in Air Transport / Features

Love Safair

Posted 4 July 2018 · Add Comment

Elmar Conradie was a finance guy but, 12 years ago, he got sucked into the aviation industry and now, as Victoria Moores discovers, he’s leading South African aviation firm Safair and its low-cost carrier, FlySafair.

“I never thought I’d run an airline but I have to say I love what I do,” said Safair CEO Elmar Conradie.
While doing audit work for PWC, Conradie ended up with Safair as a client. Fast forward a few years and he was working for Macquarie Bank when he got a call from Safair offering him the role of finance director. Very quickly, he was hooked. “I liked the people I met at Safair and, as they say, the rest is history.”
Safair has been around for 52 years as a wet-lease operator, capacity provider for humanitarian work, and maintenance organisation. In 2008, the maintenance business was sold off, but since 2011 Safair has been rebuilding that capacity and it now performs C checks on its own leased and scheduled fleet.
Around nine years into his career as finance director with Safair, Conradie became CEO, not long after the company launched new low-cost airline FlySafair in October 2014.
In the beginning, FlySafair operated just two aircraft, mainly flying between Johannesburg and Cape Town. By December that year, the fleet had grown to four aircraft. Today, the airline has 12 Boeing 737s, performing 1,700 flights per month.
“We’ve captured quite a chunk of the local market,” Conradie said. That ‘chunk’ is about 14% of domestic capacity. “That’s only domestic; we don’t fly regionally at the moment,” he said.
So, will FlySafair go regional? “That’s a question I get asked on a regular basis,” replied Conradie. “As long as we don’t run out of opportunities in the domestic market, we will stick to the domestic market. One day, if we see we are really struggling to grow domestic, we might start looking at regional.”
Should that happen, FlySafair would fly regionally from South Africa, rather than setting up a parallel operation in another market. But Conradie has reservations.
“I am not 100% sure whether regional routes are ready for the pure low-cost model yet, especially in terms of distribution, because we mainly distribute through our website, whereas for a lot of regional routes you need to have travel agents or global distribution systems to sell that. The business model challenges that a little bit. Also, regional routes aren’t as thick as domestic routes, so I don’t want to put too much capacity on regional. It’s a thing we’re looking at, but we don’t necessarily have all the answers yet.”
Distribution is also a barrier to FlySafair forming interline partnerships, but this is an area that Conradie is looking into. FlySafair is already in talks with a couple of airlines over possible interlines and, if they can get over the technical hurdles, more could follow.
But the simplicity of FlySafair’s low-cost model is also a strength. Conradie said his carrier was the first low-cost airline in South Africa to unbundle its fares and the first to charge for hold luggage. “That was quite a big thing – sometimes it’s still a big thing. It took a while, but customers are now used to it and understand it much better.”
That model is paying off. In 2016, FlySafair posted its first profit, which Conradie described as a “pleasant” surprise, because breakeven was only anticipated from 2017.
“We are doing very well,” he said.
Passenger numbers grew 47% in the first six months of 2017 alone and in the full-year the figure was roughly 2.2 million, expected to increase to around 2.4 million in 2018. To cater for that growth, the fleet may need to grow.
At the moment, FlySafair operates nine 165-seat Boeing 737-400s (eight of these are owned) and three 189-seat 737-800s (all leased). Two of those -400s are used as back-up aircraft, supporting the core operational fleet.
“Because the 737-400s are owned, we will probably keep them for a bit; we don’t have any pressure to replace them. The idea is to try and replace the -400s slowly with -800s over next two to three years,” Conradie said. He added that two -400s will leave the fleet this year, with two -800s earmarked to replace them.
However, he is being cautious with fleet growth because the South African economy – and therefore overall passenger numbers – is pretty much stagnant.
“What we have seen, though, is our passengers have grown considerably. What we think will happen is slow, but steady progress. The general flying public is trading down to low-cost airlines. Once they fly low-cost, they realise it’s not so bad and they get a pretty good service for what they pay. We’ve effectively been adding four aircraft a year. Depending on how fast that growth is, I do see us adding more capacity, but we will see how the market develops.”
Some of that market development will depend on what happens with beleaguered national carrier South African Airways (SAA), but – perhaps counterintuitively – Conradie is not wishing for SAA’s demise.
“It’s not good for the economy, or the country, if SAA goes under. I think the best thing that could happen for the industry as whole in South Africa is if SAA actually manages to turn around. A lot of our traffic would actually connect with SAA in one way or another, so really there’s no immediate benefit to us if SAA goes under, or if there is a problem with SAA. In the long term, yes, but not immediately. I think immediately it would do more harm than benefit.”
Conradie has come a long way since taking that audit job and he has no plans to change direction now.
“In aviation, even if you stay in the same job for 12 years, it’s never the same and I enjoy that. Every year there’s a new challenge, a new thing that comes up, a new problem that you need to solve. I like it that there’s always something that challenges me. I love what I do. The thing that they say about jet fuel in the veins in true. I can’t see myself being in any other industry now.”
 

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