African Journal of Hospitality, Tourism and Leisure (Jan 2014)
The demise of 1Time Airline and the reaction of various interest groups
Abstract
Following the first racially inclusive democratic elections in 1994, the government efforts to eliminate poverty have been frustrated by the continued shedding of jobs from the formal economy. The tourism industry is one industry that has grown in leaps and bound since the watershed moment in 1994. The tourism industry has developed to become a priority sector in every government policy related to economic growth and sector strategies since 1994. The fact that the tourism industry is labour intensive, employs a multiplicity of skills, allows the entry of locally owned small and medium enterprises and the tourism industry is an export product that earns foreign exchange par excellent. The dramatic rise of tourism as an economic sector has been also associated with the aviation as a dominant transportation sector. The pioneering LCC in South Africa, kulula.com increased aviation traffic, lower fares and increased completion, beneficial to business and society. 1Time was the second airline, a LCC to file for liquidation in 2012 after Velvet Sky, and this raised questions about the sustainability of the LCC model for airlines. The grounding of planes by 1Time and the application for liquidation were the last option for 1Time as business rescue was initiated due to high debt levels and the failure to conclude the sale of the airline in the eleventh hour. The case study presents the demise of 1Time, challenges facing aviation in general and the LCC aviation model specifically and lessons for potential aviation entrants. This article is based on based on a descriptive literature study (desk research) of the aviation industry in South Africa, to add to the paucity of academic literature on the demise of low cost carriers. This article seeks to trace, identify the causes of low cost carrier failure, and suggest suggestions on how low cost carriers can be better managed and how the business environment for low cost carriers can be improved. The article would create a body of knowledge that could be used for analysis in planning empirical research.
