Deanw
4th Jul 2005, 10:19
The following appeared on Moneyweb:
Glenn Orsmond (1Time), Gidon Novick (Kulula.com)
Alec Hogg
Posted: Tue, 28 Jun 2005
MONEYWEB: In tonight's top story, we look at discount airlines and a spat that is occurring. I think spat is probably a very light way of putting it. Gidon Novick has been in the studio before – he is the commercial director of Kulula.com. Gidon, a letter was sent out on a BA letterhead, British Airways letterhead, from your public relations department, presumably to some people in the media, saying that a competitor of yours, 1Time “had potentially a very dangerous situation,” and I’m quoting the exact words in the letter, on Friday morning. The impression was created that the airline was unsafe, that they were asked to get fire-engines on standby and, to add to all the problems, the system was not working with the passengers. So all of this drama was going on and the passengers didn’t know what was happening. It looks like dirty tricks. Perhaps you can tell us if you endorse this kind of action by your staff.
GIDON NOVICK: Alec, most certainly not. That e-mail was sent out by a member of our staff who is, in airline terms, on short finals – in terms of people who have really done something that’s not in accordance with what we do as a company. We have no reason whatsoever to doubt the safety of any of our competitors. Just a bit of background – the whole story about safety started with a report article on the weekend where there was an SAA engineer talking about the fact that SAA flights are apparently safer than any other flights. Quite amazingly, the journalist in that article didn’t call either ourselves or 1Time to actually comment on that. So I think, really, some mass hysteria about safety, without any reason. Airlines in this country are regulated by the Civil Aviation Authority. They make sure that we keep safe operations, that we keep our planes maintained, that our pilots are properly trained. And they keep a lot of pressure on us. And any airline that doesn’t look at safety as their top priority, does so at their own peril.
MONEYWEB: Well, that’s exactly, Glenn Orsmond, the chief executive of 1Time, why this story probably got out. OK, it came from a competitor. But when you see fire engines lining the runway at Jo’burg International, I guess someone, somewhere, is going to make an issue of it.
GLENN ORSMOND: Look, what’s happened here, Alec, we are talking about a sustained sanction strategy of over 18 months here that’s been going on, where the strategy from the opposition is thrown up in the hope that some will stick. And we’ve really had mud-slinging now for about 18 months on this basis. This is really the first time they’ve been caught out red-handed.
MONEYWEB: So the first time you’ve actually got an e-mail with the BA letterhead?
GLENN ORSMOND: Yes, we’ve had several instances in the past where this has been practised, and it’s stuff for the competition. 1Time’s big success story started 18 months ago – the experts in the market said it would never work. We’ve taken close to a million passengers this year, we are flying 180 flights a week. We’ve changed flying in South Africa. The market has grown close to 10%, simply as a result of 1Time starting, lowering air fares. We’ve brought low-fare flying to South Africa.
MONEYWEB: You’ve used a big word – “dirty tricks” from Kulula.com, Comair. What other examples have you got of this?
GLENN ORSMOND: Perhaps it’s not the right word – dirty tricks. It’s probably an under-statement, I would say.
MONEYWEB: So how does it get worse than dirty tricks?
GLENN ORSMOND: Well, it’s a sustained strategy. And what the strategy is, you throw enough mud and some will stick. And what you do is throw it in the area of safety, because safety is the one that you really don’t want to make an issue of. You throw enough at it and hope that some sticks, and really that’s what’s been going on here.
MONEYWEB: But Gidon, if you were to start accusing your competitor, a discount airline, of not being safe, then surely some of that mud would stick on Kulula.com as well?
GIDON NOVICK: Absolutely right. It’s not an area we would go to, it’s not an area to play. We compete in the marketplace on price, we compete on our product, we compete on where we fly to. And that’s really what it’s about. It is a competitive industry, Alec, it’s a tough industry. It is very competitive. We have a very big competitor that is funded by the government, and that competitor alone is worth taking note of. And that’s really the base of the industry. It does get tough at times, and I can understand what Glenn is saying. But it’s a competitive industry and we are fortunate to be a strong player in a competitive industry. Like Glenn, we are proud of what we’ve achieved.
MONEYWEB: Glenn, do you think they’re trying to take you out?
GLENN ORSMOND: Oh, clearly. We had a meeting 18 months ago with the chairman of Comair – in fact Mr Novick’s father – and he told us that he would force us out the market this year. He said he’s happy to spend R100m to R200m and he will force us out.
MONEYWEB: Were you at the meeting, Gidon?
GIDON NOVICK: I wasn’t. Absolutely not. I think we’re getting into an area of paranoia here, and it’s unfortunate, because we just say: “Come and compete if you’ve got what it takes to compete. Come into the marketplace, compete with us. Competition is a great thing.” We’ve seen, as Glenn says, many, many more people flying. South Africa is still a market of 40 million people, where less than 5% of them are flying. Let’s just get on with the mission of getting South Africans flying, as many of them as possible, and that’s got to be the objective.
MONEYWEB: Why do you think they would want you out the marketplace, Glenn?
GLENN ORSMOND: Well, it’s clear – we’ve taken a million passengers that they had before, or someone else had, we’ve lowered the average air fares in South Africa, probably close to 20, 30%. That’s had an impact on the earnings, which is really public knowledge. And there was a lot of emotion when we left. We have a team that were ex-Kulula, and I think there’s still a lot of that emotion – and I think that’s the right word to use. There’s a lot of paranoia out there at the moment.
