Flag carrying airline, South African Airways, seem to be going out with something of a whimper. Slowly scaling back operations, dropping routes and generally scrabbling to make up a shortfall has left the door wide open for European carriers to step in and snag a place in the market. A market which should be, for all intents and purposes, a very long way from home.
This week we’ve heard about British Airways expanding South African aviation activities, as well as a number of other European airlines. What’s happening with SAA, and what is the national carrier for the most powerful country in Africa going to do about it?
British Airways’ South African takeover
Just this week, British Airways have increased capacity on their main South Africa route. Adding to its two A380s running the London to Johannesburg route, BA have introduced four Boeing 787-8 services, making a total of 18 flights per week.
As well as this, the carrier has added a new destination to their South African aviation schedule. The coastal city of Durban will be welcoming BA flights three times per week from Heathrow, leading us to wonder what exactly South African Airways are doing?
Head of BA’s sales for the Middle East, Africa and Central Asia, Paolo De Renzis, said of the expansion:
“Africa has been a real success story for British Airways and there has been significant expansion onto our African route network and capacity in the past 18 months”
Yep. We see that. But how?
BA aren’t just treading on South African Airlines’ toes on international routes either. Their partnership with Comair has seen them corner the market for domestic routes too, including the highly lucrative Cape Town – Johannesburg service.
Here comes Lufthansa
It’s not just BA who are wedging themselves firmly into the South African aviation market either. Lufthansa group’s airlines are adding capacity hand over fist, with additional routes laid on from Frankfurt, Munich, Vienna and Zurich to Cape Town during the peak warm weather season.
The Munich to Cape Town service will include the A350-900 from December, increasing from three to five times per week and replacing the current A340-600. The Frankfurt service will also increase from three to five runs a week, still using an A340-300.
As well as Lufthansa themselves, their other airlines Edelweiss Air and Austrian Airlines will be operating more frequent South Africa services. These include new twice a week route from Vienna to Cape Town using a 777-200R and a Zurich to Cape Town A330/A340 service, increasing frequency from the current three times a week to a new four times a week service.
Daily flights from Frankfurt and Zurich to Johannesburg are also being scheduled.
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Other airlines are also out-competing SAA for international flights, including Emirates who are cornering the market for routes to and from the Middle East.
What are South African Airways doing?
The demise of South African Airways began in 2012, when the airline, to the astonishment of the aviation community, cancelled their flights between Cape Town and London. Their reasoning was that the route was ‘unprofitable’. This left BA to fill the void, which they did with gusto, enjoying plenty of success and profits ever since.
On the London to Johannesburg run, South Africa have also pared back their provision. In February, the carrier halved their flight frequency to just one overnight flight per week, leaving the door wide open for others to fill the gap.
The basic problem, as is often the case with state owned airlines, is lack of money. SAA posted a new loss of $457m in March this year, more than three times the loss of the previous year. However, they aren’t giving up without a fight.
CEO Vuyani Jarana has put the wheels in motion for a plan to return SAA to their former glory by 2021. He has told the press that, although there will be further losses before things get better, that he fully believes they can break even or even become profitable by the end of the 2021 financial year.
In the meantime, the carrier is set to receive various government bailouts to the tune of ZAR 13bn ($890m) over the next two years, although with predicted further losses, the cost to the taxpayer could be far greater.
Speculation as to why South African Airways has been failing is pretty clear. Having a government (who with the best will in the world are not experts on aviation) actually running an airline is never a good idea. Other airlines from poorer countries (e.g. Ethiopian) are thriving, because although they are state owned, the senior management is left to get on with what they do best.
A perfect example is when SAA submitted a letter of intent for the purchase of a number of A350’s. The South African government found out and made them cancel it, leaving them right at the back of the queue for new, modern airliners.
If SAA are going to survive what’s becoming something of a carrier cull just now, it’s time for the government to step back and leave politics where they belong.