South Africa Car Hire

Booking local air tickets – even on low-cost carriers – is now very simple…

There is a slow but significant shakeup happening in the local travel industry. Sites like Expedia and Travelocity have made online comparison travel planning and booking almost the norm in the US and Europe, while in South Africa, up until now, we’ve been forced to use travel agents or surf every single airline’s site

Enter Travelstart. Started by Swede Stephan Ekbergh in August last year, the website (www.travelstart.co.za) is essentially an online travel company, but the so-called “killer apps” are the comparison functionality and easy-to-use interface.

Select your starting point and destination (Joburg to Cape Town), your travel dates and simply search. The results (normally) show options on all six local carriers and are ranked according to price. There are sliders to refine your departure times (and number of stops for international flights), which you can manipulate by clicking and dragging. You can also see all the results from a certain carrier as well as the price breakdown (ticket, taxes) and details for each flight.

Ekbergh founded his travel empire in the 90s. In 1995 he launched Sweden’s first fully-automated, phone-based booking company. He started that country’s first online travel agency MrJet in 1998, and followed with Travelstart a year later. During the dot-com boom in 2000, Ekbergh sold the business for a profit of $9,8m. After the bubble burst, he bought it back.

Ekbergh decided to move the business to South Africa and launch a local operation in 2004. He laughs when asked: Why Cape Town?

“I haven’t figured out a standardised answer for that yet,” he says. But, adds quickly that he loves the city and South Africa. Strategically it makes sense too. SA is - roughly-speaking – in the same time zone as Europe, where most of Travelstart’s businesses are (the company has operations is the UK, Ireland, Netherlands, Sweden, Norway, Denmark, and Finland).

Its language is another reason. “We just don’t see the same results from a Swedish newspaper publishing an article about the service, than from an English one.

Also, he says, he believed that if the company could “make it” in a developing market (ie, not the UK or US), then it could succeed anywhere.

“And you know… I was right!” he chuckles.

The company’s ability to push growth from its new headquarters in Gardens, Cape Town shows this. “What we’ve managed to do in five months here is more than we did in seven years in Sweden,” he says with confidence. The company’s 40-strong team is split between SA and Sweden. The tech aspects are run from Scandinavia while the operations side is handled here.

Its growth locally has been impressive for what is essentially, a start-up. According to research from Arthur Goldstuck’s World Wide Worx, the four local airlines selling tickets online (kulula.com, FlySAA.com, 1Time and Nationwide) accounted for R1,8bn in e-commerce in 2005. This was more than double “the 2004 figure of R850m, and more than three times the size of conventional online retail”.

But volume is still very small. At the moment it has processed about R800m in sales globally over a rolling 12-month period, says Ekbergh. “Locally, we’re doing R60m on a rolling 12-month period from a standing start,” he adds. His goal is to do local sales in the region of R10m-R12m per month, which equates to about R120m a year.

Advertising is done mostly online, using web ads, search engine optimisation and newsletters as the group seeks to attract “netizens”, who spend most of their lives online. They use Google, local news sites, online banking… We need to get [Travelstart] into the flow.”

But getting to this position wasn’t easy. The company found it difficult to get buy-in from the local carriers, Ekbergh says the underdogs and smaller players came first. “This mirrored our experience in Europe,” he adds. The big guys (national carriers) are always reluctant. “We’ll prove we can do it,” he states plainly. “Then they’ll come knocking.”

Ekbergh is referring to SAA, which did not want to negotiate with Travelstart. “Around 25% of our total sales in Scandinavia are for the national airline [Scandinavian Airlines (SAS)]. In the beginning it too didn’t want to speak to us,” says Ekbergh.

Ekbergh is not stopping there. He says, a listing on the JSE was considered. “Originally we wanted to raise capital, but things have changed. We aim to launch in India this year and we have enough cash to do that ourselves,” he says. However, Ekbergh adds that listing has not been shelved completely. Discussions are still on going, and it would look at any potential opportunities to come out of a listing exercise, he says.

Clearly, there is big money to be made. Ekbergh is hoping for a considerable piece of the action.

Labels: South Africa - Travel