MONEYWEB: So you guys were involved in Kulula in the early days?
GLENN ORSMOND: Yes, I was previously financial director at Comair, that’s correct.
MONEYWEB: And the decision to move and strike out on your own?
GLENN ORSMOND: No, I left on happy terms. I was offered restraint, I declined it, I went ahead. We in fact offered a shareholding in the company to Comair, all up front. I left on good terms.
MONEYWEB: So what went wrong?
GLENN ORSMOND: I think what went wrong is the success of 1Time. And I also want to be clear, we are not interested in whining, we are not out to start legal action and to have a big whine about this. We are happy to have robust competition, we are happy to fight on price, we are happy to fight on product. We are just saying play the ball, don’t play the man.
GIDON NOVICK: No absolutely, we are fully onside with that. Again, it’s a competitive industry. There are different players that are doing different things for the market and I just think we need to look, just in terms of our financial results, going back. Fortunately we’ve had a fantastic year, and the impact of Glenn’s competition specifically, we quite honestly haven’t noticed that, and Kulula has been a big success story, together with our British Airways brand. But yes, it’s a competitive market out there, and we’ve all got to play to win.
MONEYWEB: Has 1Time then expanded the marketplace to your advantage in the longer term?
GIDON NOVICK: I think absolutely they have, and I would give them a lot of credit for that. They’ve done that together with what we’ve done. Glenn and I were chatting in the studio before we came in here. Markets like East London and George have grown by 50% – those are significant margins, and that’s really what the game is about.
MONEYWEB: You’re certainly taking what appears to be the sensible route here. Glenn’s got some reason why he’s pretty irritated, but you’ve said it’s worse than dirty tricks. These guys want to put you out the market. They are prepared to spend R100m to R200m to kill you. Gidon gives quite strong argument, though – let’s expand the cake, the size of the cake.
GLENN ORSMOND: It’s nice to repent once you’ve been caught with your pants down, I think.
MONEYWEB: All right. So what are you going to do about this, now that you’ve got the evidence?
GLENN ORSMOND: Well, I’m glad it’s come to a head and I hope it stops now. And, as I say, we’re happy to fight them price and product in the market.
MONEYWEB: But you’re not going to take this any further?
GLENN ORSMOND: Unfortunately, if you send out that sort of e-mail that was sent out I think to 50 newspaper journalists and all the radio stations, you really can’t claim a degree of defamation because it’s a corporate entity. You can only defame the individual, not a corporate. So they probably are pretty safe from any legal attack.
MONEYWEB: So you’ve had a look at the legal consequences of this?
GLENN ORSMOND: Yes. It’s not our style.
MONEYWEB: So you’re going to fight with more Nando planes in future?
GLENN ORSMOND: We will fight with everything we’ve got.
MONEYWEB: Gidon Novick, how do you feel about being caught with your pants down, as Glenn says?
GIDON NOVICK: Alec, I think it’s a nice public forum to be able to look Glenn in the eye and just say we are sorry about the e-mail that went out. It was unauthorised, it was not factual, and we regret that that happened. We are sorry about what happened and, again, let’s get back to basics. Let’s get back to business and let’s do what’s good for customers out there.
MONEYWEB: Apology accepted?
GLENN ORSMOND: Accepted.
MONEYWEB: Our thanks to Glenn Orsmond, chief executive of 1Time and to Gidon Novick, thanks to both of you for making flying more affordable.
Groveling Gidon
Geoff Candy
Posted: Wed, 29 Jun 2005
The airline industry is tough and competitors do not pull their punches - some punches even slip below the belt in the hope that they go unnoticed by the ref.
Yesterday’s anonymous e-mail sent out by the PR department of British Airways/ Comair on a BA letterhead telling media that its newest rival, 1time, was engaging in unsafe practices is definitely one of those blows, but the BA letterhead was visible for all to see.
Glenn Orsmond, CEO of 1time, believes this mudslinging attempt is not an isolated event, but rather part of a continuing strategy by BA/Comair/Kulula to push 1time out of the market.
In an emailed statement Orsmond said: “Since 1time\'s inception in 2004, we have had various reports of a "dirty tricks" campaign against 1time from BA / Comair / Kalula. We now have proof of the dirty tricks campaign.”
Speaking on Moneyweb’s Power Hour on Radio 2000 last night he said 1time had had a meeting with Comair 18 months ago and “the chairman of Comair – Mr Novick’s father – told us that he would force us out the market this year. He said he’s happy to spend R100m to R200m to shut us down.”
Orsmond believes Comair is trying to force 1time out of the market because 1time is taking market share away from it.
“We’ve taken a million passengers that they had before, or someone else had. We’ve lowered the average air fares in South Africa, probably close to 20% or 30%. That’s had an impact on their earnings,” Orsmond said.
Gidon Novick, Kulula.com’s commercial director, maintains that Kulula is not trying to push 1time out of the market and that people seem to be a little paranoid.
“It’s unfortunate, we say: ‘Come and compete if you’ve got what it takes to compete. Come into the marketplace, compete with us. Competition is a great thing,’” Novick said.
