Huge challenges remain for SAA and southern Africa's airlines
If Southern Africa is a rising star of the global economy, the same
might not yet be said for its airlines. In the past decade, growing
prosperity has led to the emergence of a middle class keen to fly, but
the largely state-owned airline sector is still beset by creaking
infrastructure, ageing fleets, protectionism, inefficiency and (in parts
of the region) a worrying reputation for patchy safety oversight.
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Billypix
SAA chief executive Siza Mzimela is determined to steer a turnaround at the airline
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South
Africa has by far the biggest and most developed aviation market in the
region, with a number of independent airlines and the only network
carrier in South African Airlines. However, even the Star Alliance
member is facing pressure in the face of rising fuel costs, a weak rand
and increased competition on its long-haul routes into Africa from
Gulf-based airlines. After two years of profitability, it will post a
loss this financial year.
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Elsewhere,
the owner of South Africa's 1time Airline, which operates a domestic
and regional network with 10 Boeing MD-80s, has filed for creditor
protection as it attempts to reduce its debt. And in the wider region,
Air Zimbabwe suspended most of its services earlier this year and
appears near collapse.
Chris Zweigenthal, chief executive of the
Airlines Association of Southern Africa - which represents 17 of the
flag carriers and domestic airlines in the Southern African Development
Community area - admits that, while long-term prospects for the region's
airlines are strong, there remain many obstacles to growth. "Each
country wanting to have its own airline is a challenge for
sustainability, as many of them don't have the volumes of business," he
says. "Dollar costs make for a high cost structure and landing fees,
tourism taxes and security charges levied by each state all add to the
cost pressures." Fifth freedoms - which allow airlines to carry
passengers between two foreign countries - are also rare, he notes.
On
the plus side, strengthening economies and growing numbers of tourists,
investors and specialists coming into the region will push traffic up
from a low base, he says. The African airline network is still
concentrated around a few network carriers and hubs in Johannesburg,
Nairobi, Addis Ababa and Lagos - often making it necessary for a round
trip of thousands of miles to travel between neighbouring capitals.
However, "some city pairs are beginning to appear", says Zweigenthal.
With
most of the airline market focused on South Africa, the country's
recent economic troubles have hit the sector. Double-figure growth in
traffic "hit a huge dip" in 2009, he says. "We are going through a tough
time in 2012 with the problems in the eurozone, but we are expecting 3%
growth in traffic in 2013 and 2014. Zimbabwe will recover. Botswana is
strong. Angola and Mozambique are starting to blossom thanks to oil and
gas," he says.
SAA chief executive Siza Mzimela is determined to
steer a turnaround at the airline, but says the fundamentals of SAA are
strong and this year's financial loss will be almost entirely down to
the rise in fuel costs. The state-owned airline is going through an
efficiency drive, trimming costs and increasing utilisation of its 24
long-haul Airbus A330 and A340 widebodies by deploying them on African
routes.
SAA is also focusing more on Africa, says Mzimela. The
airline flies to 26 destinations on the continent but plans to open a
hub in West Africa - possibly Ghana - to offer more east-west city
pairs. "We want an even stronger presence on the continent, driving
intra-African routes," she says. A switch from some traditional markets,
such as the UK, to Asia and South America is also on the cards.
While
SAA has dropped its largely leisure-driven London to Cape Town route,
it has launched services to Beijing and increased frequencies to Asia
and Latin America. Mzimela wants to position Johannesburg as a
convenient hub for travellers going between South America and parts of
Asia. "On a smaller scale we are doing what the Middle Eastern airlines
are doing in creating a global hub," she says.
SAA intends to
increase its long-haul fleet in the next five years to 30 aircraft, with
a decision on types by the end of the year. The airline has been
all-Airbus on widebodies since retiring its last Boeing 747-400s in
2010, with a mix of A330s and A340s - although its 17 A340s are likely
to be replaced. But while its 13 Boeing 737-800s are also being phased
out to leave it with an all-Airbus short-haul fleet too, Mzimela says
SAA has "no intention to move out of Boeing" and the US manufacturer is
still very much in contention when it comes to its future long-haul
fleet.
Source:Flight global International
