- CAPA Analysis
- Schedule Analysis
- Low Cost Carriers
- Economics & Trade
- Print Summary
South Africa has three major international airports in Johannesburg, Cape Town and Durban. All continents have direct flights to Johannesburg, the capital of South Africa, which also serves as the major international gateway to the rest of the African continent. The aviation industry in South Africa is undergoing rapid expansion on the growth of business and leisure market travel which has spurred a significant infrastructure development program at the country’s major airports. The Airports Company South Africa is the operator of 10 of the country’s busiest airports including the three main international airports and handles over 18 million departing passengers annually and 200,000 aircraft landings.
Airports in South Africa
1,499 total articles
SA Express: Airlines, governments need consistent management to better compete with foreign airlines
40 total articles
Emirates Airline carried 15% additional passengers in the first half of 2013/2014 compared to a year ago. The growth in volume has been led by Europe and the Middle East while Australia has seen the highest percentage growth. Saudi Arabia, the UK and Thailand have received some of the largest capacity injections. India and the UK remain Emirates' two largest markets based on seat capacity, but Saudi Arabia has overtaken Germany as the third-largest while Australia overtook the US, and Thailand overtook South Africa.
In terms of the rate of growth, the standouts were Portugal, Vietnam and Zambia – all with 100%-plus growth, albeit from a low base. But Emirates saw 40-50% growth in seven other countries, including Australia, Saudi Arabia and France.
Overall, 15% passenger growth and 16% capacity growth for an airline the size of Emirates is a considerable achievement. Full year capacity growth, however, is likely to be closer to 12%, making 2013/2014 one of the slower years at Emirates in recent times. Asia will be the largest market for growth, followed by Europe and the Middle East.
South African Airways (SAA) faces a pressing need to start moving forward with its new strategic plan, which includes pursuing expansion within Africa and cutting unprofitable long-haul destinations such as Buenos Aires. The new business plan, which was initially completed in Apr-2013, represents a critical step in finally fixing the long floundering carrier. But SAA has not yet implemented any major components of the plan although most of the pieces have secured the required layers of approval.
Under the new strategic plan, SAA will increase operations within Africa while cutting unprofitable long-haul routes and potentially hand more domestic routes to low-cost subsidiary Mango. SAA could also start operating alongside new partner Etihad on the Johannesburg-Abu Dhabi route, using the capacity freed up from axing highly unprofitable long-haul services, as it increases its reliance on partnerships to provide a stronger network beyond Africa.
The continued delays in implementing the long-term turnaround plan are costly as SAA continues to bleed. It needs to move quickly to build on its position in the intra-Africa market, with more flights from South Africa and a possible new base in West Africa, as competition within Africa is starting to intensify. SAA also needs to finally move forward in acquiring new widebody aircraft, which were identified in the plan as essential for a sustainable long-haul operation.
Low-cost carriers are starting to slowly – very slowly – penetrate Africa’s regional international market. LCCs currently only account for about 0.2% of international capacity within Africa, making it one of the last frontiers for the global LCC sector.
Tanzania-based LCC start-up fastjet finally launched services from Dar es Salaam to Johannesburg on 18-Oct-2013, completing a tedious delay-ridden process. It is the first of several planned international routes for fastjet from Tanzania and other potential new bases throughout Africa.
Incredibly there are currently only five international routes within Africa operated by LCCs. The opportunities for LCCs to penetrate the intra-Africa market are huge but so are the challenges.
fastjet has reported a USD42 million net loss for the six months to 30-Jun-2013, but its directors remain upbeat about the fledgling African LCC’s prospects, with its Tanzanian domestic operations exceeding expectations and making a profit on an underlying route basis. But the directors acknowledge in the unaudited accounts that the carrier will need to raise further funds in the future “which represents a material uncertainty over going concern”.
fastjet’s ambition to establish Africa's first pan-African low-cost carrier is continuing to encounter strong headwinds. On its own admission, the Tanzanian market is too small to sustain the company and international expansion is critical to its longer term survival.
But the first international route from Dar es Salaam to Johannesburg has, perhaps predictably, run foul of South Africa’s bureaucrats forcing the eleventh hour postponement of the route launch by about two weeks to the middle of Oct-2013. fastjet will compete against South African Airways (SAA) as the only other operator on the route and has promised to reduce fares by 60%. fastjet is taking online bookings for flights departing from 18-Oct-2013.
FlySafair’s ambitions to launch services on South Africa’s biggest domestic route between Johannesburg and Cape Town from 17-Oct-2013 have been dealt a severe blow by a High Court interdict issued on 8-Oct-2013 restraining FlySafair from operating scheduled domestic passenger services pending a review of South Africa’s Air Service Licensing Council’s (ASLC) decision to grant the carrier a licence to operate.
The interim injunction has stalled, temporarily at least, a looming battle in the South African domestic market into which FlySafair and fellow LCC start-up SkyWise are planning to launch, ending a brief period where the South African Airways and Comair groups enjoyed a duopoly following the demise of LCC 1time in Nov-2012.
Comair, which operates as LCC Kulula, and the full service British Airways franchise combined forces with would-be competitor SkyWise to block FlySafair’s launch by challenging the ASLC’s decision. Comair and SkyWise claim that FlySafair does not meet South Africa’s maximum 25% foreign ownership limit to operate domestic services and that one of its directors is not a resident of South Africa.
Africa’s unenviable record of government interference in the continent’s aviation system is demonstrated by no less than nine carriers currently surviving at the behest of their respective governments through a variety of financial support mechanisms collectively worth about USD2.5 billion.
In most cases this support serves only to distort any prospect of a level playing field, preventing privately owned carriers from competing effectively. Nigeria is even taking this a stage further as state support of private carriers is being undermined by a desire to relaunch a government owned national flag carrier. In other cases, such as Uganda, new state-owned airlines are planned to compete with successful privately owned operators in markets that often lack sufficient demand to support them both. Whatever the motives, and many of them are questionable at best, the outcome is sadly predictable.
In most cases Africa’s national carriers suffer at the hands of government mismanagement and interference, key among them is the continent’s largest airline, South African Airways (SAA) which is the subject of the biggest turnaround plan currently under way. This could offer a vital precedent if it succeeds - and if it doesn't.