Kulula’s demise

South Africans planning a long-distance getaway during the 2022 December holidays might want to consider booking their flights soon. A quick analysis of flights in the country during this period shows that prices are substantially higher than during 2020 and 2021. The loss of Kulula operator Comair has significantly impacted flight availability and prices in South Africa. Comair handled around 40% of the country’s domestic flight volume on the routers it operated.

South African Airways also downsized its operations by around 80% during its business rescue process, while Mango has been grounded for several months and seems increasingly unlikely to survive its business rescue attempt. That means the other airlines — including Lift, FlySafair, and Airlink — have seen an influx of bookings. But it is not only Comair and SAA’s missing capacity driving up prices. The airline industry is also taking a hit from the rise in oil prices, which has driven up the cost of aviation fuel. Aviation expert and SA Flyer editor Guy Leitch warned that this combination could lead to flight prices in South Africa surging by as much as 400%.

Airlink advisor Linden Birns told MyBroadband that airlines have incurred additional logistics costs associated with importing jet fuel, storing it and transporting it to the country’s main airports. “With one of the two railway lines used for carrying jet fuel from Durban to the Reef still under repair (both lines were damaged in the floods) and with NATREF now shut, the jet fuel pipeline to OR Tambo Int’l Airport is out of commission and fuel will most likely have to be trucked to the airport,” Birns said. “Over the past 10 days, the average price of jet fuel in South Africa was US$157 per barrel, this is about US$20 a barrel more expensive than the current global average. This time last year jet fuel accounted for about 20%-25% of local airlines’ costs. ”Today, for some carriers, it is more than 50% of their costs. Birns added that the strengthening US dollar against the Rand was another headache for airlines.

“Airlines here incur the majority of their costs in US dollar or Euro, such as aircraft financing or lease charges, insurance, spare parts as well as ground handling, landing, fuel uplift, en-route navigation and airport parking charges for flights to destinations outside South Africa,” said Birns.

Required.

• Highlight reasons that led to the decline of the Kulula.

• Propose how you can apply the concepts of points-of-difference (POD) and points-of- parity (POP) to reposition and rejuvenate Kulula.
• Elaborate on why Kulula should remain an operator of Comair.

• Clarify if it is possible for Kulula to recover the lost brand equity that it once possessed.

Answers to Above Questions on Kulula Case Study

Answer 1: An analysis of the given case study on Kulula indicates that there are several reasons for the decline of Kulula, and the most significant ones as identified from the given case study are the liquidation of Comair because it operated Kulula, and the demise of Comair because of high debt levels and operational challenges has contributed towards the failure of Kulula. Another important reason identified from the case study is the competitive environment faced by the company which forces it to exit from the market.