He added that the two companies should get past their mutual paranoia and focus on helping increase South Africa’s flying market,
“South Africa is a market of 40-m people, where less than 5% fly. Let’s just get on with the mission of getting South Africans flying. That’s got to be the objective.”
Novick did, however, apologise to Orsmond for the e-mail that was supposedly sent out by an employee who is, in Novick’s terms, ‘on short finals’.
“I think it’s a nice public forum to be able to look Glenn in the eye and just say we are sorry about the e-mail that went out. It was unauthorised, it was not factual, and we regret what happened. We are sorry and, again, let’s get back to basics. Let’s get back to business and let’s do what’s good for customers out there,” he said on the Moneyweb Power Hour.
Novick’s apology was accepted by Orsmond who said the group was not going to pursue the matter as that it was not it’s style. It had, however, reviewed its legal options and found little recourse.
Orsmond added, however, that he was glad it had come to a head and hoped that this would stop the mudslinging.
“We will fight with everything we’ve got and we are happy to fight on price and product in the market. We are not going anywhere,” Orsmond said.
Hitting self destruct button
Alec Hogg
Posted: Thu, 30 Jun 2005
Chief executives have become modern day missionaries. Much of their time is spent preaching positive messages to investors, customers, staff and suppliers. That’s turned many into leaders of cheers rather than people, cogs in a reputation-enhancing machine.
Wearing a fixed smile and spending fortunes on advertising, promotions and public relations often becomes a well-oiled process. That is, until the corporate bus encounters a landmine. Mishandle the unexpected surprise, drop the reputational ball, and billions in above-the-line spending becomes worthless overnight.
In the past week we witnessed stark examples of the right and wrong way to address a reputational threat. As if to emphasise fresh risks brought by this technological age, both challenges involved damage control after the unwitting distribution of embarrassing e-mails.
Let’s start with the blunder.
The life assurance industry has been under increasing public pressure lately. A string of decisions by the Pension Funds Adjudicator has gone against them, encouraging hundreds of new complainants. Publicity has exposed business practises you’d expect in a second-hand car lot, not at companies striving to be custodians of the nation’s savings.
Instead of meeting the challenge, assurers have closed ranks, tasking their Life Offices Association (LOA) to manage their defence. It matters not to them that this reinforces concerns that the LOA is actually a cartel to which member companies defer on all important matters. Through their actions, individual assurers have been abdicating responsibility on an issue which could wipe off years of reputational investment, even threaten their very futures.
Last week, a slip by publicity consultants saw an official statement being accompanied by embarrassing e-mails between Sanlam and Liberty representatives on an LOA sub-committee. Whatever the intention, for outsiders the e-mails left the impression of collusion between life offices striving to artificially gloss-up an advertisement published on the Saturday.
Instead of coming clean, the LOA clumsily flexed its over-rated muscle in an attempt to cover up concerns raised by the e-mails. Intense pressure was put on Moneyweb’s financial correspondent Jackie Cameron by the LOA executive director and a Sanlam executive. Included were undisguised threats that should the e-mails and a related article be published, she and Moneyweb would be shut out from future distribution of information. Cameron is made of much sterner stuff. Her story was among Moneyweb’s best read this week.
To compound the error, half an hour before he was due to appear on last Friday’s Moneyweb radio show, the LOA’s executive director pulled out of a live interview which was to focus on the now public e-mail discourse. As his threats hadn’t worked, he retreated into silence. A direct consequence has been shattered trust and reputational damage which no amount of future spin doctoring will recoup.
Contrast LOA incompetence with the deft handling of a potentially far more damaging e-mail that had been surreptitiously “placed” with media contacts by an overly zealous British Airways/Comair public relations manager. This e-mail (on a BA letterhead) sniped at cut-price competitor 1Time, accusing it of such poor safety standards that a flight from Durban had almost crashed at Joburg International last Friday.
Instead of ducking the issue, BA’s marketing executive Gidon Novick accepted an invitation to our radio studios, knowing that 1Time CEO Glenn Orsmond would be across the table.
From the outset a clearly agitated Orsmond went for the jugular, accusing BA of a “worse than dirty tricks campaign” and claiming the competitor promised to spend “R100-R200 million to put us under.” Novick didn’t avoid the issues, he grovelled appropriately by admitting responsibility for the actions of a rogue staffer, and ended up making a public apology. Orsmond accepted the olive branch.
Mistakes happen. How you handle them is the test. Novick’s humility turned a disaster into the perception of a one-off screw-up by BA/Comair. From being regarded as part of a dirty tricks campaign, it turned into something which, but for the Grace of God, could happen to any business.
By contrast, the LOA’s actions portrayed the life assurance industry very differently. They came across as arrogant bullies who refuse to admit faults and, to hide the truth, use whatever force available.
A reputation which takes a lifetime to build can be destroyed in an instant. Business executives would do well to study the past week’s examples. Especially those employed at companies whose very existence depends on public goodwill. Like life assurers, all of which by their silence, tacitly endorse the LOA’s questionable modus operandi.
