Kulula.com : R500 Ct to Durban on new routes

[Gunship]

Two new routes to be started by no-frills airline kulula.com have brought it into direct competition with its parent, British Airways/Comair, as well as SAA and Nationwide.

From May 12 kulula will put on one return flight a day between Cape Town and Durban, and Johannesburg and Port Elizabeth. This means the Port Elizabeth market will be served by four airlines.

Gidon Novick, the executive manager of kulula, estimates that market to be 600 000 people, with a value of R350-million a year.

But he said on Wednesday that he was confident it would grow rapidly as the Coega port came on stream and the Eastern Cape tourism industry developed. He estimated that the arrival of kulula would help to grow the market by attracting people who could otherwise not afford to fly.

'We shall not attract those passengers away from BA/Comair'
He said kulula had led traffic between Cape Town and Johannesburg to grow 12 percent since the airline was started two years ago and predicted similar growth on the Port Elizabeth route. He said kulula had no plans "at this stage" to fly to East London, which is served by South African Express and Nationwide.

Novick dismissed renewed speculation that kulula, which has carried 750 000 passengers, was displacing BA/Comair in importance to the firm. The profit made by kulula in the six months to December was not separated from BA/Comair when the R13,3-million made by the two airlines was announced.

"We are serving different markets," he explained. "kulula is attracting business passengers, mostly from small and medium enterprises, and our lower fares encourage them to fly more often.

"Executives from the car manufacturers in the Eastern Cape and Coega, whose fares are paid by their companies, will continue to fly business class. We shall not attract those passengers away from BA/Comair."

SA Tourism and the Eastern Province Tourism Board said they expected huge growth in the coming season as a result of marketing campaigns and the popularity of the Garden Route.

kulula's lowest one-way fare on the Cape Town to Durban route will be R500 and on the Johannesburg to Port Elizabeth route R400. Bookings are mostly online and the cheapest seats are the first to go, with the fare rising as the plane fills up. :ok:

But Chris Hoare, the commercial executive of Nationwide, said 80 percent of local airline bookings were still done through travel agents. kulula's expansion, he said, would be "a contest between online booking and the travel agents".

[BAKELA]

I get the distinct idea kulula.com is on the right track here. From the thread "Enron accounting at SAA" on this forum

Particular concerns included not only SAA’s projected loss, but also strong competition from Kulula.com, “problematic” succession planning...

Maybe it's SAA, Nationwide AND BA that's slightly more than just concerned about kulula's success.

[T Hairy Henry]

Going (mmm) on my experiences with Go in the UK, for Kulula to become a real force, it would need to pull away from BA/Comair!

Not long ago, I spoke to a lady from Comair about Kulula and she suggested that new routes for Kulula were unlikely. This really surprised me!

BA/Comair will loose pax to Kulula no matter how much they stimulate the market, and they know it. If SA and the region stabilises Kulula could put together quite a tidy network!

Would do you think people?

[REAL ORCA]

BA knows it will loose some passengers to Kulula (+-8%) on certain new routes. However, if they gain the same portion of passengers from other carriers like SAA and Nationwide, it makes it all worthwhile.

[T Hairy Henry]

This is very true.......but,

How can Kulula ever be a real airline if it is held back by BA/Comair?

Kulula could bury most airlines if they were out on their own. A real low cost would stimulate the market massively, then everyones a winner (the public that is)!

Any ideas what the employees or even the CEO think about it?

[goblin]

Hi there

The way I understand it is that both BA in South Africa and Kulula is Comair. Comair is covering both ends of the spectrum - cheap no-frills Kulula on the one hand and a more upmarket, business orientated BA on the other.

Kulula uses all the infrastructure of the BA brand, from busses and other ground handling services to pilots - that is why it can offer such cheap fares.

I do not think that Kulula can survive on its "own", it is just a part of Comair's marketing strategy.

Regards to all Comair drivers.

[T Hairy Henry]

If Kulula was on it's own, it would have a cheaper cost base than Comair, thus it could offer even cheaper fares and get higher yields.

If you compare Kulula's cheapest fare to easyJet and Ryanair, you will see that it doesn't even come close. Also, looking at their schedule, they could certainly do with shortening those turn times and increase aircraft utilisation.

I maintain that if Kulula was out on it's own the big boys wouldn't know what hit them!

[Gunship]

BA knows it will loose some passengers to Kulula (+-8%) on certain new routes. However, if they gain the same portion of passengers from other carriers like SAA and Nationwide, it makes it all worthwhile.

From somebody who knows what he is talking about ...

Kulula uses all the infrastructure of the BA brand, from busses and other ground handling services to pilots - that is why it can offer such cheap fares.



Goblin - the nail is on the head ! These words are the crux. Without the infrastructure (which is all there ) and been in place for many , many years you can give prices as they are giving ...

Read what ORCA says ... they know they "loose" pax BUT they gain from SAA / SUNAIR / NWide .. so it remains a win - win situation - even for pax ...:ok:

[REAL ORCA]

KULULA

Kulula is not there to "take on anybody". It is developing a market at the bottom end of the spectrum serving the people who otherwise would not have been able to fly. Obviously there will be competion with other airlines, including big brother BA. With Kulula's capacity at present it cannot compete with the big boys on the block like SAA. A small percentage loss of passengers from the "big" airlines will be a substantial increase in passengers to Kulula. Any loss of passengers to BA will only be a loss in the difference in yield per seat between BA and Kulula - the money still goes to the same company.

[Gunship]

I get your point ORCA.

Does it not seem strange that nobody jumps on the bandwagon ?
I mean SAA must surely "feel" the pain as I have flown them a few times lately and the seat occupancy to Cape Town was not more than 60%. Kulula was FULL !

