kulula.com, also known as Kulula Air, is a South African LCC. The airline is a wholly-owned subsidiary of British Airways franchise Comair. kulula.com is based at Johannesburg OR Tambo International Airport and operates domestic and international services to countries including Mauritius, Namibia, Zimbabwe and Zambia.
Location of kulula.com main hub (Johannesburg Oliver R Tambo International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider kulula.com fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Can full service carriers close the cost gap with low-cost carriers? Is this the right question to ask? Why do FSC groups create LCC subsidiaries? Can a network model and a point to point LCC model co-exist within the same group? What does this mean for corporate culture?
At CAPA's Airlines in Transition 2014 conference in Dublin in Apr-2014, Professor Rigas Doganis led a panel discussion examining the issues of the hybridisation of the LCC/FSC business models and operating dual LCC/FSC brands within the same group.
IAG CEO Willie Walsh, Comair CEO Erik Venter, flynas CEO Raja Azmi and Aer Lingus Chief Strategy and Planning Officer Stephen Kavanagh offered their insights.
FlySafair’s ambitions to launch services on South Africa’s biggest domestic route between Johannesburg and Cape Town from 17-Oct-2013 have been dealt a severe blow by a High Court interdict issued on 8-Oct-2013 restraining FlySafair from operating scheduled domestic passenger services pending a review of South Africa’s Air Service Licensing Council’s (ASLC) decision to grant the carrier a licence to operate.
The interim injunction has stalled, temporarily at least, a looming battle in the South African domestic market into which FlySafair and fellow LCC start-up SkyWise are planning to launch, ending a brief period where the South African Airways and Comair groups enjoyed a duopoly following the demise of LCC 1time in Nov-2012.
Comair, which operates as LCC Kulula, and the full service British Airways franchise combined forces with would-be competitor SkyWise to block FlySafair’s launch by challenging the ASLC’s decision. Comair and SkyWise claim that FlySafair does not meet South Africa’s maximum 25% foreign ownership limit to operate domestic services and that one of its directors is not a resident of South Africa.
South Africa’s Comair has bounced back to report a ZAR227.5 million (USD22.8 million) net profit for the financial year to 30-Jun-2013 as the benefits begin to flow from reduced domestic competition and an 18 month transformation strategy, including the implementation of the Sabre IT platform, a freeze on all non-critical costs and the arrival of next generation 737-800 aircraft.
The Johannesburg Stock Exchange-listed carrier has benefited from the demise of domestic LCC competitor 1time in Nov-2012 which significantly reduced capacity and has allowed fares to increase substantially as the market returned to a two-group duopoly with South African Airways (SAA). The competitive reprieve looks to be short lived, however, with SkyWise and FlySafair both poised to launch services on the golden Johannesburg-Cape Town route.
This is the second instalment in a two-part series of reports on South African Airways' (SAA) low-cost subsidiary Mango. The first report looked at Mango’s slow pace of expansion in the five years after its Nov-2006 launch and its improved outlook in the domestic market, where the carrier over the last year has begun pursuing faster growth. This report looks at the potential for Mango to operate international services from its South African base and launch new affiliates in other African countries, which would put Mango in competition with new pan-Africa LCC group fastjet.
Potential joint ventures or affiliates have always been part of Mango’s long-term plan. But just as it has been relatively conservative in the domestic market, Mango has been slow to expand in the international market – both organically and in establishing joint ventures.
South African Airways' (SAA) low-cost subsidiary Mango plans to pursue further expansion as it attempts to leverage its position in the domestic market, which has strengthened significantly over the last year. The carrier over the last year has completed the largest expansion phase in its seven-year history, exploiting consolidation in the South African market to increase market share and return to profitability.
The collapse of two LCC competitors in 2012 left Mango and Comair subsidiary Kulula as the only players in South Africa’s dynamic LCC sector. A new carrier is expected to eventually enter the market, leading to another possible phase of over-capacity and irrational competition. But Mango is now well positioned to fend off any new competition and gain more global recognition as a successful example of a full-service airline group budget subsidiary.
Mango is still a tiny carrier with a low global profile. Its counterparts in Asia have received significantly more attention for pioneering the LCC subsidiary strategy. But Mango’s hybrid model has quietly succeeded, providing the building blocks for growth and a bright outlook.
fastjet’s contorted strategies to develop a planned pan-South African LCC network continue to twist and turn, with the Tanzania-based carrier changing tack once again, this time shelving plans to launch domestic operations in South Africa in favour of commencing international services from Dar es Salaam. The London-listed carrier has been granted bilateral rights by Tanzania to operate international routes to South Africa, Zambia and Rwanda.
fastjet had intended to launch twice daily domestic services on South Africa’s busiest domestic route between Johannesburg and Cape Town in early Jul-2013 as part of a joint venture with South African investment company FastJet Holdings (previously Blockbuster) and charter carrier Federal Air, which was to have operated the route with a wet-leased 737-300.
In addition the carrier has entered into an MoU with Nigeria’s Red 1 Airways to expand the brand to West Africa, apparently under a new model in which local partners take a majority stake in the venture using the fastjet brand. Red 1 reportedly consists of a group of Nigerian investors interested in launching a new carrier in Western Africa.