Nico Bezuidenhout does not have your typical airline chief executive background. But in today’s low-cost airline industry, where the Internet and innovative distribution channels can be critical ingredients for success, Bezuidenhout could give South African start-up Mango just what it needs to quickly become profitable in an intensely competitive environment.
Bezuidenhout has an ecommerce background, serving as chief operating officer of online ticket broker Ticketweb before joining Mango’s parent, South African Airways (SAA), five years ago. He was persuaded into the airline industry with a challenging job to establish ecommerce platforms at SAA, where he was head of direct sales channels. But during his last year in this role Bezuidenhout spent much of his time on a special team tasked with studying the world’s low-cost airline industry to help SAA’s board determine if it should launch a low-cost subsidiary. The board approved the launch of Mango in October and the carrier took off on 15 November. It is now operating four Boeing 737-800s on five domestic routes.
“I’ve always had a passion for distribution channels. Low cost airlines rely fundamentally on distribution channels,” Bezuidenhout says.
The pre-launch study took Bezuidenhout to far away markets such as Thailand, where Nok Air has used an innovative mix of new distribution channels including cash machines, convenience stores and movie rental shops. Travelling around the world to examine the low-cost industry’s “best practices” gave Bezuidenhout plenty of distribution ideas he plans to export to South Africa. “Logically it makes sense to adapt the best business practices,” he says.
Bezuidenhout says Mango needs multiple distribution channels in order to meet its main objective, get more South Africans to travel by air, because a lot of South Africans do not have Internet access. For example, Mango plans to penetrate poorer communities that do not have Internet access by selling through retail shops, a new distribution channel pioneered by Nok Air.
“We’ll use whatever it takes to get the tickets to market,” Bezuidenhout says.
Not surprisingly, traditional global distribution channels “are not in our plans”. Also not surprisingly, Bezuidenhout has plans for generating ancillary revenues on Mango’s website through partnerships with hotels and car rental companies.
“Our aim is to offer our guests an end to end solution as much as possible,” he says.
Mango’s model, he says, borrows a mix of strategies used by other low-cost carriers around the world, many of which Bezuidenhout visited. In addition to Nok, Bezuidenhout studied Jetstar in Australia, Ryanair in Europe and Southwest and Spirit Airlines in the US. The Centre for Asia Pacific Aviation helped with the study. “The whole exercise took us more than a year,” Bezuidenhout says.
Mango has adopted a strict no-frills model, with food and drink sold on board. Its 737-800s have a dense 186-seat configuration with a seat pitch of only 29in. Only one aircraft type will be used and Mango plans to maximise fleet efficiency by flying each of its aircraft at least 12 hours per day. One-way fares start at less than R200 ($29).
Bezuidenhout says Mango will operate a mix of major domestic routes as well as some “unusual” routes which previously were only served by regional aircraft. The regional routes and the new distribution channels will help Mango fulfil its motto of “bringing air travel to the people”. According to Mango’s research, only 15% of South Africa’s urban population has travelled in the past 12 months.
“Mango will be a true low-cost carrier in every sense of the word, a transparent independent operation that will provide air travel opportunities for all those South Africans who never flown before,” Bezuidenhout says. “We are confident that, while the local aviation industry is smaller in comparison to Europe or the USA, current trends in growth convinces us that the introduction of Mango as a new player in the low-cost market will service the presently undersubscribed market and stimulate further opportunities.”
Bezuidenhout claims he is not concerned he doesn’t have any airline operating experience and points out he has hired an experienced team of managers from SAA and other South African carriers to help him with this part of the business. “Travel from point A to point B can only be so complex,” he says.
Bezuidenhout is confident Mango within a couple of years will be able to pay back the R100 million it has loaned from SAA and become a profitable standalone business. He already is looking for additional aircraft and believes Mango will operate up to 10 737s within five years. A spin-off and initial public offering are also in Bezuidenhout’s long-term plans. “I’m convinced private equity capital would be interested in this venture,” he says.