Humble, but Komani flies high

2012-03-24 09:32

Blacky Komani, the chief executive of 1time Airlines, takes the battle to stave off conditions that threaten no-frills airlines personally.

He has put up his own house as collateral for the stake he got as part of the empowerment company Mtha Aviation that received R49 million from the Industrial Development Corporation (IDC) to buy into 1time.

While other executives prefer driving in big sedans or SUV, Komani drives a humble bakkie.

It is no great wonder he is fed up with the government’s insistence on bailing out South African Airways (SAA) with billions of taxpayers’ money.

Komani says he is contemplating reporting SAA, owner of low-fare carrier Mango, to the competition authorities for using state handouts to gain unfair advantage over competitors in the airline market.

“We have asked our lawyers for a legal opinion on the matter. We should be getting a report at the end of the week…If our lawyers tell us that the financial assistance that is being given to SAA, and possibly Mango, amounts to unfair competition we will lodge a complaint with the Competition Commission. I have a responsibility to protect my ­2 500 shareholders, 1 200 employees, and our two million passengers,” he threatens.

In the face of weak demand for air travel, spiralling fuel prices and airport tariffs, local airlines are incurring losses and it appears the lean streak will continue for a foreseeable future. To ride the rough seas, SAA has gone to its shareholder, the government, to ask for a R6 billion cash injection.

Komani fears that some of this money will trickle down to Mango, disadvantaging other low-cost airlines such as Kulula.com, 1time, and the debt-stricken Velvet Sky.

“We are all affected by the same economic conditions. If the South African government is going to extend assistance to Mango, it must level the playing field by extending bailouts to all the struggling airlines.

“After the 9/11 attacks, the US government bailed out all airlines including the ones that were profitable. We should also be bailed out,” says Komani.

Komani predicts that if the oil price scales $150 (R1 152) a barrel, the effect will be disastrous because fuel accounts for more than 50% of airlines’ operating costs. Oil was hovering around $106 a barrel at the time of going to press.

“If the oil price goes to $150 a barrel, half of the airlines in the world will close down, except for the ones that are subsidised.”

His airline is still incurring losses due to high operating costs associated with weak demand, high fuel and airport tariffs. They are taking steps to reduce costs. Pilots have been instructed to fly aircraft in a manner that results in less fuel burn and unprofitable routes have been cast aside. 1time is also flying out of Lanseria Airport in Randburg, where it gets a 30% discount on landing costs.

Komani says failure is not an option as his investment vehicle Mtha Aviation, which bought 25% of 1time last year, has to ensure that it repays its debt to the IDC which lent Mtha – comprising five black investors including Komani – the money to purchase the stake in 1time.

“We put down a 3% deposit for the shares and the five of us have put down our primary residences as collateral,” says Komani, who holds a masters degree in tourism from George Washington University, in Washington DC.

Although Komani is new to the aviation industry, he has extensive experience in the tourism industry.

He spent 10 years in the US, where, at one point, he was the head of SA Tourism in New York and was also the managing director of Miami-based tour operator Karell Travel.

Upon returning to South Africa in 2006, the former boxer and rugby player from the Eastern Cape joined foreign exchange dealer American Express, where he was responsible for sales, marketing, HR and strategy.

Komani says he picked up priceless experience in the US.

“After 10 years in the US, I figured that there were more opportunities in South Africa than in the US in terms of growing business. We made money, but the US market is very competitive.”

He describes himself as a “details fanatic”, who does not see helping out at check-in counters at the OR Tambo International Airport as beneath him.

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