Johannesburg - Comair has felt the effects of increased competition in the year to June, reporting lower profitability off flat revenue.
The low-cost airline reported flat revenue of R5.59 billion amid an oversupply of cheaper seats in the market, but said profit for the year declined to R192 million from R218 million previously.
CEO Erik Venter says the airline grew passenger volumes by 6 percent, largely due to the strength of the kulula.com and British Airways brands, and the company’s ongoing focus on customer service, including achieving its threshold target of 85 percent on-time performance for both brands.
However, in a statement issued on Tuesday, Comair notes the 2016 financial year was characterised by overcapacity in the low cost carrier segment, which led to 10 percent volume growth in the domestic passenger market.
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It estimates, however, that total revenue in the market for domestic airline tickets declined, a situation that was made worse by the weak economy. The international inbound market showed a partial recovery of 4 percent after the relaxation of the 2014 visa regulations, improving the international feed traffic, especially on the British Airways flights operated by Comair. The weakening of the rand further improved revenue from overseas sales.
The company’s non-airline brands, such as flight training, travel product distribution, catering and airport lounges grew revenue 6 percent and contributed 18 percent to profit from operations.
Cash generated from operations grew by R212 million, an increase of 31, giving Comair a war chest of R1.12 billion.
Venter notes this year sees the 70th anniversary of Comair’s operations, the 20th anniversary of its franchise agreement with British Airways and the 15th birthday of kulula.com.
“We aim to strengthen all our relationships in the coming year, especially as the weak economy is expected to continue putting pressure on consumer spending in the industry, despite the recent growth in passenger volumes.”
IOL