Comair Flying through turbulence - www.comair.co.za - Business Excellence Magazine
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Comair
Flying through turbulence
www.comair.co.za
Flying
through
turbulence
Comair
Comair Ltd continues to deliver operational
excellence and consistent profitability in what
can only be described as an economic headwind:
its CEO Erik Venter explains how
words by John O’Hanlon research by Stuart Platt
2 [ Issue 87 ] BE Weekly
Comair
British Airways operated
by Comair Boeing 737 800
ho would invest in an airline? The has to compete with the heavily subsidised 1991 it has been operating local and regional
W industry is facing a lot of challenges
right now with escalating fuel
national carrier South African Airways
(SAA) and its low-cost brand Mango. “We don’t have to go
services under a licence agreement with
British Airways, and in 2001 it launched
prices, reduction in passenger volumes The government, by taking a largely anti South Africa’s first no frills airline kulula.
caused by the global recession and competition stance and allowing SAA to
through major change com. Erik Rudolph Venter, a chartered
arguably the growth of technology that increase capacity in a shrinking market, management programmes accountant, joined the company 20 years
allows people to communicate and confer has done no favours for the industry. ago and has been the Chief Executive Officer
without the need to travel. These are things Such is the environment in which Comair every time we want to of Comair Ltd since 1 December 2011. He is
that affect airlines all over the world, but in operates. Dating back to 1946 the JSE listed make an improvement!” a pragmatist, and entirely sees the point of
South Africa life is even more challenging company has been successfully operating the banks and investors who tell him they
for a private sector airline operator that in southern Africa for nearly 70 years. Since would never invest in the airline industry. “I
ATNS
Air Traffic and Navigation
Services (ATNS) State-Owned
Company (SOC)
In our 21 years of existence, we have Shaka International Airport in Kwa-Zulu Natal.
seen the growth of the South African As is procedure, the regulator requested trials
and global aviation industries. We have faced to be conducted before these procedures could
a myriad of challenges. And we have achieved be implemented. Following a well-defined
notable and significant milestones along the programme of action (POA, this process was
way. Be that as it may, we have discovered the undertaken without a glitch.
most innovative ways of delivering world-class Still on procedures, Lanseria Airport
safety and operational performance. Management has contracted ATNS to design
ATNS is very concerned about the current instrument flight procedures for its new runway,
aviation crisis resulting from the economic which includes the Advanced RNP procedures.
downturn, and how this could affect relations These procedures enable aircraft to access
between ANSPs and airlines. Recognising airport with terrain and airspace limitations. This
the need to support the airline community is a first of its kind in Africa. Kulula - a low cost
in its efforts to reduce costs, we have since airline under Comair - is currently trialing the
agreed to seek short-term initiatives, in close Advanced RNP and preliminary results indicate
collaboration with our clients, including Comair. that these procedures will be approved for use
ATNS has also noted that airlines require at Lanseria Airport - in the last quarter of this
reliable information, such as ATM and other year (2014). This is an exciting milestone for
ATM-related trends and developments. In which Lanseria Airport management should be
this regard, ATNS is transparent at all times commended. In the main, the airline operators
and offers proof of active cost and efficiency will benefit significant by using the advance as well as on the continual improvement of block in our quest to capture the market share
management to all its clients. RNP, in that it will reduce the operating costs, safety levels. We have prioritized sustainable within the continental aviation sphere.
ATNS regularly interacts with COMAIR noise and CO2 emissions. Kulula.com operates development by minimizing our own carbon To all our valued stakeholders, engagement
on all relevant operational matters. The daily flights from Lanseria International Airport footprint, and seek to continue developing and collaboration are deeply embedded in
two organisations have worked closely on to Cape Town, and Durban. and helping our stakeholders to minimize our quest to keep our skies safe. And that is
numerous projects, such the implementation ATNS continues to serve the ATM community by the environmental impact of their operations through proper maintenance of sound relations
of the RNAV (GNSS) procedures at the King deploying leading technologies with foresight, through flight efficiency programmes and other with them. The effective maintenance of such
best practice initiatives. carries with itself proper understanding of the
While our Vision is to be the preferred supplier “issues” that we are addressing. And that’s
of air traffic management solutions and exactly what we’re doing with Comair.