Clive Simpkins: Communications specialist
Alec Hogg
Posted: Thu, 30 Jun 2005
MONEYWEB: A fairly regular visitor to our studio is in this evening and I have asked Clive Simpkins to give us some insight into the whole story of reputation management – the reason being, Clive, this week in Boardroom Talk I have focussed on the Life Offices Association and BA Comair’s dealings, both of them with a very embarrassing e-mail that went out in both aspects. Now I know you’ve had a chance to have a look at it, but perhaps we can just start off with e-mail itself. It seems to be a pretty dangerous little fellow this.
CLIVE SIMPKINS: Very. What a lot of companies are learning in a very painful way right now is that if you don’t have some kind of Internet or e-mail policy in your company, and you don’t have people signing off on that, you are putting the entire organisation’s reputation at risk. In this very last week, for example, I know of a particular organisation who called in their IT guys, because somebody had ostensibly lost a file that had to do with financial and accounting information. In the process, they took the person’s notebook computer to go and examine it and see what they could do, and they found that it was loaded with reams and reams of pornography from the Internet. Now that has enormous implications, because that of course can also put the company at risk in terms of the legality or illegality of what has been downloaded. In another instance, for example, they had an employee who had only had a computer for three months – there were 20 000 deleted Internet files on that computer. This raises the question – what are you doing at work? You are spending your day surfing the Internet.
MONEYWEB: But taking it one step further, as in this case, these are e-mails that have been sent out into the arena. It’s happened, it’s history now. The way you deal with this embarrassment, I guess, is the issue I’d like to focus on now. From the Life Offices Association, they tried to use their muscle, they threatened our Jackie Cameron, our financial correspondent. They virtually said to her, “You publish this and we will never talk to you again, and neither will any of our members” and so on.
CLIVE SIMPKINS: Yes, I mean that kind of sabre-rattling is so passé, and it is the height of ineptitude because – you know it’s a bit like Schabir Shaik at one point, who was threatening to sue the pants off anybody who dared to comment on what was going on before he was actually indicted. That is highly, highly inappropriate PR. The other thing that one has got to consider today, and this is a reality, is when you send an e-mail you are not in the comfortable position of being able to believe that that e-mail is only going to go to the intended recipient. There is often malice inside of organisations – Leslie Stones wrote an article this morning, saying that a lot of sabotage in organisations on the IT front, for example, is a occurring from inside. So all you need is a disaffected employee and something like that suddenly goes into the public domain. The fact that, for example, the Life Offices Association can actually be associated with that kind of behaviour is particularly appalling, given the industry they represent.
MONEYWEB: Well, what about their members? No-one has come out and dissociated themselves with that action. If you were advising Old Mutual or Sanlam – well, Sanlam are right in the middle of it – perhaps a Metropolitan who have got a good reputation, what would you be saying to them?
CLIVE SIMPKINS: The difficulty here is, of course, I think the insurance industry is by default at risk of allowing the LOA to become the 400lb gorilla over which they don’t have control. And, as I understand it, the Life Offices Association should be their representative body, so they should actually dictate how it relates to the public, how it does what it does. I would not want a runaway organisation that assumes some kind of mandate on my behalf and in the process has the potential to do inestimable damage to my organisation.
MONEYWEB: On the other hand, British Airways/Comair was faced with a very similar situation, where one of its staff had made some scurrilous statements about a competitor.
CLIVE SIMPKINS: The story there, of course, and you passed that on to me as well, but it featured quite prominently today across the board, and that is that a …
MONEYWEB: Well, we had them in the studio here two nights ago, the two chief executives.
CLIVE SIMPKINS: Yes, I know and you described it in a rather interesting way when you said “an over-zealous employee”. I found that extremely distasteful that somebody at Kulula.com would have sent the media an item of information on 1Time as an airline, designed to do damage to 1Time. Three thoughts popped into my mind. The young woman concerned needs a course in ethics, she needs to know a little bit more about business etiquette, and she needs some emotional intelligence, because one does not grow one’s own reputation or develop one’s business reputation by dissing the competition and putting them down.
MONEYWEB: But she did it, and the way the company reacted to this one was interesting.
CLIVE SIMPKINS: It was interesting in that their CEO was prepared to come on air and talk about it with you and to do the mea culpa and put on a hairshirt and smear ashes across his forehead and the whole trip. The point is that Moneyweb has picked up on that particularly well. You’ve also picked up on the apology, but a lot of the other media haven’t. So the story out there is of this ugly little bit of internecine, in this case almost fratricidal – except they are women – warfare, where people are dropping little clangers like that about another organisation. Extremely distasteful! And what that says in reputation terms is that the chief executive officer has the responsibility to say to the PR people, “Let me tell you where competition stops and where business etiquette begins” – and that’s that particular point.
MONEYWEB: But if it is now circulating elsewhere in the media, what is the advice that you would give to them?
CLIVE SIMPKINS: I would say he needs to get out a release, stating that he went on record as quickly as it was humanly possible, on public radio through your good self, and actually acknowledged that they had made a big boo-boo, that they had put in place measures to prevent it happening again and they were genuinely contrite about it. And that is unfortunately not widely known outside of the very wide Moneyweb community. But the fact that other dailies could be running the story without the apology is not a good sign.
MONEYWEB: Clive Simpkins, the country’s leading communications specialist – consultant is probably a better word – giving us some insights into this week’s Boardroom Talk. I would recommend that you go along to the Moneyweb site, and you will get more of a feel for the problems that bad public relations and reputational management can cause to a business.
