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South Africa: Tourism Reaps Benefit of Open Skies - article from http://allafrica.com

Business Day (Johannesburg)

23 June 2008
Posted to the web 23 June 2008

SA's decision to open its skies to increased competition from foreign airlines in the run-up to 2010 is finally beginning to pay dividends, says SA Tourism CEO Moeketsi Mosola.

The recently concluded UK-SA agreement on air transport, which added 28 new flights a week between the two countries over the next three years, was evidence of this, Mosola said last week.

SA Tourism and other leaders in the tourism sector have long called for more flights to the country to meet burgeoning demand but the government has been slow to respond.

"I have been involved in these discussions for the past seven years as CEO of SA Tourism and it is the first time that I am completely satisfied with the agreement. There is no longer this eye for an eye approach to talks and this agreement offers the airlines much more flexibility in how the frequencies (flights) are used," Mosola said.

Under the agreement, airlines in both the UK and SA have been given 14 additional flights between the two countries this year, seven next year, and a further seven between London and Durban in 2010.

British Airways was first to take up the flight, adding a third daily flight between London's Heathrow and Johannesburg from April next year. Virgin and South African Airways are still weighing up their options.

Among the changes in this agreement is a clause allowing UK airlines to take up South African flights if South African airlines did not take up their frequencies within a specified time. "That has never been the case in the past," said Mosola. The airlines would now have more choice about what aircraft they used, which airports they used and when they fly. It also allows airlines to add extra capacity in peak season periods.

"The government has become more sophisticated and clever in their negotiations. They are not strictly adhering to the principle of reciprocity but looking at what is needed for the country, particular the tourism sector, to grow."

The government first outlined a more liberalised approach to bilateral negotiations in its airlift strategy document which was approved by the cabinet in 2006. The document presents a five-year plan for the regulation of air transport in support of the tourism sector with the express aim of ensuring that capacity is created (airline frequencies) ahead of demand.

However, that policy has only now begun to translate into positive results.

The transport department said yesterday that discussions regarding added capacity were taking place with other governments. So far the department has negotiated with Qatar, the United Arab Emirates (UAE), the UK, South Korea, Gambia, New Zealand and is in negotiations with Australia.

Further discussions were planned between SA and the Netherlands within the next two months, but SA was also in discussion with India on further liberalising the existing bilateral agreement, the department said.

Talks in December with the UAE resulted in Emirates adding daily flights between Dubai and Cape Town in March.

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Labels: South Africa - Airlines, South Africa Car Rental, South Africa Tourism

Article from http://www.ioltravel.co.za

British Airways says there is no change to their check-in policy, describing an email claiming that customers can no longer use their driving licences when checking in for domestic flights as nonsense.

"Absolutely nothing has changed," says Stuart Cochrane, Comair's executive manager of marketing, sales and communications.

"We'll still happily accept driver's licences as a form of identification for domestic flights."

Valid identity documents and passports are also accepted.

Passengers flying to other countries on regional or international flights will, however, still need to carry a valid passport and any visas that are required.

Cochrane also rubbished rumours that customers would be required to produce an e-ticket receipt at check-in. All that is required is the booking reference number.

The booking reference number, usually a combination of six letters and digits, can also be used to check-in online 24 hours before departure or at one of the remote check-in kiosks at the airport.

Customers can print their boarding passes at the kiosks, allowing them to skip the queues at the check-in counters.

Dedicated fast-bag-drop facilities are also available.

>>>

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Labels: South Africa - Airlines, South Africa Car Hire

By: Olivia Spadavecchia

Low-cost airline 1Time, which plans to list on the Johannesburg Stock Exchange on August 14, expects to raise R30-million through a private placement of 30-million shares, priced at R1 a share, the company said on Monday.

The JSE has approved the listing of 21-million shares under the share code 1TM.

The airline also plans to launch an airfreight business in the next three years, it said.

1Time, whose first flight took place in early 2004 on the Johannesburg-Cape Town route, also operates in aircraft maintenance and in charter businesses.

