๐Ÿ”’ Cemair founder Miles vd Molen: Boxing on, despite State-sponsored abuse

Former pilot turned airline founder Miles van der Molen personifies the courage and persistence of a blue blooded entrepreneur. He’s needed every ounce of it to keep the 23-aircraft Cemair afloat after predatory pricing by the State’s heavily subsidised SA Express and what the court described as an “irrational” grounding order by SA’s Civil Aviation Authority. On this week’s episode of Rational Radio, Van der Molen explains how he’s still standing despite overwhelming odds. Inspirational. – Alec Hogg

On Rational Radio today as promised, our super entrepreneur – I do like talking to entrepreneurs, is Miles vd Molen who’s the chief executive of Cemair. He’s had more than his fair share of a lifetime of challenges. Before we go into all of those challenges, let’s start with Cemair itself. I’ve pictures of you on Facebook. Is that a captain’s regalia or insignia on your shoulders?

Yes I do fly. I don’t fly that much anymore because I’m operating the airline. It obviously was my primary duty and took most of my time, but my background is as a pilot and I do still enjoy doing it from time to time.

So you’re a pilot and then you decided to start an airline.

Pretty much. There’s a couple of steps in between. From being a pilot, I ended up getting involved on the business side, the operations side of the aircraft, particularly where infrastructure is lighter, where opportunities for small to mid-size aircraft could play a role. We ended up with equipment that was appropriate to use in a local market and we launched a scheduled service around about six or seven years ago.

Then disaster struck recently with the decision by the civil aviation authority to shut you down, or to ground you. Just explain the background to that and how they could do something of that nature.

It came in a couple of waves. It started as we got into the 50 to 100 seating class aircraft. We found that the time to get any documentation processed became more and more extended. In February last year we had a short grounding and we chose to take the approach to do whatever they needed us to do to resolve it. However, it became clear that this wasn’t going be the end of it. We had a further grounding in December for a new cause that was overturned by the court on an interdict basis, then in early January we had yet another grounding, on yet another cause, which was subsequently overturned by the Department of Transport civilisation appeal committee.

And that doesn’t really help you because although it’s been overturned, it hasn’t been that easy to get back in the air.

It hasn’t. The judgment came out on in April and we still aren’t operational. The reason being, during the lengthy appeal process, the certificate expired and now we are trying to get the renewal. The process we’re finding rather frustrating. There’s no actual issue that anybody can point out, they’re asking for us to provide further documentation and three weeks later you get a response.

Miles, how many aircraft does Cemair own?

We have a mixture of our own fleet and a leased fleet. I think we’re at 23 by the time of the grounding.

23 on the ground. But what happens now when you can’t fly?

Some of those aircraft we moved to foreign registers. We have a large portion of our income intact. The largest portion of our income was from foreign operations. At the time of the grounding, we were probably in eight or nine different African countries for various organisations including the United Nations. A lot of people were inconvenienced by the grounding and have no connection at all to South Africa. In many cases the airplanes were stranded. It took us some months in order to be able to move them to an airport to safety in some places.

So in South Africa you decided to fly to the smaller centres – Plettenberg Bay, Margate etc.. Also flying to those centres, or many of them is SA Express. We had a report this week from the Free Market Foundation which researched SA Express and discovered that every seat was costing the taxpayer almost R4,000. Now these are huge numbers and given that they were competing directly with you, you must have some pretty strong thoughts on what’s going on there.

Absolutely. Our initial route that competed directly against SA Express was Bloemfontein about three years ago and their approach when a new entrant came into the market was shocking.

In what way?

Well, we immediately entered into a price war. Literally the day we started, they dropped their fares by I would guess 40%.

But surely that’s predatory pricing given that they’ve been subsidised by government by about R1.5bn in the past year, we believe.

Absolutely. If you go back further in their history, they haven’t produced financials since 2016. The full set of financials before that contain a material qualification and even so, showed a loss over the entire period. It’s an entity that has contributed to the fiscus for a long time. One of the reasons why we started looking at the routes operated by SA Express is that their operational record was weak. They had on time performance issues, customer satisfaction issues and therefore they were the logical airline to compete against. We could demonstrate and offer a service alternative that would add value to customers.

Miles van der Molen, a man who is fighting a good fight as you can hear against almost overwhelming odds. At least the more people get to understand what is going on in the world of aviation and with SA Express which is a government entity, the more we might believe that it is time that governments steps away from the private sector.

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