Glenn Orsmond (1Time), Gidon Novick (Kulula.com)
Alec Hogg
Posted: Tue, 28 Jun 2005
MONEYWEB: In tonight's top story, we look at discount airlines and a spat that is occurring. I think spat is probably a very light way of putting it. Gidon Novick has been in the studio before – he is the commercial director of Kulula.com. Gidon, a letter was sent out on a BA letterhead, British Airways letterhead, from your public relations department, presumably to some people in the media, saying that a competitor of yours, 1Time “had potentially a very dangerous situation,” and I’m quoting the exact words in the letter, on Friday morning. The impression was created that the airline was unsafe, that they were asked to get fire-engines on standby and, to add to all the problems, the system was not working with the passengers. So all of this drama was going on and the passengers didn’t know what was happening. It looks like dirty tricks. Perhaps you can tell us if you endorse this kind of action by your staff.
GIDON NOVICK: Alec, most certainly not. That e-mail was sent out by a member of our staff who is, in airline terms, on short finals – in terms of people who have really done something that’s not in accordance with what we do as a company. We have no reason whatsoever to doubt the safety of any of our competitors. Just a bit of background – the whole story about safety started with a report article on the weekend where there was an SAA engineer talking about the fact that SAA flights are apparently safer than any other flights. Quite amazingly, the journalist in that article didn’t call either ourselves or 1Time to actually comment on that. So I think, really, some mass hysteria about safety, without any reason. Airlines in this country are regulated by the Civil Aviation Authority. They make sure that we keep safe operations, that we keep our planes maintained, that our pilots are properly trained. And they keep a lot of pressure on us. And any airline that doesn’t look at safety as their top priority, does so at their own peril.
MONEYWEB: Well, that’s exactly, Glenn Orsmond, the chief executive of 1Time, why this story probably got out. OK, it came from a competitor. But when you see fire engines lining the runway at Jo’burg International, I guess someone, somewhere, is going to make an issue of it.
GLENN ORSMOND: Look, what’s happened here, Alec, we are talking about a sustained sanction strategy of over 18 months here that’s been going on, where the strategy from the opposition is thrown up in the hope that some will stick. And we’ve really had mud-slinging now for about 18 months on this basis. This is really the first time they’ve been caught out red-handed.
MONEYWEB: So the first time you’ve actually got an e-mail with the BA letterhead?
GLENN ORSMOND: Yes, we’ve had several instances in the past where this has been practised, and it’s stuff for the competition. 1Time’s big success story started 18 months ago – the experts in the market said it would never work. We’ve taken close to a million passengers this year, we are flying 180 flights a week. We’ve changed flying in South Africa. The market has grown close to 10%, simply as a result of 1Time starting, lowering air fares. We’ve brought low-fare flying to South Africa.
MONEYWEB: You’ve used a big word – “dirty tricks” from Kulula.com, Comair. What other examples have you got of this?
GLENN ORSMOND: Perhaps it’s not the right word – dirty tricks. It’s probably an under-statement, I would say.
MONEYWEB: So how does it get worse than dirty tricks?
GLENN ORSMOND: Well, it’s a sustained strategy. And what the strategy is, you throw enough mud and some will stick. And what you do is throw it in the area of safety, because safety is the one that you really don’t want to make an issue of. You throw enough at it and hope that some sticks, and really that’s what’s been going on here.
MONEYWEB: But Gidon, if you were to start accusing your competitor, a discount airline, of not being safe, then surely some of that mud would stick on Kulula.com as well?
GIDON NOVICK: Absolutely right. It’s not an area we would go to, it’s not an area to play. We compete in the marketplace on price, we compete on our product, we compete on where we fly to. And that’s really what it’s about. It is a competitive industry, Alec, it’s a tough industry. It is very competitive. We have a very big competitor that is funded by the government, and that competitor alone is worth taking note of. And that’s really the base of the industry. It does get tough at times, and I can understand what Glenn is saying. But it’s a competitive industry and we are fortunate to be a strong player in a competitive industry. Like Glenn, we are proud of what we’ve achieved.
MONEYWEB: Glenn, do you think they’re trying to take you out?
GLENN ORSMOND: Oh, clearly. We had a meeting 18 months ago with the chairman of Comair – in fact Mr Novick’s father – and he told us that he would force us out the market this year. He said he’s happy to spend R100m to R200m and he will force us out.
MONEYWEB: Were you at the meeting, Gidon?
GIDON NOVICK: I wasn’t. Absolutely not. I think we’re getting into an area of paranoia here, and it’s unfortunate, because we just say: “Come and compete if you’ve got what it takes to compete. Come into the marketplace, compete with us. Competition is a great thing.” We’ve seen, as Glenn says, many, many more people flying. South Africa is still a market of 40 million people, where less than 5% of them are flying. Let’s just get on with the mission of getting South Africans flying, as many of them as possible, and that’s got to be the objective.
MONEYWEB: Why do you think they would want you out the marketplace, Glenn?
GLENN ORSMOND: Well, it’s clear – we’ve taken a million passengers that they had before, or someone else had, we’ve lowered the average air fares in South Africa, probably close to 20, 30%. That’s had an impact on the earnings, which is really public knowledge. And there was a lot of emotion when we left. We have a team that were ex-Kulula, and I think there’s still a lot of that emotion – and I think that’s the right word to use. There’s a lot of paranoia out there at the moment.