“ATNS regularly interacts with COMAIR on all associated services to the African Continent
relevant operational matters. The two organisations and selected international markets, our
+27 11 607 1000
mission, that of providing a safe, expeditious
have worked closely on numerous projects” and efficient air traffic management solutions
marketing@atns.co.za
www.atns.co.za
and associated services, has been a building
Comair
wouldn’t invest in a fund of airlines either!”
So is he in the wrong job? Not a bit of it.
Comair not only outperforms other airlines
but a lot of other industries that are not seen
as high risk. It has an astonishing record of
declaring an operating profit in every one of
its 68 years of existence, remarkable enough
in itself but quite extraordinary in the South
African climate of the last few years. So
think again, investors, he says. Look at the
company not the industry!
The chief explanation he has for Comair’s
success is its people. “We hold on to people
for a very long time. Long service awards for
ten years service or more are held by about
25 percent of our staff at any one time.
There is a lot of experience here compared
with our competitors in the market.” And the
reason they stay is related to the flexibility
and adaptability to change that is at the
heart of the corporate culture. In the aviation British Airways operated
industry more than most, he believes, it by Comair Boeing 737 800
is essential to build that flexibility into
people’s contracts and instil a continuous
improvement mindset: “Everyone is used to
the fact that things are always evolving, and percent against a consumer of products such as the
we don’t have to go through major change price index rise of around 98 Did you know? prestigious Executive Club
management programmes every time we percent in South Africa over frequent flyer programme.
want to make an improvement!” the same period. At the same 68 Some years ago there were a
People and the flexibility they bring to time the average air fare has Profitable years number of similar franchise
the company are probably the two main increased only by 37 percent, for Comair arrangements round the world,
reasons Comair has dealt so well with the so we have had to close that though now Comair is one of
volatility of the airline market says Venter. gap and that requires constant 26 only two airlines to remain in
The cost environment has imposed a harsh innovation and improvement.” Boeing planes the scheme. “It has been a very
Comair discipline on airlines and not all have been More efficient aircraft, better in its fleet successful arrangement both
ticketing staff able to adapt. “Look at our 14 year history route planning, working with air for Comair and for BA in South
since 2001: costs have risen by about 168 traffic management to improve Africa – we are able to make
landing patterns, saving weight all the operational decisions
on the aircraft – these are all strategies that and tailor the service to local requirements,
have been adopted. while benefiting from the reputation of the
“We hold on to people for a very long time. Long service Comair’s full service offering is flown top brand in the business.”
in the livery of British Airways (BA) under In 2001 Comair added another brand,
awards for ten years service or more are held by about a licence agreement dating back to 1996. the low-cost, green-liveried kukula.com
25 percent of our staff at any one time” The British Airways brand brought with it (slogan: Full-on Travel). Today most of the
a rich heritage of stylish travel, reputation popular domestic routes in South Africa are
for service excellence and a wide range served by both carriers. The major routes
Comair
are Johannesburg to Cape Town (the tenth of sub-Saharan Africa, but it is growth from
busiest route in the world with 4.5 million a low base, he warns, and even respectable
passengers a year), Johannesburg to Durban, percentages resolve into low volumes. “I
Durban to Cape Town and Johannesburg to don’t think Africa is quite there yet in terms
Port Elizabeth. “After these,” says Venter, of potential for passenger volume growth.
