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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South African Airways (SAA) is finally starting to make progress on a strategic plan that was initially prepared in early 2013. SAA has been highly unprofitable in recent years as it has struggled to secure the government approvals needed for a meaningful restructuring.
The ailing flag carrier is cutting its Beijing and Mumbai routes at the end of Mar-2015 but launching Abu Dhabi as part of an expanded partnership with Etihad. Trimming the long-haul network and relying more on partnerships are crucial components of a new business plan that SAA until now has been stymied in implementing due to continued resistance and meddling from its government shareholder.
But SAA still has a several challenges to overcome, including increasing competition from LCCs on domestic and regional international routes.
Competition has again intensified in the South African domestic market with the launch and expansion of FlySafair. The new LCC launched services in Oct-2014 and is already competing on five of South Africa’s main routes.
The South African market has contracted since the 2012 collapse of 1time and Velvet Sky. The consolidation left Comair and South African Airways (both of which have full service and budget brands) with a duopoly, leading to a significant improvement in profitability.
As another new LCC, Skywise, also prepares to launch there is now a risk the South African domestic market could quickly swing back to overcapacity. New pan-African LCC groups fastjet and flyafrica.com, which are already competing in the regional international market, also continue to look at entering South Africa’s dynamic domestic market.
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.