MONEYWEB: So you guys were involved in Kulula in the early days?
GLENN ORSMOND: Yes, I was previously financial director at Comair, that’s correct.
MONEYWEB: And the decision to move and strike out on your own?
GLENN ORSMOND: No, I left on happy terms. I was offered restraint, I declined it, I went ahead. We in fact offered a shareholding in the company to Comair, all up front. I left on good terms.
MONEYWEB: So what went wrong?
GLENN ORSMOND: I think what went wrong is the success of 1Time. And I also want to be clear, we are not interested in whining, we are not out to start legal action and to have a big whine about this. We are happy to have robust competition, we are happy to fight on price, we are happy to fight on product. We are just saying play the ball, don’t play the man.
GIDON NOVICK: No absolutely, we are fully onside with that. Again, it’s a competitive industry. There are different players that are doing different things for the market and I just think we need to look, just in terms of our financial results, going back. Fortunately we’ve had a fantastic year, and the impact of Glenn’s competition specifically, we quite honestly haven’t noticed that, and Kulula has been a big success story, together with our British Airways brand. But yes, it’s a competitive market out there, and we’ve all got to play to win.
MONEYWEB: Has 1Time then expanded the marketplace to your advantage in the longer term?
GIDON NOVICK: I think absolutely they have, and I would give them a lot of credit for that. They’ve done that together with what we’ve done. Glenn and I were chatting in the studio before we came in here. Markets like East London and George have grown by 50% – those are significant margins, and that’s really what the game is about.
MONEYWEB: You’re certainly taking what appears to be the sensible route here. Glenn’s got some reason why he’s pretty irritated, but you’ve said it’s worse than dirty tricks. These guys want to put you out the market. They are prepared to spend R100m to R200m to kill you. Gidon gives quite strong argument, though – let’s expand the cake, the size of the cake.
GLENN ORSMOND: It’s nice to repent once you’ve been caught with your pants down, I think.
MONEYWEB: All right. So what are you going to do about this, now that you’ve got the evidence?
GLENN ORSMOND: Well, I’m glad it’s come to a head and I hope it stops now. And, as I say, we’re happy to fight them price and product in the market.
MONEYWEB: But you’re not going to take this any further?
GLENN ORSMOND: Unfortunately, if you send out that sort of e-mail that was sent out I think to 50 newspaper journalists and all the radio stations, you really can’t claim a degree of defamation because it’s a corporate entity. You can only defame the individual, not a corporate. So they probably are pretty safe from any legal attack.
MONEYWEB: So you’ve had a look at the legal consequences of this?
GLENN ORSMOND: Yes. It’s not our style.
MONEYWEB: So you’re going to fight with more Nando planes in future?
GLENN ORSMOND: We will fight with everything we’ve got.
MONEYWEB: Gidon Novick, how do you feel about being caught with your pants down, as Glenn says?
GIDON NOVICK: Alec, I think it’s a nice public forum to be able to look Glenn in the eye and just say we are sorry about the e-mail that went out. It was unauthorised, it was not factual, and we regret that that happened. We are sorry about what happened and, again, let’s get back to basics. Let’s get back to business and let’s do what’s good for customers out there.
MONEYWEB: Apology accepted?
GLENN ORSMOND: Accepted.
MONEYWEB: Our thanks to Glenn Orsmond, chief executive of 1Time and to Gidon Novick, thanks to both of you for making flying more affordable.
Groveling Gidon
Geoff Candy
Posted: Wed, 29 Jun 2005
The airline industry is tough and competitors do not pull their punches - some punches even slip below the belt in the hope that they go unnoticed by the ref.
Yesterday’s anonymous e-mail sent out by the PR department of British Airways/ Comair on a BA letterhead telling media that its newest rival, 1time, was engaging in unsafe practices is definitely one of those blows, but the BA letterhead was visible for all to see.
Glenn Orsmond, CEO of 1time, believes this mudslinging attempt is not an isolated event, but rather part of a continuing strategy by BA/Comair/Kulula to push 1time out of the market.
In an emailed statement Orsmond said: “Since 1time\'s inception in 2004, we have had various reports of a "dirty tricks" campaign against 1time from BA / Comair / Kalula. We now have proof of the dirty tricks campaign.”
Speaking on Moneyweb’s Power Hour on Radio 2000 last night he said 1time had had a meeting with Comair 18 months ago and “the chairman of Comair – Mr Novick’s father – told us that he would force us out the market this year. He said he’s happy to spend R100m to R200m to shut us down.”
Orsmond believes Comair is trying to force 1time out of the market because 1time is taking market share away from it.
“We’ve taken a million passengers that they had before, or someone else had. We’ve lowered the average air fares in South Africa, probably close to 20% or 30%. That’s had an impact on their earnings,” Orsmond said.
Gidon Novick, Kulula.com’s commercial director, maintains that Kulula is not trying to push 1time out of the market and that people seem to be a little paranoid.
“It’s unfortunate, we say: ‘Come and compete if you’ve got what it takes to compete. Come into the marketplace, compete with us. Competition is a great thing,’” Novick said.