The company said it sees buoyant conditions ahead, with the aviation industry expected to transport 12,5-million domestic passengers this year, out of a population of about 48-million.

"In addition, the market is poised to benefit strongly from the events such as the 2010 FIFA soccer World Cup," it said.

The company also plans to expand its leisure market and target the corporate market, while considering routes into Africa.

Revenue is forecast to grow from R491,3-million to R621,2-million this year, and to R714,2-million in 2008.

1Time competes in South Africa with fellow no-frills carriers kulula.com, which is operated by JSE-listed Comair, and SAA-linked Mango.

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Labels: South Africa - Airlines

By Ron Derby

JOHANNESBURG (Reuters) - South Africa's second largest low-cost airline, 1time, is set to list on Johannesburg's smaller bourse AltX and capitalise on strong growth in air travel, it said on Monday.

1time said it would list on AltX, operated by the Johannesburg Securities Exchange, on Aug 14 and would offer 30 million ordinary shares at an issue price of 100 cents per ordinary share, raising 30 million rand.

1time said the domestic market had grown by around 14 percent a year over the last three years.

"Notwithstanding the significant growth achieved by low fare airlines, it is estimated that less than 10 percent of South Africans travel by air. This augurs well for the future growth of this market segment," the firm said.

1time's main rivals in the domestic market are Comair -- which is listed on the main bourse with a market capitalisation of 1.2 billion rand -- and government-owned airliner SAA, which has a new low-cost airline Mango.

Last month, Comair said Mango's "unprofitable ticket pricing" had negatively affected industry profits in the fourth quarter to the end of June, and warned it could also impact future results.

1time Marketing Director Rodney James said Mango's impact on 1time had not been as onerous: "We have had steady growth since Mango's launch and are expecting 25 percent growth in passengers this year."

James also said oil prices -- which are at record highs -- have not had a dramatic impact on operations.

"Obviously there has been a small increase in air fares to account for that. But they (prices) are the same as they were more than five years ago," he said.

1time said South Africa's aviation industry was forecast to transport about 12.5 million domestic passengers in 2007.

"The domestic market has grown by approximately 14 percent per annum over the last three years whilst achieving a growth rate of 70 percent over the past five years," 1time said in a statement.

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Labels: South Africa - Airlines

Direct comparisons are tricky but the low-cost sector is set to grow

With 1time, SA's fifth-largest airline in terms of market share, joining a lonely Comair on the JSE, the sector should be more carefully scrutinised.

Though 1time, and Comair's kulula, have similar, comparable, low-cost models which offer cheap flights, together with non passenger add-on businesses, Comair also operates the SA franchise for British Airways on a more traditional airline model.

Direct comparisons between Comair and 1time are therefore complicated, because Comair doesn't disclose profits for its two brands separately.

What is simple is that the market is competitive, with three state-owned airlines (SAA, SA Express and Mango), two privately owned ones (Nationwide and Airlink) and now two listed operators, 1time and Comair. (See market share graph "Airline market share".)

Prospects for the low-cost airline market seem good, which is one of the reasons SAA launched Mango last year. SAA had lost market share to low-cost carriers.

However, margins are small, so pricing has to be supported by high volumes and low costs. Mango's pricing is considered by competitors to be unprofitable. The winner will be the airline that sells the most seats at the lowest possible cost, and makes money at the same time.

A standard benchmark in the low-cost sector is the seat per mile cost. Kulula says its figure is US7,4c, 1time is at 8c and Mango is under 7c. 1time CE Glenn Orsmond says SAA's is 15c which the airline could not confirm or deny.

One of the ways Comair has reduced costs is by acquiring newer aircraft, which are cheaper to maintain and use less fuel.

"While the capital outlay is huge, maintenance costs are far lower," says Comair joint CE Gidon Novick.

By the end of the year, says Novick, Comair will operate only 737s, and its "fuel-inefficient" MD82s will be phased out. 1time, on the other hand, still has an older fleet, mostly of MD82s and MD83s, but they were bought at competitive prices when the airline industry was in a global decline after the September 11 2001 attack in New York.

