Online success drives kulula

Johannesburg, 22 Mar 2007

SA's largest online retailer is reconsidering its position as an airline. Kulula.com believes its online audience is its biggest asset.

The low-cost airline launched in August 2001 and is a division of JSE-listed Comair.

Speaking at Microsoft's People Ready business summit on Tuesday, Comair's executive manager of IT and distribution, Carl Scholtz, explained kulula's online presence had a significant impact on its business model.

"Today we are SA's largest online retailer. About 80% of our two million passengers book online. For those who doubt public willingness to pay online, these people predominantly use online credit card payment facilities to pay for their bookings," he said.

"Our online success has led us to ask ourselves whether we are an airline or online business."

Facing the future

Comair is pleased with the financial success of its low-cost airline. However, it recognises there are challenges that need to be addressed in sustaining this success, said Scholtz.

"We have several challenges. For instance, there are five local airlines of which two are government-owned. It's not easy; we are not operating on a level playing field. We have to address changing airline business models, while meeting increasing customer expectations. The fact is change is happening faster than ever before," he explained.

However, Scholtz believes the company has a few aces up its sleeve.

"When you look at Google's purchase of YouTube, you begin to see the value of online audiences. Google essentially bought YouTube's audience. We are capitalising on our online strength and growing our offerings. We are essentially becoming a travel company, with the airline aspect of the business being supplementary," he said.

Since its launch, kulula has added to its travel offerings through partnerships with complementary service providers. Customers can book accommodation, car hire, taxis and adventure packages through its site. A partnership with Discovery Health resulted in the medical aid's Vitality members receiving discounts on bookings.

Kulula last year introduced a credit card offering, which Scholtz says is the company's first step towards a loyalty scheme.

Underpinned by IT

Technology has a history of providing kulula with added advantages, said Scholtz.

"Two years ago, kulula had a system change. The result was Internet bookings increasing from 65% to 80%; improved Web performance and so reduced calls to our call centre; shorter deployment lifecycles; better financial control; and improved transaction accuracy. These were big impacts for us," he explained.

Further enhancements will be introduced to kulula's Web site.

"In line with our evolving business strategy, we continue to look at technology to see how we can support our operations, understand our business better and empower our people to do what they need to do."