Ex-1Time founders face objection from launching another airline

Introduction and Background

1.      Messrs Glenn Orsmond, Gavin Harrison, Rodney James and Sven Petersen founded 1time Airline in February 2004. Ticket sales officially opened on 22 January 2004 through the Internet, the airline’s service centre, as well as through ticket sales counters at Johannesburg and Cape Town International Airports.

2.      Since being founded in February 2004, 1time Airline achieved many notable milestones, and became the fastest growing low cost airline in the South African domestic air travel market. The core values of 1time Airline have always been its ability to guarantee its customers low airfares on an unlimited basis, with no additional costs, hidden conditions and restrictions.

3.      1time’s business model is one that makes it affordable and accessible for all South Africans to fly. This was made possible because 1time utilises a low cost operating model, which is based on keeping costs low enabling the cost saving to be passed onto to the traveling public. It is because of this commitment to keeping costs at a minimum that 1time carried over 2 million passengers per annum and made a respectable turn over of R1.4 billion per annum.

4.      1time holdings is a diversified aviation holding group for its subsidiaries 1time Airline, and the airlines maintenance arm, Jetworx.

5.      1time Airline directly employs 569 staff and indirectly creates additional employment opportunities for the travel and tourism community. Due to the rapid growth of the airline, fairer competition in the aviation sector was fast encouraged, which translated into reasonably priced air travel for all South Africans.

6.      The majority of the staff complement for this national business was at the various airports (OR Tambo International, King Shaka, Cape Town International, George Airport, East London Airport, Port Elizabeth Airport, Zanzibar Airport and Victoria Falls Airport), or as part of a large group of the flight attendants, that serviced the customers onboard our aircraft.

7.      Jetworx is 1time Airline’s official maintenance partner who is responsible for all maintenance required, ensuring that the airlines entire McDonnell Douglas (MD) fleet is always in a serviceable and airworthy condition. Jetworx currently employs just over 400 highly qualified technical staff.

8.      1time continued to succeed against the odds for eight years, but was met with the unfortunate reality of rising operating costs that cripples many private businesses in this country. 1time was obligated to perform under strained conditions, which were compounded by the high level of debt amassed by the airline. The airline had to also deal with the soaring costs of fuel and aircraft that weren’t fuel efficient, as well as the general down turn in the economy.

The odds of survival continued to grow against the organisation, and therefore, the board of directors in conjunction with management filed for Business Rescue, in terms of chapter 6 of the Company’s Act, on the 23rd of August 2012. Despite Fast Jet’s (a UK based low cost airline) interest to invest in 1time Airline, two and a half months into the Business Rescue process, it became apparent that, the Business Rescue process was not going to assist with returning the business to profitability. As a result on the 2nd of November 2012, 1time Airline suspended its services with the intention of filing for provisional liquidation, which took place on the 6th of November 2012.

9.      The North Gauteng High Court subsequently issued a provisional liquidation order on Wednesday, 7 November 2012, and decreed that that the return date for the order would be 11 December 2012, at which time the court will rule on the final closure of the business.

10.    On the same date, the Master of the High Court appointed Aviwe Ndyamara as the provisional liquidator. Ndyamara is currently investigating the affairs of the company and has commenced his statutory obligations as provisional liquidator. These obligations involve engaging with all stakeholders in interrogating various options of investment into 1time Airline Pty (Ltd) Registration Number 2003/020975/07, with the ultimate objective of reviving the company and saving jobs.

11.    1time’s colossal debt was amassed while the airline was in the hands of the original founders, whom all conveniently saw fit to sell off their vested interest in the business and part ways with the company. Not only were they responsible for lack of job security, but they also seen as the catalyst for the events that lead to the provisional liquidation of 1time Airline as discussed above.

Impact of closure of 1time Airline (Pty) Ltd

12.    The effect of the withdrawal of 1time from that industry was felt immediately, impacting customers nationwide, as airfares of all the competitor carriers rocketed to capitalise on the “gap” created in the market. Competition in the industry is now imbalanced.

13.    The consumers who already have to tighten their purse strings will feel the pinch even more, as the festive season approaches (a peak period in air travel) the man on the street will be forced to part with more money to fly. This means that the dream of making air travel accessible to ALL South Africans will cease to exist. The public support for 1time has been overwhelming, with people not taking the demise of another private airline lying down.

14.    Because of the immediate nature of the suspension, 1time was forced to cease operations immediately, which meant that 569 people were effectively out of work. The resulting impact is a step backwards in the government’s mandate to create employment as there are now 569 new job seekers in the already over saturated job market. These ex-employees have to now seek other means for livelihood, so that they can support themselves and their families.

15.    There are currently an undetermined number of indirect jobs, linked to the services provided by 1time in the aviation sector, that are also now threatened or already lost.

Conclusion

16.    The misconduct of the previous founders of 1time Airline, Messrs Glenn Orsmond, Rodney James and Michael Kaminski cannot be rewarded with licence to operator another airline, as it will just be an opportunity to ruin listed company. This in turn, will put more employees at risk, as well as the tens of thousands of people who would invest in their company as it would be listed on the stock exchange.

17.    The organisation was not run with prudence or with a regard for the lives of the people who depended on this company as a means of livelihood. A lot of these people were primary breadwinners in their family units; the vicious cycle needs to stop somewhere, as the original founders showed no business responsibility when they sold a defunct company.

18.    We request that the parties that founded 1time Airline not be granted a license as they have failed dismally to successfully run 1time Airline and have displayed a blatant disregard for the public who trusted in their product, as well as the employees who were all very heavily invested in the airline.

19.    We firmly believe that granting these individuals a license would not be in public interest as their questionable business ethics and lack of credibility has been made abundantly clear, as with the governance of 1time Airline. Should they be granted the opportunity to re-enter the market, it will be an opportunity for them to enrich themselves, and exit the market again to serve their own personal agendas.

20.    We believe that the former founders of 1time will repeat history, as they have demonstrated a lack of integrity with regards to the manner that the R49 million, provided by the IDC as funding, was misallocated, because they deviated from the signed agreement which stipulated how the funds were to be utilised to recapitalise 1time Airline.

21.    As a result of all the reasons above, we, the former employees of 1time Airline, believe that this company would not be in its current situation had they utilised the funds as was agreed.

22.    In conclusion, we request that the Department of Transport consider all the information provided above, and decline to give Messrs Glenn Orsmond, Rodney James, Sven Peterson and Micheal Kaminski, or any of their affiliates, permission to start up another airline.

Author: Muzi Mohale

Hi there, am your host and I blog about the tourism industry in South Africa. You're also welcome to contribute your expert content on matters affecting the industry. You can reach me on muzi[at]tourismedition.com

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