You might think that now is literally the worst time to launch a new airline. Well, several businesses think not, including Nolinor in Canada and Air Arabia in the Middle East. Now, a South African entity is eyeing starting up, and given the aviation brains behind the venture, we wouldn’t be surprised if it ended up being a wild success.
Gidon Novick is a former Comair CEO and founder of Kulula.com. He’s a serial entrepreneur, founder of Lucid Ventures, and this week he talked to AviaDev Africa about his latest enterprise: a brand new low-cost airline based out of South Africa that he hopes to launch before the end of the year.
Although he’s keeping tight-lipped on the name of his new airline, Novick insists that it’s just what South African aviation needs, and was keen to share some juicy details with AviaDev’s CEO Jon Howell about his future plans.
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Is now really the right time to launch a new airline in South Africa?
In many ways, there couldn’t be a worse time to start an airline anywhere, let alone in South Africa. Passenger demand is impossible to predict, and the constant threat of secondary outbreaks of COVID make it tricky to plan ahead. But Novik believes it’s the perfect opportunity for the airline with the right business model. He told Jon,
“For many people around the world, it’s been a time to reflect. It’s been a time to reset … For many of us, we have been put under pressure with COVID-19 in many respects, and so efficiency is forefront in our minds. And on the flip side, there’s the opportunity for creativity. This is the time where traditional, normal ways of thinking don’t necessarily solve the problems that we are faced with and those two things have really got my mind racing towards the opportunity that I see in the airline industry.”
In many ways, Novik believes that there couldn’t be a better time to start an airline. He views the challenges presented by COVID as opportunities for his startup, saying that,
“Obviously it’s opportunistic, in terms of the availability of all the key inputs into an airline, starting with aircraft facilities, and really high-quality people. Unfortunately, many people are really keen to get back into the industry. So, I think when you put all of that together there’s an to create something new something fresh, something super-efficient. And something that resonates with the market where the market is today … it’s a very unique situation that we find ourselves in.”
It’s refreshing to hear that an experienced aviation professional sees opportunity in a situation that is seeing many airlines struggle. But what else do we know about this brand new South African airline?
Where will it fly?
On the subject of where the initial routes of this new airline would be, Novik was clear. He said his startup was looking at…
“…one route in particular, and you can guess which route that is, that’s the Cape Town – Joburg.”
Cape Town to Johannesburg is one of the busiest airline routes in the world. In 2019, it was the 11th busiest in the world, and amassed South African Airways around $185m over the course of that year. With the future of SAA hanging in the balance, Novik’s startup could be onto something. He said,
“it’s a proper route. It’s a good distance. You can’t easily drive between the two cities; it’s got a great mix of traffic. It’s also a route that I know fairly well and have a great comfort level with. So, so that is certainly the starting route. And it will be the focus of the business for some time and obviously you know, it needs the bigger the bigger gauge.”
What aircraft will it use?
It’s interesting that Novik talks about the bigger gauge aircraft. So many airlines are looking to go into the post-COVID world with a slimier, smaller fleet. But for this startup, signals are that aircraft will be of the short-haul variety, rather than regional, and used rather than new. He said,
“We won’t be using new aircraft to start. We will be using used aircraft. I think that’s the opportunity for now. And frankly in a market like South Africa, I’m not sure if it justifies new aircraft, certainly for some time to come.
“We’re only really interested in the bigger narrowbodies and the 180 odd seater aircraft. [I’m] not getting into deep aircraft discussion right now, but the kind of a 321 size or [737]-900, that’s quite an interesting aircraft but again, new, would be too expensive for us. But it lends itself well to that kind of a route. So yeah so that’s where we are.”
Will a low-cost airline work in South Africa?
Pre-COVID, South Africa would have welcomed more low-cost competition with open arms. But in a post-COVID world, when airlines are struggling with longer turnaround times and higher costs due to the deeper cleaning being required, does a low-cost airline really have a place in the modern South African landscape?
Novik thinks so. He explained,
“The term ‘low-cost airlines’, I think it’s an outdated term, because if you’re in the short haul market globally and you don’t have a low-cost basis, then you’re not going to be around. I don’t know how you’re going to survive in whatever market you operate. So, I think that term is going to wither away, and I think we have to be a low-cost airline otherwise we don’t have a right to even play a part in the industry.”
He went on to explain how his airline will not be driven by utilization rates, and how it will strive to keep fixed costs low while minimizing debt. For once, it sounds like a startup airline that has more than just legs, but also some serious aviation game behind its model.
You can enjoy the whole podcast below for more information.
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