5 questions: Safair CEO on why it is possible for an airline to be profitable in SA

CEO Elmar Conradie has been with Safair since 2005, when he started as chief financial officer before taking over the reins as CEO in 2015.

Conradie is a qualified chartered accountant and certified information systems auditor, with more than 20 years of finance experience and 14 years of aviation experience.

• Subscribe to Fin24’s newsletter here.

He spoke to Fin24 about the aviation industry in SA - especially in the low-cost sector, where Flysafair, Safair's airline, operates.

Fin24: What are the biggest challenges for the aviation industry in SA?

Conradie: The biggest challenges we face are the lack of growth of the economy, which has a direct impact on our demand; and the price of oil and the exchange rate, which have a direct impact on our cost.

Skills shortages have also become a much bigger issue in the local aviation sector.

Fin24: How does Safair deal with these challenges?

Conradie: With regard to demand, at this stage we've managed to grow our business significantly, despite low economic growth.

We believe we've made FlySafair an attractive option through highly competitive pricing and a punctual, compelling service.

The macro-economic factors of exchange rate and oil price are something we as an industry face collectively, and need to negotiate through proper planning, effective cost control and efficient distribution.

Fin24: What are Safair/FlySafair's successes?

Conradie: One of the first successes is that Safair is 53 years old, which is a remarkable testament to the culture of the company and the hard-working people there.

On FlySafair's side, one of our successes is our leading 94% on-time performance.

We've also received a number of accolades over the past four years, having won multiple Airports Company SA (Acsa) feather awards; being named Aircraft Operator of the Year at the South African Civil Aviation Excellence Awards; and being named Best Airline Africa and Indian Ocean in the 2018 Tripadvisor Travellers' Choice Awards.

• The Sunday Read: Safair CEO on doing 'good, honest business'

Fin24: In the context of state-owned SAA's financial woes and a number of private low-cost airlines which have not managed to survive in the SA aviation space, is it possible to be profitable?

Conradie: Yes it is – and we are.  

Running a profitable airline is an exceptionally complicated and challenging undertaking. But there are examples around the world which illustrate that efficient management of core principles and sticking to the business model can yield a profitable result.

We're always looking at expanding. We're further expanding our fleet, and by May we will have added three more Boeing 737-800s. The added capacity we will get from these aircraft will mean increased frequency on some of our existing routes, and the ability to expand our route network regionally.

• READ: ACSA appoints acting CEO

FlySafair showed profits for our second and third operational years, in 2016 and 2017 respectively. Although movements in oil prices and the exchange rate in 2018 presented a challenge, we are pleased that we managed to even improve on those results and have had our most profitable year yet.

One of the reasons we are able to have such high on-time performance is because we are not reliant on anyone else to maintain our aircraft, which has proven to be a challenge for some of the other airlines.

Safair is one of the biggest maintenance organisations in South Africa capable of maintaining Boeing aircraft operated by most of the domestic airlines.

• READ: 5 questions: Mango's acting CEO on SA aviation and Mango's route ahead

Beyond the technical dispatch reliability, it's about a great team and the right culture within the company and, more importantly, a constant focus on punctuality for every flight.

Fin24: What role do partnerships play in the airline industry and for Safair?

Conradie: We are heavily dependent on all our partners in the business, from catering, ground handling, check-in counters and baggage to the airports themselves. So, having the right partners also plays a big role.

They say it takes a village to raise a child, and it takes a community to run an airline.

There are several partners, like our ground handling company Swissport, catering company LSG Skychefs, the airports themselves (ACSA and Lanseria) and First Car Rental, who have been incredibly supportive along the FlySafair journey.

Hopefully they have also grown themselves as a result of our growth, creating more job opportunities for South Africans.