Then strangely it is also going well with SunAir operating Business Class ONLY from Lanseria .. or so they say ....

[T Hairy Henry]

Okay, show me the money!!!

Two single fares that have a similar sector length.

CPT - JNB

Lowest Single Fare Kulula = R595 + tax

LON - MAD

Lowest Low Cost Single Fare = R295 + tax

How many more people would be able to fly with fares like this. And this isn't even the Lowest of the Low Cost Airlines.

I'll let you guys do the maths. The best way to sum up BA's cost base is this. In the UK, only the Post Office has more vehicles than BA. Remember, Kulula pax are paying for infrastructure they don't even need.

[Gunship]

The Hairy One Harry .. ok you made your point but without getting into a massive argument about Rand - Pound Exchance rates etc .. are you speculating that Kulula is not SO CHEAP ?

Well I have seen rates of 19 pounds to Germany from the UK and 1 Pound if I remember correct to Ireland ... so yes and no.

Kulula hit the SA market on the head with a "SA - Type" low cost airline and the bottomn line is : It works ... as a pax I love to pay a third of the price knowing that I gave enough money for grog in the Uk and not feel unwelcome with my rands ;)

Talking about sampling apples with apples ... surely the UK to Madrid route has 10 times more pax than the Ct - Jhb route ?

[T Hairy Henry]

Shame on you Guns!!!

MAD = Madrid!!!

1.6 million pax between London and Madrid last year. About 17% of those pax flew LC with easyJet.

Anyone know how many pax between CPT & JNB?:confused:

[REAL ORCA]

Kulula

You have just answered you own question regarding Kulula.

[Gunship]

Henryy ... ol chap what is the matter .... Sorry if I ashame you bru but I am a bit confused now ... what is the argument about ?

Easy jet / Kulula = low cost ... I for instance and a few othe million in the World loves it as well and we travel on it ...

Easyjet and Kulula makes bucks and i do not care.

Safe flying in safe aircraft and safe crew at a budget price ... I am happy ... If I was an SAA director / shareholder / hand in the pocket - I mean budget - I would have NOT been happy as they should have been compensating for the Kulual - effect years ago.

Bru I think we argue the same point - my Kweens English is just much badder ;)

[PAXboy]

My guess is that Comair are making hay whilst the sun shines. The fares are low for ZA but high relative to elsewhere. So, when more competition arrives, they will be able to cut fares further.

By running the two together, they are certainly getting some benefits. Don't forget that it's not just the trucks and service vehicles - all the back office of I.T. admin/accounts/order processing. To add the infrastructure for another ten machines (or however many they have) is peanuts by comparison to starting from scratch as easy had to. It does not matter if you do your own ops and so forth, or if you contract them in, the costs are going to be higher than expanding a bit more of what you do now.

Future? When the SAX/Link situation is resolved, you might see a regional/feeder that can compete but I doubt it. That will be about trying to maintain the Airways brand from largest to smallest. It looks as if they are following a well worn path in this attempt. Note, I say 'attempt'.

As the ZA tourist market continues to expand (which it will, dependent only upon how many tourists get murdered) then other's will want to try their hand at this too. But Comair will have room to reduce fares and build on the success.

Choosing the PLZ link is very sensible, European visitors want a week in CPT and then a week driving up the route. Arrive PE by 14:00 and be ready to board your euro main line carrier from 18:00 onwards in JNB.

I used Kulula twice on a recent visit and found them to be fine. Since they have BA standards of maintenance, I was advised by an insider, I had no concerns. I did one sector last Nov in the 727 and that may well be my last ride on one of those!

By the way Guns, your Kweens eengleesh is as good as on the Kulula web site. They declare themselves to be "Winna. Airline of the Year" :rolleyes: At least you have an excuse, still swigging from that bottle, I see. :p

[Gunship]

Lo Paxboy .. I just knew we would get great feedback sooner than later from you ;) ... hik ... Bert my 5 L Tassies is finished again ... new one tomorrow. .... hik .. :yuk:

[T Hairy Henry]

I just feel that Kulula has so much more potential. Maybe a second player in the Low Cost Market would spice things up!

A new starter would be better rather than SAAlite!!!!

Let's just hope things continue to develop. I'm looking forwrd to taking my first trip in Dec from Cape Town to Durbs!

[Gunship]

Agree henry .. if we can call "us" the pax - things can only be much better for all of us .. PAXBOYS ;)

What about NationWide going NationCheap ?

:cool:

[PAXboy]

Oh dear, Guns. You are in a sorry state are you not? I have to keep looking in here just to keep an eye on you. Soon be time to call the nice men in white coats to cart you back to the supplies warehouse. Then ask the engineers nicely if they can fit a new Jeraboam of Tassies into place. :}

As for your impudent suggestion that you could EVER call yourself a Paxboy??? You'll be in the hold next time on my persoanl orders!

What about NationWide going NationCheap? Funny you should mention that ... I was going to ask that question in my post but thought that I had already talked enough. I doubt that they will be able to control themselves much longer.

The biggest mess would be if Airways think that they could turn Sax or Link into a 'Lite'. But if I was a betting man, then I would tip Nationwide to jump first. Second chance is an outside financier using an existing company as the vehicle.

BUT as I said, it all depends upon how many tourists get murdered and raped each year. THAT is the controlling factor in your tourist industry. Everyone that discovers my ZA links and trips asks about going. They all want to go - but are worried about their lives. Some won't go, others say "I could get knifed in London" Which is true!

Anyway, back to finish the bottle of Upland Pure Potstill Brandy from Wellington, that I bought in January. :=