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Gidon Novick: Aiming for a future, prosperous SAA

Gallo Images/Brenton Geach

A I M I NG S KY-H IG H

Airline industry veteran Gidon Novick believes low-cost airline Lift can teach SAA a thing or two once its sale to the Takatso Consortium is finalised

Adele Shevel s h eve l a @ b u s i n e ss l i ve .co. z a

idon Novick is no stranger to the

Gairline industry. He’s a former joint CEO of Comair, and founder of low-cost airline kulula. More recently he, former Uber executive Jonathan Ayache and airline leasing and maintenance company Global Aviation launched Lift. The only new airline in the world to have taken to the skies in 2020, it’s celebrating its first birthday this month.

“We ’ve been through four waves of a pandemic, aggressive price competition, rampant oil prices —survival and thriving through all that is a good sign,”Novick tells the FM.

He also represents Global Aviation’s interest in the Takatso Consortium, the governme nt ’s preferred equity partner for the sale of SAA. It’s a joint venture with infrastructure and investment company Harith General Partners, and is chaired by Tshepo Mahloele, who is also chair of Arena Holdings, owner of the FM.

The 51% stake in the state-owned airline is expected to cost Takatso at least R3bn over three years. The sale, announced in June, has been delayed by months. But it should be concluded shortly, according to public enterprises minister Pravin Gordhan.

“There are a few more regulatory hoops that we have to jump through,”he told Bloomberg TV last week. “So early in the new year that process should be completed.”

Novick has long been of the view that the national carrier should not be subsidised by taxpayers; they’ve stumped up more than R50bn for the struggling airline over the past de c a de .

“If run professionally and independently, SAA is a real commercial opportunity,”he says. “It also has the potential to demonstrate a positive case study of public-private partnership in the country —to take something t h at ’s been a drain on the country and create an asset that adds value …and builds positive s e nt i me nt .”

He believes the airline “has the potential to rebuild itself as a strong regional player. The brand still has good recognition on the co nt i ne nt .”

Still, there’s work to be done. “Le g a cy models are no longer viable,”Novick says of post-Covid air travel. Success now is premised on efficiency and putting the customer first.

“We ’ve taken advantage of the opportunity with Lift to start afresh from an efficiency and culture perspective. This is a model that is replicable and needed in many parts of Africa, a market which remains the most underserved travel market on the planet ,”he says.

The Lift model is technology driven, leveraging off rapidly evolving cloud-based solutions. So while airline support capability is traditionally focused on an inbound call centre with high staff overheads, for example, Lift has gone completely digital, using artificial intelligence to prioritise issues and manage service levels. It costs the company one-fifth of what it would pay for a traditional call centre, he says, and delivers much better service.

Which is all good and well. But isn’t there an inherent conflict of interest between Lift and SAA, given Global Aviation’s role in the co n s o r t iu m?

“There would be,”says Novick. “The businesses would need to be combined in order for it to work.”

In Novick’s view, numerous aspects of the Lift model need to be embedded into a “future prosperous SAA”. Among these is the combination of a low-cost base with a premium service offering.

So far, it’s worked well for Lift. “We ’ve operated over 2,000 flights, 97% of them on time, and are carrying over 30,000 passengers a month,”he says. “The business is profitable and operates both economy and premium [business-class] services on up to five daily return flights on the Joburg to Cape Town route.”

One of the drivers of Lift’s success has been the introduction of flexibility, allowing customers to change or cancel their flight at no cost. Then, in October, the low-cost airline launched a business-class offering.Lift is also the first airline partner of the Pick n Pay Smart Shopper loyalty programme, and has introduced other innovations, like allowing small dogs to fly in the cabin with their hu m a n s .

First Lift, now Takatso and SAA —all in the space of a year. Just how did this come about?

As Novick tells it, during the hard lockdown last year —before Lift was conceptualised —he reached out to the department of public enterprises (DPE) to offer guidance and input on the future of the then grounded SAA. “We had some good discussions with the DPE’s advisory team, but nothing really came of it.”

Then, around April this year, he got a call from the DPE about selling a controlling stake in the carrier. At the same time, he happened to meet Mahloele, CEO of Harith — a big shareholder in Lanseria Airport.

Given Harith’s interest in SAA, “it was obvious we should combine our efforts and that led to the discussions and the negotiations, culminating in a memorandum of understanding with the DPE”, he says.

For Novick, the SAA proposition is twofold. There’s the commercial value that would come out of making a success of the carrier. But there’s a personal motivation, too. “We need to start believing that this country can succeed,”he says. “That is very appealing to the patriot in me.” x