TROUBLED Comair suffered a further blow to its corporate reputation after it suspended flights for British Airways and kulula.com due to a lack of funding which, analysts said yesterday, might signal the death knell for the airline with no apparent funding channels in sight.
In a brief statement on social media platforms late on Tuesday, the company said: “Comair regrets to advise its flights have been voluntarily suspended from 1 June pending securing funding to resume operations.
“If your flight has been cancelled, please don't travel to the airport unless you have alternative arrangements. Our heartfelt apologies for the inconvenience,” the statement went on to read.
The flights, which Comair operates under a licence agreement, equate to about 40 percent of the country’s aviation capacity.
Aviation analyst Puthego Mojapili said: “The chances of surviving this are very slim. They might not take to the skies again.”
Mojapili said that Comair had the time before to secure funding from either local or international institutions, but the opportunity was missed.
“It is hard to tell what their options are now. They could approach the National Treasury or the Department of Trade and Industry, but the government too is in a tight spot - it would be hard to get funding from that quarter,” he said.
Comair chief executive Glenn Orsmond, in a contrite statement, said the airline offered its apology to the at least 3 000 passengers who had been due to fly yesterday.
“We’ve been in business for 75 years. We’ve been safe and reliable and consistent but we let down our passengers today and, for that, I really have to say sorry,” he said.
The airline has been in business rescue since 2020, at the height of the Covid-19 regulatory lockdown.
The company’s business rescue practitioners (BRP) have advised that the process to raise the necessary capital was in progress and that there was reason to believe funding might be secured. Once received, the airline would be able to recommence operations.
However, the latest incident comes after the South African Civil Aviation Authority had grounded Comair on March 12 over serious safety concerns, with flights only reinstated on March 17 after Comair’s air operators’ certificate was reinstated.
Mojapili said Comair had suffered other woes.
The airline had committed to buying 10 Boeing 737 Max aircraft and only two were delivered before the model aircraft were grounded after safety incidents with Lion Air and Ethiopian Airlines deemed them unsuitable in other parts of the world.
The 737 Max scandal erupted in March 2019 when global flight regulators grounded all 387 Max aircraft in operation following two fatal crashes that appeared to have been caused by a fault in the 737 Max’s autopilot software.
Furthermore, the Comair misfired after the departure of former joint CEO Eric Venter in 2019, who had left the company on solid footing.
Parmi Natesan, the CEO of the Institute of Directors in South Africa, said it should have been foreseen that, at a time of financial instability, the relevant operational decision-makers were properly briefed. Senior management, serving as the link between the board and the company’s operations, should certainly have been extra vigilant at this time.
“At this stage, it is not clear whether this was simply a disastrous example of the left and right hands not knowing what either was doing or an indication of a more serious ethical breach. But either way, irate customers are putting the blame on the board and the CEO,” she said, attributing Comair's failure to poor governance.
Natesan added that on social media one could see people questioning the ability of Comair to operate successfully again. Whatever the truth of the matter, “one thing is clear: Comair has aggravated one of its most important stakeholder groups — its clients — and if it does return to service, the board will have its work cut out to repair a severely damaged reputation alongside all the other challenges it faces”.
Flight reward partners
Meanwhile, to help deal with the fallout of Comair suspending all of its kulula.com and British Airways flights, flight reward partners First National Bank (FNB) and Discovery have come aboard to offer some assistance to customers looking for alternative flights.
Discovery told Business Report yesterday that the Comair refund and credit process would apply to those who would be affected by the suspension of the flights.
Discovery also said they would automatically be refunding members who were Discovery Bank clients and registered on their Vitality rewards programme.
Vitality chief executive Dinesh Govender said: “We are sorry that Comair has suspended their flights and encourage those with flights in the next few days to consider making alternative arrangements. While the Comair refund and credit processes will apply, we are exploring additional potential support for all affected Vitality members and will advise on this in due course.
“In the interim, for any Vitality member who is a Discovery Bank client and has a discounted flight booked to depart between 1 and 7 June 2022, Discovery Bank will automatically refund the amount they spent on that flight into their Discovery Bank account.”
Discovery further told Business Report that, based on Vitality member feedback, in addition to demands for more choice in terms of airline partners, they had seen continued strong demand for kulula.com and British Airways flights.
“Vitality has worked with Discovery Bank to launch Vitality Travel, with more flight partner options since March this year, so that members can now also book local flights with FlySafair, LIFT and Airlink,” Govender said.
Meanwhile, First National Bank said it was aware of the notice from Comair that British Airways and Kulula flights would be suspended from June 1, 2022, pending further developments.
Tourism affected
Meanwhile, Tourism Minister Lindiwe Sisulu has also expressed concern over the suspension of flights.
“This comes at a bad time as families are preparing for school holidays, and some international holidaymakers are preparing to spend their summer holidays in South Africa. However, our main concern is the effect this will have on tourism,” Sisulu said.
According to Sisulu, domestic travel contributed positively to demand in the Covid-19 period, driven by campaigns and pricing targeted for the domestic market.
“This was positive and helped create better understanding within the market and, through this exposure, propelled the market to diversify its offerings.
"Global tourism is rebounding despite lingering Covid restrictions and the effects of the conflict in Ukraine, but tourist arrival numbers are not back to pre-pandemic levels.
“The pace of recovery is slow and uneven across world regions, and this is due to varying degrees of mobility restrictions, vaccination rates, and traveller confidence," Sisulu said.
Aviation statistics
According to figures from sources including the Airports Company South Africa (Acsa) and the OAG, an international airline industry data analytics firm in the UK, global passenger volumes and flights are still not at the level they were prior to 2019 and the the advent of Covid-19 lockdown, which set a new benchmark.
According to Acsa figures for April, passenger volumes were down 23.9 percent from the 2019 travellers, while domestic flights were down 16.4 percent from April 2019 in the current year.
Domestic and International passenger volumes, which include countries in the sub- Saharan region, were all down a combined 27.8 percent, while flights have dipped a combined 18.7 percent.
According to the OAG analysis for the week ending May 31, looking at the whole southern African region, 2019 had a total of 777 103 seats, which fell to 373 668 seats in 2021 and in the current year, for the same week ending May, there were 561 866 seats.
This indicates that the industry is still struggling with the upward curve to pre-Covid-19 levels.
BUSINESS REPORT