1time founders plan a comeback

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The founders of defunct budget airline 1time plan to launch a new low cost carrier, SkyWise, in the first quarter of next year.

Using two Boeing 737-300s, the airline will offer flights between Johannesburg’s OR Tambo International Airport and Cape Town International Airport, with plans to expand the network. This is according to Rodney James, ex-CEO of 1time, who made the revelation to Tourism Update today.
“We believe the B737-300 is the wise choice for the South African low yielding market, with an affordable capital cost and very good fuel efficiency,” James said. The model is far more efficient than the McDonnell Douglas jets 1time was flying, but less efficient than the new generation Boeing 737-800 model, which carriers like Comair and Mango are buying in order to keep operating costs low – fuel accounts for approximately 40% of an airline’s costs.

James said that the idea for a new budget carrier was hatched six months ago and the founders are currently in the process of applying for an air operator license. The application was confirmed by the transport department’s Air Services Licensing Council.

SkyWise has external investors and will incorporate a Black Economic Empowerment (BEE) component as well as a foreign investor.

Other founders of SkyWise include Glenn Orsmond (ex-1time CEO), Michael Kaminski (ex-1time CIO) and Johan Borstlap (ex-Sun Air MD), reports Tourism Update.
1time ceased operations on Friday 2 November after pulling the plug on business rescue proceedings, which were instituted in August following growing losses. “It was recognised and agreed that the business had no reasonable prospect of being rescued,” the company said at the time.

It said the decision to file for liquidation was taken after a potential financier said it would not be able to invest in the airline. This potential investor was British low cost airline FastJet, which pulled out of the transaction at the last minute. FastJet is expanding into Africa and is the holding company for Fly540, which operates from Kenya, Ghana, Angola and Tanzania.
1time reported a loss of R43.5 million for the six months to June 30, versus a loss of R33.9 million for the same period last year. The carrier has around R460 million of debt.
1time partly attributed its losses for the first half of 2012 to costs associated with new routes from Lanseria and Mombasa, both of which have since been suspended. Less than expected demand for maintenance at its Jetworx division also dented performance, the airline said.

Airlines have been hard hit by a combination of higher fuel prices, airport taxes and navigation fees and a recent fall-off in demand. Earlier this year newcomer Velvet Sky, a low-cost carrier operating from Durban, was forced to shut down after less than a year of operation after it failed to convince creditors and a court that it would be able trade its way back to profitability. In 2008 Nationwide airline announced it would halt flights.

The International Air Transport Association has said that the global airline industry is not very profitable at the moment, with the entire global airline industry recording a profit of just $4.1 billion this year, with a profit margin of a mere .6%. Many have questioned the logic of setting up another airline in the face of low profit margins, tough competition and high operating costs but James said that similar concerns were voiced before 1time’s launch nine years ago and that did not stop it from becoming a successful airline for a time.

Erik Venter, CE of Comair (which runs Kulula.com and British Airways in South Africa) said that ten out of eleven private airlines launched in South Africa since 1991 have failed. He attributed 1time’s demise mainly to its fleet of McDonnell Douglas aircraft, which were relatively old and inefficient.