Bad news for a whole industry

2012-11-03 00:00

CAPE TOWN — South Africa’s first stand-alone low-cost airline went bankrupt yesterday, leaving hundreds of passengers stranded across the country.

The directors of 1time, which had been in business rescue since August, liquidated the company at about 3 pm, leaving 1 000 staff out of work and passengers scrambling for alternative flights.

The airline was the 11th to go under in South Africa in 20 years and the second independent airline to fold this year, after Velvet Sky failed in February.

The latest bankruptcy follows hard on the heels of the government’s latest R5 billion guarantee for SAA.

Critics say it is almost impossible to compete in the airline industry with the state’s three airlines — SAA and its associates Mango and SA Express.

Erik Venter, CEO of Kulula and Comair, said 1time’s fall was unavoidable. “Their planes were very old and heavy on fuel. But nevertheless, 1Time would have had a better chance if it were not for state-controlled Mango and SAA. Those airlines have a hugely negative effect on the market,” said Venter.

He said it is a blow to passengers and the industry as a whole.

1time first flew in 2004 and had flown about one million passengers. It was most successful before the current round of fuel price increases. Its most popular route was the Johannesburg-Zanzibar one.

It also served smaller SA destinations like East London, offering passengers welcome choice.

The company listed on the JSE on August 14, 2007.

The writing was on the wall in April when 1time posted a loss of R157 million. It is also estimated to owe between R300 and R350 million to various creditors, including the Airports Company SA (Acsa).

A spokesperson for the SA Airline Association said the demise of 1time was a blow to the industry.

“The other airlines will be able to take up the passengers in the long term as there is an oversupply of tickets.” But prices could rise now that one large player was gone, he said.

Sister paper Beeld understands that the airline is negotiating with major creditors to ascertain whether ticketholders can be refunded.

However, this is unlikely, and passengers who had paid will have to wait for the finalisation of the liquidation process to get any of their money back.

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