South African airline Lift is planning to grow in accordance with growing demand, as the country’s aviation industry is still recovering from the impact of the Covid-19 pandemic.
Lift CEO Jonathan Ayache told CNBC Africa that the airline launched in what was likely the most difficult time for aviation in history. “It has been a challenging but incredible road,” he said.
Lift launched at the end of 2020 as a partnership between established operator Global Aviation, Kulula founder Gidon Novick, and Ayache, a former Uber executive.
Speaking to eNCA in 2020, Novick said the pandemic created an incredible opportunity to create and launch a new airline.
He said the competitive environment has changed, many aircraft were available at low prices, and excellent skills are available.
In addition, Global Aviation’s established position in the industry allowed Lift to have the necessary regulatory approvals to take to the skies automatically.
The airline initially launched with only two routes – Johannesburg to Cape Town and Johannesburg to George (seasonally). It also started with only two aircraft.
Since, Lift has expanded its routes to include Durban – achieving the ‘golden triangle’ of Cape Town, Johannesburg, and Durban – and added four aircraft to its fleet.
Lift’s performance is impressive, considering the country’s struggling aviation industry during and following the Covid-19 pandemic.
In the past few years, several local airlines have closed down, and the number of flights has dropped significantly.
According to Ayache, the industry has been recovering slowly. Passenger data shows the country is now at about 75% of pre-Covid passenger levels.
However, the country is still a long way from where it was, especially compared to the rest of the world.
Markets like Europe are close to or have already reached pre-Covid passenger volumes, and some forecasts say they may soon surpass those levels.
Ayache ascribes South Africa’s slower growth to the country’s macroeconomic challenges, and the number of flights aligns with current demand.
“It is important that growth happens slowly and sustainably to ensure the market does not collapse again. The country is back to about 80% to 85% of the number of pre-Covid flights,” he said.
Domestically, travel has not changed much. Passengers can still get where they need to go. However, they cannot book flights as last minute as they could before.
This is due to a combination of limited seat capacity and the high fuel cost. According to Ayache, the fuel price has more than doubled since Lift launched.
On the other hand, regional access, especially in Africa, is much more challenging than pre-Covid – though not impossible.
Lift’s angle of attack
Ayache said Lift differs from other airlines in its view on operating models. The airline is far more demand-driven, and its intention is not to scale up as quickly as possible in the hope demand recovers.
“We will grow as demand recovers,” he explained.
One has to be prudent in the aviation industry – a lesson Lift learned by looking at its competitors, including Kulula owner Comair, that have closed down in recent years.
He said a large reason for many airlines coming and going is that they grow too quickly and take on too much debt.
Then, inevitably, when there’s a downturn or demand decreases, “you get into trouble, and you get into trouble very quickly”.
“I would rather be on the backend of an upward trajectory than try and catch it right from the beginning and be caught short,” he said.
However, Lift proved its ability to grow quickly in the second half of last year when it increased its aircraft and added Durban to its routes.
This expansion happened around Comair’s closure when recovery from the Covid-19 pandemic did not seem likely.
“We can move quickly if we need to, but the demand needs to be there.”
Depending on demand and where the market is, Lift wants to expand its fleet further to add between two and four aircraft in 2023.