1time liquidation: will low-cost fares soar?
2012-11-08 12:05
Pretoria - "1time's filing for provisional liquidation is a major setback for the local and regional domestic tourism market", the Chairperson of the Tourism Business Council of South Africa (TBCSA), Mavuso Msimang has said.
Responding to the recent announcement by the airline that it had suspended operations and would be filing for provisional liquidation, Msimang said it was unfortunate that the business rescue process under which the airline was operating for the past few months had not yielded the desired results. "1time was a major player in the local and regional market and as we head towards the festive season, which is traditionally ‘high season' for us, this is a major blow for customers and the broader tourism business community".
CEO of the Airline Association of South Africa (AASA), Chris Zweigenthal explained that airlines are facing tough times with increasingly tight margins, sluggish consumer demand and pressures to cover the high operating costs in particular fuel, maintenance and infrastructure service provider costs. According to Tourism Update he believes that there's a good chance fares will go up in the near future, "especially where demand is high."
He highlighted the importance of government, airlines and all stakeholders to work together to "get an understanding of the respective challenges facing the aviation sector, and to formulate policy and strategies that are aligned for the common good of the industry".
Msimang concluded that the TBCSA is "very concerned about the gap that has been created following 1time's exit from the market and supports the Airline Association's call for all role players to urgently engage on how best to address the current challenges".
Not the end of low fares
Tourism Update reports that Hein Kaiser, Communications Manager at Mango Airlines said an increase in fares is not on the cards in the near future.
"This is not the end of lower fares at all - competition remains fierce between the remaining two LCCs and, over and above that, the two traditional carriers," says Kaiser.
The demise has also called into question the stability of 1time-run Zimbabwean LCC, Fresh Air. The airline launched its maiden flight from Harare to Johannesburg on the same day 1time suspended its operations. 1time spokesperson Refilwe Masemola said: "Fresh Air is a separate entity to 1time.
However, as it stands, Fresh Air will be affected by 1time's suspended service."
The most obvious gaps in the market left by 1time are direct flights to Zanzibar and East London. It is unclear if kulula or Mango will be looking at servicing these routes in the near future.
Zweigenthal explains that once the liquidation of 1time is finalised, the air services licensing council will initiate the process to enable interested parties to apply for the licence to operate the route. This could take up to six months to achieve.
According to trade union Solidarity, an investor could still be found for the embattled airline but at this point nothing has been finalised.
1time CEO Blacky Komani says "We've committed to rescue this business," and hopes to be able to announce a clear direction for the airline as soon as possible.
- SAPA and Tourism Update