He added that the two companies should get past their mutual paranoia and focus on helping increase South Africa’s flying market,
“South Africa is a market of 40-m people, where less than 5% fly. Let’s just get on with the mission of getting South Africans flying. That’s got to be the objective.”
Novick did, however, apologise to Orsmond for the e-mail that was supposedly sent out by an employee who is, in Novick’s terms, ‘on short finals’.
“I think it’s a nice public forum to be able to look Glenn in the eye and just say we are sorry about the e-mail that went out. It was unauthorised, it was not factual, and we regret what happened. We are sorry and, again, let’s get back to basics. Let’s get back to business and let’s do what’s good for customers out there,” he said on the Moneyweb Power Hour.
Novick’s apology was accepted by Orsmond who said the group was not going to pursue the matter as that it was not it’s style. It had, however, reviewed its legal options and found little recourse.
Orsmond added, however, that he was glad it had come to a head and hoped that this would stop the mudslinging.
“We will fight with everything we’ve got and we are happy to fight on price and product in the market. We are not going anywhere,” Orsmond said.
Hitting self destruct button
Alec Hogg
Posted: Thu, 30 Jun 2005
Chief executives have become modern day missionaries. Much of their time is spent preaching positive messages to investors, customers, staff and suppliers. That’s turned many into leaders of cheers rather than people, cogs in a reputation-enhancing machine.
Wearing a fixed smile and spending fortunes on advertising, promotions and public relations often becomes a well-oiled process. That is, until the corporate bus encounters a landmine. Mishandle the unexpected surprise, drop the reputational ball, and billions in above-the-line spending becomes worthless overnight.
In the past week we witnessed stark examples of the right and wrong way to address a reputational threat. As if to emphasise fresh risks brought by this technological age, both challenges involved damage control after the unwitting distribution of embarrassing e-mails.
Let’s start with the blunder.
The life assurance industry has been under increasing public pressure lately. A string of decisions by the Pension Funds Adjudicator has gone against them, encouraging hundreds of new complainants. Publicity has exposed business practises you’d expect in a second-hand car lot, not at companies striving to be custodians of the nation’s savings.
Instead of meeting the challenge, assurers have closed ranks, tasking their Life Offices Association (LOA) to manage their defence. It matters not to them that this reinforces concerns that the LOA is actually a cartel to which member companies defer on all important matters. Through their actions, individual assurers have been abdicating responsibility on an issue which could wipe off years of reputational investment, even threaten their very futures.
Last week, a slip by publicity consultants saw an official statement being accompanied by embarrassing e-mails between Sanlam and Liberty representatives on an LOA sub-committee. Whatever the intention, for outsiders the e-mails left the impression of collusion between life offices striving to artificially gloss-up an advertisement published on the Saturday.
Instead of coming clean, the LOA clumsily flexed its over-rated muscle in an attempt to cover up concerns raised by the e-mails. Intense pressure was put on Moneyweb’s financial correspondent Jackie Cameron by the LOA executive director and a Sanlam executive. Included were undisguised threats that should the e-mails and a related article be published, she and Moneyweb would be shut out from future distribution of information. Cameron is made of much sterner stuff. Her story was among Moneyweb’s best read this week.
To compound the error, half an hour before he was due to appear on last Friday’s Moneyweb radio show, the LOA’s executive director pulled out of a live interview which was to focus on the now public e-mail discourse. As his threats hadn’t worked, he retreated into silence. A direct consequence has been shattered trust and reputational damage which no amount of future spin doctoring will recoup.
Contrast LOA incompetence with the deft handling of a potentially far more damaging e-mail that had been surreptitiously “placed” with media contacts by an overly zealous British Airways/Comair public relations manager. This e-mail (on a BA letterhead) sniped at cut-price competitor 1Time, accusing it of such poor safety standards that a flight from Durban had almost crashed at Joburg International last Friday.
Instead of ducking the issue, BA’s marketing executive Gidon Novick accepted an invitation to our radio studios, knowing that 1Time CEO Glenn Orsmond would be across the table.
From the outset a clearly agitated Orsmond went for the jugular, accusing BA of a “worse than dirty tricks campaign” and claiming the competitor promised to spend “R100-R200 million to put us under.” Novick didn’t avoid the issues, he grovelled appropriately by admitting responsibility for the actions of a rogue staffer, and ended up making a public apology. Orsmond accepted the olive branch.
Mistakes happen. How you handle them is the test. Novick’s humility turned a disaster into the perception of a one-off screw-up by BA/Comair. From being regarded as part of a dirty tricks campaign, it turned into something which, but for the Grace of God, could happen to any business.
By contrast, the LOA’s actions portrayed the life assurance industry very differently. They came across as arrogant bullies who refuse to admit faults and, to hide the truth, use whatever force available.
A reputation which takes a lifetime to build can be destroyed in an instant. Business executives would do well to study the past week’s examples. Especially those employed at companies whose very existence depends on public goodwill. Like life assurers, all of which by their silence, tacitly endorse the LOA’s questionable modus operandi.
