Low-cost airline has eye on bigger slice of national market
LOW cost airline 1time, which commands a 13% slice of the domestic air travel pie, and will list on the JSE this year, remains committed to the Eastern Cape and plans to achieve a 15% to 20% capacity growth on its routes to and from East London for 2007.
This was the word earlier this week from the airline‘s CEO, Glenn Orsmond, in an address at the annual general meeting of the Border-Kei Chamber of Business in East London.
Orsmond, born in Kokstad, raised in King William‘s Town and educated at Dale College, Rhodes University and the University of Port Elizabeth, admits to “an emotional involvement” with the Eastern Cape. He plans to build a holiday home at Khamanga Bay outside East London.
Speaking on how to conduct business in a competitive environment, the airline boss said before 1time launched its highly competitive low-fare daily Johannesburg-East London service back in 2005 with just one aircraft, East London was the national carrier SAA‘s most expensive domestic destination. Other low cost operators followed suit and the city is now SAA‘s cheapest destination.
In the interim, however, all the competitors, with the exception of 1time, had withdrawn for the East London route.
Orsmond said from 2002 to 2006 the East London air travel market grew by 74% from 172 000 departing passengers a year to 300 000. This compared favourably with the 60% growth achieved by neighbouring Port Elizabeth, but unfavourably with the 120% growth achieved by George.
He warned that East London was running the risk of being overtaken by George as South Africa‘s sixth biggest route. Speaking on the small beginning of his company, Orsmond said it had all started “around a couple of beers and big dreams” in 2003.
“The time was right, there was a world-wide trend for low fare airlines. Fares in South Africa were high, values of aircraft were low and the rand strong. ”
It was against this background, and the September 11 terror attack – which grounded many aircraft and slashed their value – that Orsmond said he plucked up the courage to quit as financial director of kalula.com and start up 1time. He has also been associated with airlines such as BopAir, SunAir and ComAir.
“It took five months to draw up a business plan, look for investors, find (the right) people, premises, apply for licenses, find aircraft, start selling and then start flying. We opened for sale at the end of January 2004 and started flying in February 2005.
“The effect on the market was dramatic. Fares fell by 40% overnight. A vicious price war started as our competitors tried to force us out of the market before we got off the ground. We estimated that kulula spent R30-million on a price war before our first flight”.
The company survived and revenue grew from R156-million in the first year of operation, to R332-million in the second year and R462-million in the third year. Orsmond said R500-million was forecast for 2007.
The company, with its fleet of nine aircraft and a staff of 500, now carries 1,2-million passengers annually on some 1 000 flights every month.
Article from http://www.theherald.co.za/
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This was the word earlier this week from the airline‘s CEO, Glenn Orsmond, in an address at the annual general meeting of the Border-Kei Chamber of Business in East London.
Orsmond, born in Kokstad, raised in King William‘s Town and educated at Dale College, Rhodes University and the University of Port Elizabeth, admits to “an emotional involvement” with the Eastern Cape. He plans to build a holiday home at Khamanga Bay outside East London.
Speaking on how to conduct business in a competitive environment, the airline boss said before 1time launched its highly competitive low-fare daily Johannesburg-East London service back in 2005 with just one aircraft, East London was the national carrier SAA‘s most expensive domestic destination. Other low cost operators followed suit and the city is now SAA‘s cheapest destination.
In the interim, however, all the competitors, with the exception of 1time, had withdrawn for the East London route.
Orsmond said from 2002 to 2006 the East London air travel market grew by 74% from 172 000 departing passengers a year to 300 000. This compared favourably with the 60% growth achieved by neighbouring Port Elizabeth, but unfavourably with the 120% growth achieved by George.
He warned that East London was running the risk of being overtaken by George as South Africa‘s sixth biggest route. Speaking on the small beginning of his company, Orsmond said it had all started “around a couple of beers and big dreams” in 2003.
“The time was right, there was a world-wide trend for low fare airlines. Fares in South Africa were high, values of aircraft were low and the rand strong. ”
It was against this background, and the September 11 terror attack – which grounded many aircraft and slashed their value – that Orsmond said he plucked up the courage to quit as financial director of kalula.com and start up 1time. He has also been associated with airlines such as BopAir, SunAir and ComAir.
“It took five months to draw up a business plan, look for investors, find (the right) people, premises, apply for licenses, find aircraft, start selling and then start flying. We opened for sale at the end of January 2004 and started flying in February 2005.
“The effect on the market was dramatic. Fares fell by 40% overnight. A vicious price war started as our competitors tried to force us out of the market before we got off the ground. We estimated that kulula spent R30-million on a price war before our first flight”.
The company survived and revenue grew from R156-million in the first year of operation, to R332-million in the second year and R462-million in the third year. Orsmond said R500-million was forecast for 2007.
The company, with its fleet of nine aircraft and a staff of 500, now carries 1,2-million passengers annually on some 1 000 flights every month.
Article from http://www.theherald.co.za/
Thousands of cars, hundreds of locations. www.southafrica-carhire.com can also supply impressive numbers.
Labels: South Africa - Airlines