Another way low-cost airlines can save is by not offering free on-flight food. Orsmond estimates that a standard meal costs around R50/passenger. Instead, 1time sells food and makes R4m/year profit from this service.

An Internet-based sales model also saves costs. Orsmond says 95% of 1time's bookings are made on the Internet, which is cost-effective. "About 20% of other traditional airlines' costs are from distribution," he says.

Both 1time and kulula are using the Internet to boost other areas of their business, such as accommodation and car rentals. "Though their contribution is small at the moment, this could make up half our profits in time," Orsmond says.

1time also has its own maintenance business, which already contributes 38% to its profits. Comair, on the other hand, has recently signed a maintenance contract with SAA. "We don't want those headaches," says Novick.

Novick expects growth opportunities in Africa, though mostly by flying the BA brand, as the Internet is not used as well in African markets as it is here.

The outlook for the airline sector, and particularly for low-cost carriers, is positive, with Comair recently publishing a trading update saying that earnings per share for the year to June 30 are expected to be 20%- 40% higher.

Passenger numbers in the local market have grown by around 14%/year over the past three years, according to the 1time prospectus, which also says the industry expects to transport 12,5m domestic passengers this year. 1time expects a 20% increase in passengers this year.

1time lists on AltX on August 14. It has used the impetus of current market conditions to drum up support for its R30m capital raising exercise.

Though Comair has warned about rising oil prices and unprofitable ticket pricing by Mango, it is known to be cautious, and the market is not expected to fall off in the near future.

1time's downside is its aged fleet, which is accompanied by growing maintenance costs. One market watcher is also suspicious as to the reasons for 1time's listing, saying he believes the owners want to sell out. The five founders' shareholdings will be reduced from almost 16% each to just under 11% after the private placement.

Both airlines have p:e ratios that are within international norms - Comair on 12 and 1time on 10.

According to a Deutsche Bank analysts' report on European airlines published earlier this year, low-cost airlines Air Berlin, easyJet and Ryan Air trade on p:es ranging between 11 and 20, and the report calls the first two a "buy" while raising Ryan Air from "sell" to "hold".

Global risks for the airline sector include the rising oil price and pressure from environmental bodies to reduce carbon dioxide emissions. Locally, rising airport taxes and airport congestion may put people off flying despite lower fares.

Comair will probably outperform 1time over time, mostly because of its newer fleet and more years of combined management expertise.

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Labels: South Africa - Airlines

You wouldn't know it riding back in Seat 23D, but there is a whole other culinary world of airline food being served in first-class and business-class cabins on premium international carriers, where meals are considered an important part of the in-flight experience.

That level of service is expected to get an extra boost soon as airlines make plans to put their new Airbus A380 super-jumbo aircraft into service. The A380 is certified to carry 853 passengers and crew, but the dozen or so top-tier international airlines that have ordered the planes so far all say they'll fly their A380s with around 500 passengers in three-class configurations.

Singapore Airlines, which has ordered 19 of the A380s, will be the first to fly the aircraft commercially this fall, initially between Singapore and Sydney. The airlines buying A380s all have been secretive about cabin designs, but Singapore recently allowed me to sit in on a meeting and A380 menu tasting involving Hermann Freidanck, its manager of in-flight services, and Alfred Portale, owner and executive chef of the Gotham Bar and Grill in New York and one of nine chefs creating meals for Singapore's first-class menus.

Planning fancy in-flight meals requires some skills that may not be learned at the Culinary Institute of America. That's because the taste buds flatten out at 35,000 feet. And, of course, even long-haul airlines aren't equipped with full-service kitchens.

With in-flight meals, "you don't do emulsified sauces or anything that can't be reheated without breaking up," said Portale, who sometimes flies on Singapore just to see how the dishes taste six miles up. "Flight attendants have nothing to do with the cooking, but they do play an important role in the plating, saucing and garnishing."

We trooped downstairs to the kitchen, where a platoon of sous chefs, chefs and cooks prepared dinner on either side of a huge cooking station. We stood at a small work table while a succession of dishes were brought out to audition for the A380.

