New low-cost airline Lift will launch its first flight in South Africa on December 10 in defiance of the pandemic’s impact on the usually busy summer period.
Although Covid-19 cases are rising once more in Africa’s most developed economy, the government has eased restrictions and lifted an almost five-month ban on inter-provincial travel.
The carrier, which has three Airbus SE A320 jets, will operate routes between Johannesburg, Cape Town, and the small tourist town of George in the Western Cape, as it banks on South Africans travelling over the Christmas holidays.
The airline has some big names behind it including Gidon Novick, the former CEO of low-cost South African airline Kulula.com, and Uber’s former head of operations for Sub-Saharan Africa, Jonathan Ayache. CEO Novick said that starting a new airline while others face potential bankruptcy due to Covid-19 has been met with scepticism.
“Many think it’s crazy starting an airline in these times,” he wrote on Lift’s website.“We think it’s the best time ever. The outdated supply-driven‚ high-debt airline model needs to change. Among many other things‚ Covid has proven that it’s simply not a sustainable approach. Instead‚ it’s time for a demand-driven business model. One that’s super-efficient‚ leverages off record low input costs and is both agile and flexible.”
Industry in crisis
The Southern African aviation industry is mired in crisis as a result of Covid-19. Airline revenues from Southern African countries are forecast to decline by 60% in 2020 and the number of passengers to fall by 58%, according to the International Air Transport Association (IATA).
Flag-carrier South African Airways was in trouble even before the pandemic and remains at a crossroads after years of unprofitability and repeated government bailouts. Policymakers continue to debate whether it will be revived, sold, or decommissioned.
Domestic routes have historically been well served by South African Airways alongside the likes of Airlink and British Airways’ franchisee Comair, which operates Kulula.com, FlySafair and Mango. Signs that the domestic route may be overburdened came when Comair filed for administration in May, citing Covid-19. The airline has secured new financial backing from private investors and is relaunching domestic services this month, including British Airways flights.
“Lift and its direct rivals are competing primarily on the primary domestic trunk routes Johannesburg to Cape Town. It’s too early to say if they have mistakenly put too many eggs in that particular market,” says Linden Burns, managing director of communications firm Plane Talking.
Aside from the competition, the yields on these routes for carriers like Lift are “paper-thin” and profitability is always in question, says Burns. It is also unclear whether the demand for Lift’s services will continue past the holiday period.
“There is a risk that an unabated second wave of Covid-19 infections could prompt the government to reimpose travel restrictions in the region surrounding Cape Town,” says Burns.
“We’ll also have to wait until after the summer holiday season to see what kind of support Lift is able to sustain.”