Viva la mini price-war

Perhaps Kulula’s CEO was right when he said that Mango would become rancid (he used the Afrikaans word "vrot"). Try as I may, I have been unable to access the website of South Africa’s newest entrant into the low-cost airline segment. Thankfully, Mango’s call centre (+27 (0) 8611-MANGO) didn’t play me any music, utilising instead the harmonious pulse of an engaged tone.

I did, however, manage to have a look at the website last night - in ‘Matrix-style-slow-motion’ - and was even able to book two return tickets between Johannesburg and Durban at a more than comfortable R338 (about $45) each. I did feel a little betrayed given that just two weeks ago I paid almost double this for the same flight on SAA, but there are enough articles about the ‘dubious’ link between Mango and SAA. I’m not really interested in whether this is fair or how much the tax-payer is supposedly subsidising Mango through state-owned SAA because, if true, this is one of those rare opportunities which may see me benefit from my taxes.

What I am interested in is that it seems the South African low-cost airline sector, which Kulula likes to remind us is already 5 years old, has graduated into the ‘first world’. We’re not used to price-wars in South Africa and although analysts are saying Mango’s prices are unsustainable, Kulula has already started undercutting some of Mango's introductory offers, albeit by only R2 ($0.25).

First world not in terms of quality - the umpteen grammar mistakes on www.flymango.com probably won’t cause planes to fall out the sky - but in terms of ballooning advertising budgets, which are used to prop-up, given that this is a marketing ploy, unsuitable ticket prices. (That is if we believe those who say that cut-throat prices aren’t sustainable and looking at some of the prices of the pioneers of the low-cost industry, these prices aren’t nearly as cut-throat as some may want us to believe.)

While price-wars can result in some players going out of business, which can create a less competitive environment, they can also force enterprises to rethink their profit margins and revenue streams, find ways to increase productivity, and become more efficient. Those who can’t find ways to compete should be left behind as they’re charging their customers too much and perhaps that is what SAA realised when they decided they needed to launch their own low-cost airline in response to the threat from low-cost carriers, which it says can sustainability offer prices 20 percent lower than its rivals. So I say, viva la mini price-war and perhaps, if this war leaves a stink, it’ll encourage some other partly-state-owned enterprises, one in particular, to reconsider the sustainability of their super-profits.