Airline considers buy or lease for Kulula expansion

South Africa's Comair is considering either acquiring South African Express (SAX) or hiring another regional carrier to operate a new fleet of turboprops for its budget operation Kulula.

Comair and Kulula joint chief executive Gidon Novick says it is evaluating 50- and 70-seat turboprops, which will be used by Kulula to expand into secondary cities which do not have enough traffic to support narrowbodies. Kulula is fully owned by Comair, which is part-owned by British Airways and operates Boeing 737s as a BA franchise.

SAX already operates a fleet of six Bombardier CRJs and seven Bombardier Dash 8 Q300/400s for South African Airways on routes Kulula is eyeing. Novick says SAX's high cost base would have to be restructured if Kulula/Comair succeed in acquiring SAX.

The South African government owns both SAA and SAX but the two operate independently and currently only bids for SAX are being entertained. If Kulula/Comair does not buy SAX, it plans to acquire its own turboprops and hire a South African regional which already operates 19- to 50-seat turboprops.

Kulula operates a 16-aircraft fleet consisting of 737-200s, 737-400s and MD-80s and Novick says his first priority is to replace the 737-200s and MD-80s with 737-400s or similarly-sized Airbus or Boeing aircraft. He says he will then focus on acquiring smaller and larger aircraft. Kulula is now studying ATR 42s and Dash 8s for for the former requirement, and Boeing 757s for the latter requirement.

He adds that used aircraft are more likely because most new aircraft, including the Dash 8 Q300/400 and 737-800, are "overpriced". He calls the new 737-900ER "fantastic" but also potentially too expensive for Kulula. "The problem is availability and purchase price," he says.

Source: Flight International