Battling to fly with SAA dead weight

The South African airline industry is facing a skills crisis and is unsustainable, says Comair CEO Erik Venter.

"If you took away government subsidies, a large proportion of the industry would fall over," he says.

By contrast, the global airline industry is expected to grow for a fourth consecutive year this year.

This week, Comair announced an unbroken 72-year profit record in an environment of negligible economic growth, an oversupply of seats in a stagnant domestic aviation market that hasn't grown in revenue for eight years, soaring fuel prices, a plunging rand and concerted efforts by government-funded SAA to put it out of business.

"For many years, the irrational commercial behaviour of SAA was our biggest challenge. That really gave us a hard time for a very long time. At the moment, it's a little better, but who knows what comes next?"

If SAA gets the latest R21.7bn bailout it has asked for, it will "give them free rein again for another three years", he says.

He believes there is no hope of turning the stricken national carrier around, and it would just be more taxpayers' money down the drain.

"There are too many people benefiting from the way it is, both in terms of those who are looting the business and those who are getting paid salaries they wouldn't get in the private sector, to want to change the status quo.

"That makes trying to change or improve things almost impossible for a small team at the top with a different agenda."

Venter, 49, has been part of the leadership of SA's most successful and only JSE-listed airline, which also runs Kulula.com, for 22 years, 12 of them as CEO.

During this time, at least 12 private airlines in SA have collapsed, and state airlines have depended on the taxpayer to keep them going.

The skills needed to run airlines and keep planes in the air are all but nonexistent, he says.

"There's a massive skills shortage because airlines are just training for the bare minimum to get by, and state airlines are doing almost no training whatsoever."

Almost all large planes depend on SAA Technical for their maintenance, but it can't cope.

"There's been a drain of skills and no reinvestment into that pool, creating a crisis around aircraft maintenance."

This is why so many flights are late or cancelled.

There has been a fatal lack of investment in training and oversight functions "and all the other things necessary to make an airline industry work properly", he says.

"The skills the industry demands don't exist any more."

Comair has invested heavily in skills programmes, "but it's very difficult to have one airline trying to support the entire industry in terms of the skills required".

It has taken over the training role because "no-one else is doing it".

Now, "everyone is attempting to poach Comair skills".

The latest bailout that SAA has requested

—  R21.7bn

SAA Technical is so short of skills that Comair is having to fly planes to Europe for essential maintenance.

"It's really ridiculous but that's what we're forced to do at this point."

It is setting up a maintenance organisation with Lufthansa Technik, which will be in operation from January next year so it can train its own technicians and do its own maintenance.

Flight delays caused by capacity constraints at SAA Technical are hurting Comair's reputation.

"As a commercial operator, you can't simply cancel a flight. Having an aircraft standing on the ground and giving up on that revenue will bankrupt you overnight.

"But this is exactly what the state airlines do. They simply walk away from the aircraft and say sorry, it's not going to operate today, the flight's cancelled."

Because it's been cancelled, it doesn't show up as a late flight.

SAA's inability to purchase new flight simulators to train pilots and the lack of capital expenditure on the maintenance side have created an opportunity for Comair to get into that space and provide pilot training to the broader market.

"It will be very expensive and we will have to bring in skills from abroad, but in the long run we will take over those functions from SAA within the industry, and hopefully make them profitable."

Venter says the difference between Comair and other local airlines is the depth of experience of the people working at Comair.

"This is an industry where you can't go out and employ people from a university who've done training in aviation management. Everyone gets trained within the industry, so if you lose that skills set you can't just go out and find it."

Comair has built that skills set over many years. It has had to hire from abroad to keep up with evolving commercial practices and technological advances, "but it's incredibly difficult to get people who want to come and work in SA".

Cheap leases

Building expertise within the airline has been key, "so staff turnover is a critical factor we look at".

More than half his staff have been with Comair for more than 10 years.

Too many people have started airlines on the basis of cheap leases rather than experience of the industry, he says.

Leasing companies offer them planes for just about nothing and they jump in and go for it without any understanding of what else is involved. They underestimate "the sheer amount of money one has to invest in fleet replacement and information technology just to keep ahead of the curve".

Constant reinvestment in the business to keep up to speed with processes and aircraft that negate cost inflation has been critical, he says.

Comair started its latest round of fleet replacement five years ago. The next round will be operational from January 1 next year, when it will start taking delivery of the next generation of Boeing 737s.

These are expected to deliver 35% lower fuel burn per seat than the 26 planes it currently has.

Apart from skills, Venter says that the local aviation industry desperately needs an end to government policy uncertainty.

After President Cyril Ramaphosa's election, "we saw a surge in business confidence and a boost in corporate travel. Then it all died off again."