South Africa

South African Airways codeshares with Etihad and Jet have mutual advantages for all - except Star

South African Airways has become the latest carrier to join the embrace of the Gulf carriers, signing a codeshare agreement with Etihad which adds 22 new codeshare connections between Africa and the Middle East and follows another important codeshare agreement with India’s Jet Airways. The agreements mark a shift for cash-strapped SAA towards recognition that as an end-of-line carrier it must develop a more virtual long-haul network. Such partnerships are part of SAA’s long term turnaround strategy and allow the carrier to extend its network without the need to commit capital to expensive long-haul aircraft.

SAA acting CEO Nico Bezuidenthout said the codeshare agreements would grow the carrier’s revenue, with initial expectations that the Etihad partnership would add about ZAR100 million (USD11 million) a year to revenue.

Meanwhile Etihad will increase its already comprehensive African coverage with the addition of SAA which improves access to the continent’s biggest economy.

Air Mauritius is on the road to recovery with an Asia-Africa focused network

Air Mauritius is well on the road to recovery, a year into a five-year plan that aims to implement a new business model that restructures its operations to become less dependent on traditional, but flagging, European markets and instead turn the airline’s focus to the growth markets around the Indian Ocean Rim and Asia.

A seven step recovery plan launched in Feb-2012 as profits crumbled into losses saw Air Mauritius undertake a major network consolidation which involved withdrawing its services to Germany, Italy and Switzerland as well as service reductions to China, Australia and Africa. But, with its network brought back into balance, and profitability restored, Air Mauritius has resumed a growth path with plans to launch a direct service to Beijing and reinstating some suspended routes and capacity in key markets.

South African Airways' future hinges on a new strategic plan and CEO

South African Airlines will spell out its future in a strategic plan to be presented to the South African Government in early Apr-2013. But history suggests that implementation of a new strategy is far from assured at the carrier which suffers from extensive government meddling.

A new CEO is also expected to be appointed by the end of Mar-2013, replacing Siza Mzimela who resigned, along with several top executives in Oct-2012 in the wake of a mass board resignation the previous month, citing a “breakdown in the relationship with the shareholder”, testifying to the deep divisions between management.

Details are emerging of what led to those events, with media reports suggesting a decision by Minister of Public Enterprises, Malusi Gigaba, to block a ZAR10 billion (USD1.08 billion) decision to purchase a fleet of A350 aircraft to replace the carrier’s A340-600s was at the centre of the falling out between the board and management.

Meanwhile SAA survives on the basis of a ZAR5 billion (USD540 million) government guarantee granted on 02-Oct-2012 for a two year period effective 01-Sep-2012. The guarantee is intended to enable SAA to borrow on the financial markets and remain solvent.

fastjet pushes ahead with African expansion in 2013, but faces protectionist hurdles

fastjet is pushing ahead with expansion plans to create a pan-African low-cost carrier network, adding two more routes to its Tanzania domestic network in Mar-2013, applying to operate its Fly540 between Dar es Salaam and Johannesburg and continuing to negotiate a deal to buy South African LCC 1time from its liquidators.

London Stock Exchange-listed fastjet will launch daily services to Kilimanjaro to Zanzibar and Mwanza on 18-Mar-2013, increasing its network by 50%. The carrier launched in Nov-2012 with two routes from Dar es Salaam to Mwanza and Kilimanjaro.  

fastjet acquired the Fly540 aviation business of British-based African-focused investment firm Lonrho in Jun-2012, including its operations in Kenya, Tanzania, Angola and Ghana. The Fly540 operation will be progressively rebranded as fastjet and adopt its hybrid LCC model. The carrier has a licensing and consulting agreement with easyJet founder Stelios Haji-Ioannou’s easyGroup, which also holds a 5% stake in the company

The carrier is, however, dealing with a raft of claims relating to the troubled takeover of Five Forty Aviation operations ranging from outstanding debts, including unpaid aircraft leases, airport fees, bank guarantees and taxes.

South African Airways hits a new low with the suspension of acting CEO Vuyisile Kona

Nearly four months after the mass resignation of the South African Airlines board over unwelcome government interference, followed soon after by the departure of its CEO and several senior executives, the carrier has plunged to new lows with the suspension of its acting CEO.

Vuyisile Kona was suspended from his job on 11-Feb-2013 while “certain allegations that have come to the attention of the board” are investigated.

CEO of SAA LCC subsidiary Mango, Nico Bezuidenhout, has taken over as interim CEO, the third head of the company since 2009. He will now lead the committee developing the strategic plan that is now due by the end of Mar-2013.

Fastjet secures Nairobi base, but expansion in East and South Africa may be on hold

Fastjet has secured its entry into the Kenyan market and its first expansion outside Tanzania and access to the key Nairobi hub by throwing a lifeline to collapsed local carrier Jetlink Express.

The two carriers signed a memorandum of understanding (MOU) on 28-Jan-2013 to create a joint venture allowing fastjet to launch its brand in Kenya in the next few months.

Fastjet launched two domestic routes from Dar es Salaam in Tanzania in Nov-2012 with A319 aircraft, rebranding and refleeting its newly acquired Fly540 operation in the country. The carrier also owns the Fly540 regional operations in Angola and Ghana.

The bigger Kenyan market will provide a strong launch pad for further Eastern African expansion, including the development of links with international carriers which are already being explored.