“the numbers get smaller, especially when A lot of hurdles remain to be overcome.”
we look at the various African destinations A cautious approach to expansion that will
we serve, though some, like Harare, Mauritius sustain the company’s profitability record.
and Victoria Falls are quite busy.” More immediate returns are being
He is constantly looking for new generated in cer tain aspec ts of
opportunities. There is undoubtedly a lot of diversification. Taking a travel business
growth taking place within many economies approach Comair is developing its revenue
“It has been a very successful arrangement both
for Comair and for BA in South Africa”
Happy staff stading in front of
the new airport ticket counters at
OR Tambo International Airport
streams from car hire, hotel bookings and training at a much better rate than anything
other value added services. “That segment available in Europe or the USA. This is a service
of the business is starting to grow quite with potential for expansion. But Comair
nicely. We have done a successful job of understands training. “We have to train
developing our airline lounges and we almost everyone ab initio for Comair whether
see possibilities in developing conference front line staff, finance staff, or cabin crew.”
facilities and dedicated lounge facilities for Extensive facilities at the Comair training
other partners.” The company has also set up centre next to O.R. Tambo International
its own catering facilities at Johannesburg Airport provides the knowhow and instils the
and Cape Town and is applying for licences soft skills vital to the Comair culture.
to do third party catering for other airlines, As with any airline Comair needs to keep its
he adds. “We are finding we can run a much assets up to date, and this is the largest area
more efficient catering operation than for investment, with an ongoing programme
some of the legacy catering businesses to completely renew the 26 strong Boeing
were able to provide.” fleet, or at least the 18 that it owns rather
Another important revenue stream over than leases. Though it’s a big balance sheet
Kulula Boeing 737-800
the years has been third party pilot training. item the replacement of Boeing 737-300s
in flight
With simulator facilities for Boeing aircraft as with the larger 800s resulted in a 15 percent
well as ATR regional jets, Comair can offer increase in capacity that was a major factor
Comair
“We are finding we can run a much more efficient
catering operation than some of the legacy catering
businesses were able to provide”
in the 23 percent rise in revenue over the instant feedback compared with the old
first half of the current financial year. Being ways of communicating with customers.”
more fuel efficient these aircraft also offset It has meant getting social media addicts
escalating fuel prices. Four new Boeing 737- onto the marketing team, who understand
800s were introduced into the kulula fleet the dynamics of the twittersphere: “People
last year, and four more will be delivered by respond at 3.00 on a Sunday morning, and
the end of 2015 followed by further orders by 8.00 you have a trend growing across
by 2020, he says. social media channels – if you are not alive
Another important ongoing investment 24/7 you will miss it!”
is in the migration to a new enterprise As the last remaining independent
solution platform. Says Erik Venter: “We privately owned domestic scheduled airline
have implemented the Sabre airline solution operator in South Africa Comair has a
system, which has already delivered benefits responsibility to its employees, customers
both in revenue and cost efficiency. The and shareholders to secure a level playing
basic inventory hosting went live in July field in what is after all an over-traded
2012, though that in itself does not deliver market, concludes Erik Venter. While in no
huge benefits. It’s the bolt-on modules that way challenging the position of SAA nor
bring measurable efficiencies. We have been arguing it should not be subsidised, he feels
continually adding improvements and new that it should share the risk as well as the
functionality over the last 24 months and rewards, and be subject to the same rules
will continue to do that.” As with any ERP of competition that protect the industry
platform, there’s huge suite of upgrades and in other jurisdictions. Things may change
new products to choose from – Comair will after the general election in May but even
avail itself of the most relevant functionality. in the present climate the message is loud
These days TV and newspaper advertising and clear – Comair is a great investment,
are in rapid decline, with the rise of instant as proved by its confident declaration of an
access to news and the ability to skip ads when interim dividend based on its results in the
watching programmes by satellite. Social half year to December 2013 – resulting in a
media have stepped into the resulting space, ten percent rise in its share price.
and Comair is determined to make full use of
the new platforms. “It’s essential to keep up
to the minute with what is happening in that Comair
space especially in Africa with the reliance
of so many people on mobile devices to stay
+27 (0) 11 921 0111
Flight simulator at the in touch. It is a whole new way of thinking cr@comair.co.za
Comair Training Centre (CTC) and requires a very different strategy. You www.comair.co.za
get instant response from customers and
Comair
+27 (0) 11 921 0111
cr@comair.co.za
www.comair.co.za
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