Offerings included: caviar; seared scallop with caviar and sea urchin; beet salad with mango, fennel and feta; seared black bass with andouille sausage, fingerling potatoes and mussel broth; black bass ceviche with potatoes, avocado and pineapple; spring vegetable custard with fava beans, asparagus tips and spring onions.

Article from http://www.charleston.net/
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Labels: South Africa - Airlines

The Airports Company South Africa has launched an investigation into shrink-wrap plastic used to stop passengers' luggage from being pilfered at OR Tambo, following claims that it is "hazardous and unsafe".

The investigation follows a letter to Acsa from an unnamed pilot who claimed the material used by Equity Air's shrink-wrapping service - a low-density polyethylene or plastic - "seems to be unstable, flammable and highly toxic when on fire and its toxic fumes released when it starts to burn could kill a person".

The pilot urged Acsa to investigate the matter as he believed it could be "allowing a potential time bomb to be transported on aircraft".

This week, Acsa confirmed that it is conducting their own investigation into the wrapping, but it has emerged that airlines using OR Tambo had never been told of the warning or the subsequent investigation.

Glenda Zvenyika, the communications manager for Comair, which operates both British Airways and kulula.com in South Africa, said safety was a key focus for both airlines, and a decision had been taken not to accept plastic-wrapped bags until the outcome of the investigation was known and the wrapping was found to be safe.

"We are now aware of an investigation into Equity Aviation's baggage-wrapping product," said Zvenyika. "We have taken the decision not to accept any wrapped baggage aboard any of our aircraft until the products and services have been approved by the Civil Aviation Authority - regardless of which company they are from. We will use products which are CAA approved."

The plastic shrink wrapping was introduced after airlines, reeling from thefts from baggage at the airport and constantly looking to improve security, began using the service. According to at least four airlines, it has definitely helped to curb pilferage.

Equity has successfully been offering the service to airlines at OR Tambo for some time. But last year a second company, Bag-it, entered the market with what it claimed was a better product that was in line with international standards.

Acsa has since terminated Bag-it's services, although Equity is still being allowed to provide the service while a tender process is being conducted.

"Currently, Bag-it's product is SABS-approved, but we will wait until the tender process has run its full course and the CAA gives its final stamp of approval and assured us of this before we accept any wrapped baggage on board," said Zvenyika.

Emma da Silva, Virgin Atlantic's airport manager at OR Tambo, said they were unaware of the investigation and were continuing to use the services of Equity Aviation. "We have a contract with Equity Aviation and currently offer a baggage plastic-wrapping service to all passengers free of charge," she said.

"Virgin have never had a problem and have smoke detectors and fire systems in all their holds - which would reduce the capabilities of a fire in the hold," Da Silva said.

Robyn Chalmers, a spokesperson for South African Airways, said Bag-it's services had been used for just over six months as a pilot project. It was offered free of charge to customers travelling with SAA.

At the end of December 2006, the six-month pilot project came to an end. Based on the success rate in preventing pilferage, the service was reinstated, but SAA was then notified by Acsa that it be stopped, as Acsa was in the process of issuing a tender for a baggage-wrapping service at the airport, said Chalmers.

"SAA will respect Acsa's procurement policy and make a decision on the way forward once the process has taken its course and is completed, and based on the outcome," said Chalmers.

Acsa spokesperson Nothemba Noruwana said the company was legally obliged to tender all new business opportunities. Equity Aviation spokesperson Herman Fleischmann said claims that Equity's product is dangerous were unfounded, adding it was in line with European safety criteria.

"That report is very interesting to us because our fabric is the least hazardous of all that is out there. They use similar products in Melbourne, Sydney, Russia, Saudi Arabia and Turkey, to name just a few," he said.

Article from http://www.iol.co.za/
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Labels: South Africa - Airlines

Trade and Industry Correspondent

COMPETITION among SA’s low-cost carriers is set to get even tougher amid plans by 1time Airline’s parent company 1time Holdings to raise R30m to buy extra planes after listing on the JSE’s AltX board next month.

