay bills,” says Bezuidenhout.
The Tanzanian business, which uses the capital Dares-Salaam as a hub, is now profitable and Zimbabwe, the younger of the two operations, is now cash-flow positive, with the Harare Joburg route having grown from one flight a day to four flights at ticket prices that are on average 40% less than SAA’s, he says.
Yesterday, Fastjet launched its Mozambican operations, flying from Maputo to Tete, Beira and Nampula, with the strategy being to grow the local business before connecting it to the other countries. Mozambique, though, makes perfect sense, it’s next door to Tanzania and Zimbabwe and borders South Africa, where the head office is situated and – thanks to Fastjet’s very recent acquisition of boutique air safari operator Federal Air – the South African market too.
In all cases, the model is leisure travel and business.
“The days of business people not travelling on lowcost carriers (LCCs) are long gone,” says Bezuidenhout. “We saw it on Mango as the profile changed from slops to suits. On a country-by-country basis the market changes – in Tanzania it’s a cost issue, in Zimbabwe it’s reliability, Mozambique will probably be both.”
One of Bezuidenhout’s key strengths has always been his humility – coupled to a fierce work ethic and a very pragmatic approach to business.
“Before I joined Fastjet, they launched a bunch of international routes. It’s always very sexy to do that. The downside is that your only competitor is a flag carrier (a national airline) operating below cost.
“As a rule I tend to stay out of pubs after 11pm, because all the guys who are left are drunker and bigger than me,” he laughs. “I choose my routes the same way, you can’t compete with the drunken gorilla in the room. I don’t need my ego stroked by having the biggest routes and the biggest aircraft.
“The Joburg Cape Town route is one of the top 20 in the world and by the time I left, Mango had a 20% market share of that, but that route won’t be Fastjet’s first call when we launch in South Africa next year.”
Instead, the youthful looking 41-year-old, who eschews suits for jeans and jackets, is looking at under-utilised and under-served secondary routes in South Africa. Once again, Mango provides the example.
“The Cape Town Bloemfontein route benefited the local economy, we doubled the number of passengers travelling and the route was profitable. It’s all about sacrificing margins and building up scale.”
Bezuidenhout is excited about the prospects at Fastjet and he’s grateful for the experience that has let him get to know London’s capital markets through the company’s listing on the UK stock exchange, as well gaining first-hand knowledge of southern Africa.
By 2019, he hopes to take Fastjet into West Africa, through Ghana.
Eventually he hopes to have an airline that is affordable, simple and reliable, providing a one-stop shop into and across east, central, west and South Africa that is attractive, not just for local travellers, but the only logical option for foreign travellers too – with one check-in system and UK operating and safety standards, in time for the much-awaited boom in continental air travel.
“Some people l ook at Africa and say ‘ what’s the point?’ I look at Africa and it’s mind-blowing: 30% of the world’s mineral resources, 20% of the world’s landmass and 15% of the population but only 3% of the aviation. The World Bank will tell you that seven of the world’s fastest-growing economies are here, IATA (the world air transport authority) sees a phenomenal growth in air travel in the next decade and when you look at the state of road and rail infrastructure north of us, plus the distances to be travelled, you realise that you can’t have growth without aviation.”
He remains wistful about SAA and Mango, the latter for purely sentimental reasons since he started the airline, SAA for more patriotic reasons.
“I remain a South African at heart, I like seeing our flag on the tail of aircraft, I don’t miss the politics – with a small ‘p’ – though. There’s a tough job to be done at SAA; over time there’s been a skills drainage throughout the organisation. It can be fixed, though – with the right political will and leadership stability, but there’s no white horse airline waiting in the wings to shell out money. That view definitely needs a healthy dose of reality.
“The most important thing is that shareholders are not management and each one of them should be held accountable for their own areas of responsibility, regardless of whether the shareholder is a government, as in this case, or an institution. You need to entrench that rigour.”
There also needs to be clarity of purpose, a divorce between ownership and control and a clear alignment with the strategies agreed on.
“You’ve either got a social experiment or a commercial operation,” he says, “you can’t have both. But if these things are in place, then it can be done.”
But would he be the man to do it – a third time?
“I’ve backed myself before, I’ve got the skill-set, but then again, I don’t have the monopoly on those skills.”