Clive Simpkins: Communications specialist
Alec Hogg
Posted: Thu, 30 Jun 2005
MONEYWEB: A fairly regular visitor to our studio is in this evening and I have asked Clive Simpkins to give us some insight into the whole story of reputation management – the reason being, Clive, this week in Boardroom Talk I have focussed on the Life Offices Association and BA Comair’s dealings, both of them with a very embarrassing e-mail that went out in both aspects. Now I know you’ve had a chance to have a look at it, but perhaps we can just start off with e-mail itself. It seems to be a pretty dangerous little fellow this.
CLIVE SIMPKINS: Very. What a lot of companies are learning in a very painful way right now is that if you don’t have some kind of Internet or e-mail policy in your company, and you don’t have people signing off on that, you are putting the entire organisation’s reputation at risk. In this very last week, for example, I know of a particular organisation who called in their IT guys, because somebody had ostensibly lost a file that had to do with financial and accounting information. In the process, they took the person’s notebook computer to go and examine it and see what they could do, and they found that it was loaded with reams and reams of pornography from the Internet. Now that has enormous implications, because that of course can also put the company at risk in terms of the legality or illegality of what has been downloaded. In another instance, for example, they had an employee who had only had a computer for three months – there were 20 000 deleted Internet files on that computer. This raises the question – what are you doing at work? You are spending your day surfing the Internet.
MONEYWEB: But taking it one step further, as in this case, these are e-mails that have been sent out into the arena. It’s happened, it’s history now. The way you deal with this embarrassment, I guess, is the issue I’d like to focus on now. From the Life Offices Association, they tried to use their muscle, they threatened our Jackie Cameron, our financial correspondent. They virtually said to her, “You publish this and we will never talk to you again, and neither will any of our members” and so on.
CLIVE SIMPKINS: Yes, I mean that kind of sabre-rattling is so passé, and it is the height of ineptitude because – you know it’s a bit like Schabir Shaik at one point, who was threatening to sue the pants off anybody who dared to comment on what was going on before he was actually indicted. That is highly, highly inappropriate PR. The other thing that one has got to consider today, and this is a reality, is when you send an e-mail you are not in the comfortable position of being able to believe that that e-mail is only going to go to the intended recipient. There is often malice inside of organisations – Leslie Stones wrote an article this morning, saying that a lot of sabotage in organisations on the IT front, for example, is a occurring from inside. So all you need is a disaffected employee and something like that suddenly goes into the public domain. The fact that, for example, the Life Offices Association can actually be associated with that kind of behaviour is particularly appalling, given the industry they represent.
MONEYWEB: Well, what about their members? No-one has come out and dissociated themselves with that action. If you were advising Old Mutual or Sanlam – well, Sanlam are right in the middle of it – perhaps a Metropolitan who have got a good reputation, what would you be saying to them?
CLIVE SIMPKINS: The difficulty here is, of course, I think the insurance industry is by default at risk of allowing the LOA to become the 400lb gorilla over which they don’t have control. And, as I understand it, the Life Offices Association should be their representative body, so they should actually dictate how it relates to the public, how it does what it does. I would not want a runaway organisation that assumes some kind of mandate on my behalf and in the process has the potential to do inestimable damage to my organisation.
MONEYWEB: On the other hand, British Airways/Comair was faced with a very similar situation, where one of its staff had made some scurrilous statements about a competitor.
CLIVE SIMPKINS: The story there, of course, and you passed that on to me as well, but it featured quite prominently today across the board, and that is that a …
MONEYWEB: Well, we had them in the studio here two nights ago, the two chief executives.
CLIVE SIMPKINS: Yes, I know and you described it in a rather interesting way when you said “an over-zealous employee”. I found that extremely distasteful that somebody at Kulula.com would have sent the media an item of information on 1Time as an airline, designed to do damage to 1Time. Three thoughts popped into my mind. The young woman concerned needs a course in ethics, she needs to know a little bit more about business etiquette, and she needs some emotional intelligence, because one does not grow one’s own reputation or develop one’s business reputation by dissing the competition and putting them down.
MONEYWEB: But she did it, and the way the company reacted to this one was interesting.
CLIVE SIMPKINS: It was interesting in that their CEO was prepared to come on air and talk about it with you and to do the mea culpa and put on a hairshirt and smear ashes across his forehead and the whole trip. The point is that Moneyweb has picked up on that particularly well. You’ve also picked up on the apology, but a lot of the other media haven’t. So the story out there is of this ugly little bit of internecine, in this case almost fratricidal – except they are women – warfare, where people are dropping little clangers like that about another organisation. Extremely distasteful! And what that says in reputation terms is that the chief executive officer has the responsibility to say to the PR people, “Let me tell you where competition stops and where business etiquette begins” – and that’s that particular point.
MONEYWEB: But if it is now circulating elsewhere in the media, what is the advice that you would give to them?
CLIVE SIMPKINS: I would say he needs to get out a release, stating that he went on record as quickly as it was humanly possible, on public radio through your good self, and actually acknowledged that they had made a big boo-boo, that they had put in place measures to prevent it happening again and they were genuinely contrite about it. And that is unfortunately not widely known outside of the very wide Moneyweb community. But the fact that other dailies could be running the story without the apology is not a good sign.
MONEYWEB: Clive Simpkins, the country’s leading communications specialist – consultant is probably a better word – giving us some insights into this week’s Boardroom Talk. I would recommend that you go along to the Moneyweb site, and you will get more of a feel for the problems that bad public relations and reputational management can cause to a business.