1Time announced its plans as the parent company of kulula.com, Comair Holdings, yesterday cautioned its shareholder of reduced future earnings because of predatory ticket pricing by South African Airways (SAA) through its subsidiary Mango.

The competition among the no-frills airlines will greatly benefit customers, and with less than 10% of South Africans using air travel, the sky war could result in a sharp increase in passenger numbers.

1Time Holdings said yesterday that it would raise R30m by privately placing 60-million ordinary shares before listing on AltX on August 14.

The money would be used to buy additional aircraft to enable 1time to expand its operations in the domestic market. There were also plans to introduce regional flights as demand increased.

Part of the cash would also be used to capitalise 1time Holding’s aircraft maintenance business, Aeronexus Technical. Director of marketing and operations Rodney James said the airline would acquire two new aircraft.

The airline has 10 aircraft and operate s 33 flights a day on eight domestic routes.

“Notwithstanding the significant growth achieved by low-fare airlines, less than 10% of South Africans travel by air,” said James.

“This bodes well for the future of this market segment as 1time Airline expects a 20% increase in passengers,” he said.

James said some of the planes would be used to meet the growing demand from governments, international bodies and corporate clients for charter flights.

1Time also planned to launch an airfreight business and would also establish an engine maintenance facility.

“Prospects for 1time Holdings are extremely encouraging,” said 1time Holdings’ CEO Glenn Orsmond.

“We commenced business (in 2004) with a clean slate and no historical overheads. In addition, low aircraft acquisition costs and a standardised fleet have also contributed to our success, along with our own technical maintenance operations.”

Meanwhile, Comair, which operates kulula.com and the British Airways franchise in SA, has cautioned its shareholders that its future earnings could be negatively affected by SAA’s predatory pricing and high fuel prices.

The privately-owned company said although its headline earnings a share and earnings a share for the year ended last month were about 40% higher compared with last year, the feat may not be repeated next year.

The JSE-listed firm blamed SAA for using its new low-cost subsidiary Mango to engage in “unprofitable ticket pricing”.

Comair suggested that SAA’s behaviour was anticompetitive and was aimed at driving other domestic airlines out of business.

“Shareholders are cautioned … that unprofitable ticket pricing by the state-subsidised SAA, through its new subsidiary Mango, negatively affected industry profits in the fourth quarter of the financial year to June, and may also affect future results,” Comair said in a statement.

But SAA has rejected Comair’s allegation of predatory pricing, saying that “Comair’s response to Mango is an indication of how Mango has raised the bar in the low-cost category.”

SAA GM of commercial Rushj Lehutso said while Mango was a subsidiary of SAA, the low-cost carrier operated as a completely separate entity and that SAA had no direct say in its operations or in its pricing structure.

“SAA’s decision to launch the low-cost carrier was based purely on meeting market demand for low-cost carriers,” said Lehutso.

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Labels: South Africa - Airlines

Johannesburg - South African Airways' (SAA) restructuring strategy is moving rapidly ahead, with a number of key initiatives well underway, SAA CEO Khaya Ngqula said on Friday.

In the current financial year the airline plans to focus on the restructuring plan in the hope of returning the airline to profitability.

In the 2006 financial year it reported a loss of R883m, after a small profit of R65m the year before, as operating costs, many of which are beyond SAA's control, soared 13.4% to R21.3bn.

The losses in the second half of the year slowed and were in the region of R200m - as a consequence of some of the initiatives put in place, the airline said.

The main contributors to the higher operating costs were a 7.8% rise in the dollar/rand exchange rate, a 12.3% hike in the Brent fuel price, a jump in aircraft lease rental and an ongoing increase in the broader cost structure of SAA.

Ngqula said with costs rising above revenue, it became evident that a fundamental restructuring of the airline was required.


Reaping the benefits
He added that other global airlines have restructured their finances and operations and are now reaping the benefits, with many returning to profitability.

"SAA found itself behind the restructuring curve and we moved decisively to implement a turnaround plan that will see the airline return to profitability within 18 months," he added.

The restructuring plan was approved by the Board in May and publicly launched on June 4.

