Velvet Sky cancels, delays flights amid payment disputes

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Flights by low cost carrier Velvet Sky were delayed on Wednesday and today and cancelled yesterday as the airline struggles to pay its bills.

Six hundred passengers were stranded in Cape Town, Johannesburg and Durban yesterday after flights were cancelled. Passengers experienced long delays on Wednesday, mainly in Cape Town, while Velvet Sky said today that flights were delayed by several hours. Solomon Makgale, spokesman for the Airports Company of South Africa (Acsa), said that three flights, two out of Johannesburg and one out of Durban, did not take off on time today.

Today BP Southern Africa is bringing before the Pietermaritzburg High Court provisional liquidation proceedings for the airline due to non-payment. BP spokeswoman Glenda Zvenyika said company had begun liquidation proceedings against Velvet Sky over money owed for fuel. BP suspended fuel supplies to Velvet Sky last month due to non-payment.
“BP Southern Africa and Velvet Sky had agreed payment terms over recent months, but Velvet Sky has not been able to meet these and unfortunately we have now been forced to take this action,” she said.

At the same time Velvet Sky is engaged in a financial dispute with SAA Technical, which maintains its aircraft. Velvet Sky operations chief Gary Webb said that flights were cancelled yesterday and that “the delays were mainly as a result of commercial issues that have arisen between Velvet Sky Aviation and a service provider [SAA Technical]. We are in dispute with them, but we are…changing service providers…We started that process on Thursday, but it was not concluded in time to operate.” Webb said he was confident that a deal with the new service provider will be signed by today and that Velvet Sky will be back in the air again.

Makgale said that Acsa was also owed money by Velvet Sky, but had entered into a payment arrangement, which had been honoured.

Velvet Sky said passengers whose flights had been cancelled would be reimbursed.

Velvet Sky launched on March 22 with an inaugural flight between OR Tambo International and King Shaka International. The carrier is plying the ‘golden triangle’ between Johannesburg, Durban and Cape Town. This route is already served by all of South Africa’s biggest existing airlines, including Kulula.com, Mango, 1Time, South African Express, South African Airlink and British Airways.

Velvet Sky was sold to Excalibur Aerospace by parent company Macdonald Holdings only three months after the airline first took to the skies.

In August last year Velvet Sky leased two more Boeing 737s, in addition to its DC-9 and first 737. Velvet Sky said it had a bumper festive season, enjoyed high load capacities and aimed to open up new routes in Africa.

However, domestic airlines have been facing tough times recently – Comair, which operates British Airways and Kulula.com in southern Africa, posted a loss for the second half of last year. The company cited a 24% increase in operating costs, mainly driven by the highest average fuel price seen to date. Other factors that resulted in the loss included the weak economic climate and 70% rise in airport tariffs.



Comair said that prevailing high oil prices and a weak global economy prevailing into the foreseeable future will result in a tough environment for airlines. “Airlines that do not substantially reinvent themselves will not survive in this new environment, as demonstrated by the failure of a number of airlines globally in the first weeks of 2012,” the group warned.
“The weak economy and poor consumer spend, high oil prices, excessive Acsa charges, a weakening local currency and increased competition, all threaten the growth of local air travel. Worldwide, the airline industry has been forced to recognise the need for radical change to ensure sustainability and profitability,” said Comair’s CEO Erik Venter at the end of January.