South African Airways will launch a low-cost carrier by year end, President and CEO Khaya Ngqula revealed during a ceremony in Johannesburg Monday that saw SAA become a full Star Alliance member (ATWOnline, April 11)."There is a clear demand for low-cost travel in the country," Ngqula said, noting that LCCs represent 20%-25% of the market. "The market for domestic travel has increased by 50% over the past five years [since the first LCC, kulala.com, commenced operations], and we have only captured 5% to 10% of this. We need to take a bit of this back."

The LCC will have its own management and brand and a network separate from SAA's domestic and regional routes. Ngqula is uncertain whether SAA will allocate part of its fleet to the startup--"Probably not. Maybe," he told ATWOnline.

There reportedly is some dissent within SAA concerning the venture. Last Friday, CFO Tryphosa Ramano resigned "to pursue other interests," but insiders told this website she left because of a disagreement with Ngqula over the low-cost idea, although it had been clear for some time that the pair did not see eye-to-eye on several issues.

South Africa's fastest-growing LCCs include kulula.com, a Comair entity, and 1time, which is run by Glenn Orsmond, who set up kulula.com for Comair and then left to establish a copycat operation of his own.

Ngqula also told ATWOnline that he expects the current financial year, which started April 1, to be reasonably good. "GDP growth in South Africa is 6%. Our board expects us to attain a growth of at least this," he said, but he refused to disclose whether the recently completed fiscal year ended in the red, as expected by insiders.

He did concede that "last year was difficult. We had the strike [by ground personnel], a 40% surge in the price of fuel, while additionally a hole in the runway in Cape Town Airport and the rationing of fuel at London Heathrow affected our operations. The airline industry is a fickle industry. You just never know what will hit you next."