Economy favours low-cost airlines

FlySafair saw its highest monthly load factor this month since it started in October 2014.

Low-cost airline FlySafair saw its highest monthly load factor this month since it started operating in October 2014. CEO Elmar Conradie looks forward to a very good year. In a market littered with failed airlines’ corpses, FlySafair has grown from two planes to nine and flies to most major SA destinations. By end 2017, it will have flights to 12 city pairs and 10 planes, eight of which will be flying on schedule.

Conradie says it has a 15% market share and has outgrown parent Safair on revenue and profitability.

He explains Safair didn’t enter the market as an aviation novice like many other airlines do. Often newcomers know the commercial side of the business and how to set up sales channels and customer interfaces, but are unfamiliar with aircraft and aviation environment.

The opposite was true for FlySafair. Safair had been around for about 70 years, operating flights on behalf of clients. Most passengers had flown in its aircraft before FlySafair took off, not realising it as it had Safair’s clients’ branding.

Safair is not listed and Conradie wouldn’t disclose financial details, save to say FlySafair recorded a loss in 2014 and 2015 was a difficult year with a lot of set-up costs as the airline grew its fleet. However, 2016 was a good year as FlySafair “unexpectedly broke even and even recorded a small profit”, Conradie says.

He says there’s a natural hedge between the two sections of the business as Safair earns mostly in dollars and FlySafair in rand. The expenses are split about 50/50 between the two currencies.

This year, things are going well. In the first half, FlySafair grew passenger numbers 12% compared to the same period last year.