The plan revolves around group-wide operational, revenue improvement and cost cutting initiatives to achieve an EBIT margin of 7.5% in the next 12 to 18 months. To this end the key financial focus areas will be to reduce and contain operating costs and margin and yield enhancements.

SAA said it would require a further recapitalisation in order to cover the once off costs of the structure and turnaround strategy, which it says will be "substantial".

To date, SAA has grounded its fleet of B747-400s and put its fleet upgrade on hold, with the fleet unlikely to grow for the next 12 to 18 months. The first of the B747-400s is to be returned in early July and the first "balloon payment" of R168m was made on June 27.

Key growth area

The plan also includes SAA's network, with the airline having identified Africa as a key growth area. It plans to concentrate its network schedule design on how to best serve its African markets.

On the international front, SAA plans to focus on those routes that are profitable while curtailing unprofitable ones. To this end the Paris route will stop flying by the end of October. New routes to be introduced include Munich from July 3 and Libreville from mid-September.

Low cost carrier competition was addressed by the launch of Mango in November. SAA said Mango had experienced good growth since its launch, capturing around 10% of the domestic market.

In the next few weeks the low cost carrier will fly its one-millionth passenger. No financials were disclosed for Mango, as is the practice among many low cost carriers.

Ngqula said from an organisational point of view, the management structure of SAA has been redesigned to ensure that general managers are directly responsible for implementing the restructuring initiative.

Consultations are taking place with managers across the board to ensure SAA has the skills and expertise to take the airline through the restructuring process. New conditions of employment are being negotiated with all employees.

Ngqula concluded by saying: "There can be no turning back from restructuring, as it is clear it is the only way to ensure that SAA not only survives, but becomes profitable."

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Labels: South Africa - Airlines

Low cost airline Mango has announced that it will absorb the much debated increase in third party passenger charges until the end of the year. The increase in taxes, announced last week, has set the aviation industry ablaze with discontent — prompting some airlines to switch to publishing tax exclusive fares, further adding to consumer confusion.

Mango CEO Nico Bezuidenhout says that Mango will not respond to the increase in taxes with the same knee-jerk reaction, but rather approach it laterally.

“Due to the fact that Mango has the lowest cost base in the industry, it is possible for the airline to absorb the increased charges and pass on the benefit to our Guests.”

Bezuidenhout says that Mango will not increase taxes charged until the New Year, rather absorbing the increase in its already affordable fares — quoted inclusive of all third party charges; available for travel until 31 December this year.

“It is still possible to fly domestically on Mango from less than R200, all inclusive,” says Bezuidenhout. “And our most expensive tickets remain under R1000 per flight.”

"Again, while our competitors engage in a hue and cry, Mango will maintain its focus and deliver to our Guests."

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Labels: South Africa - Airlines

Allan Reddy, who wanted to buy 1time, said he would continue in his quest to become the first black owner of a private airline.

Black businessman Allan Reddy wanted to buy low-cost airline, 1time, but the sale fell through at the last minutes.

The Sunday Times reported that 1time argued that it had an “irrevocable” pre-listing agreement with the JSE and therefore could not sell the airline but the stock exchange denies these claims.

According to the Sunday newspaper, Reddy is the CEO of Satlog Group – an empowerment company, looking to get its hands on an airline company.

Reddy told the paper that the price he offered to pay for 1time was just right but that the listing came in the way.

“We worked around the clock to make it work. We looked at alternatives to get out of the listing. As a last ditch attempt, we asked the JSE to delay the listing, but it wouldn’t budge,” he reportedly said.

JSE director of listings, John Burke said it was nonsense that the listing got in the way of the sale.

“Formal approval for the listing hasn’t been given. It’s in the process, but it doesn’t mean the listing is going ahead,” he said, adding that the pre-listing document was not irrevocable and that 1time could do what it wants.

Rodney James head of marketing at 1time confirmed that Reddy’s company had made an offer to buy the business but said that the airline never really had intentions to sell full control of the company.

1time Holdings, which is the holding company of 1time Airline, 1time Charters and Aeronexux Technical, is scheduled to list on the alternative exchange on August 14.

The company plans to raise R30m with its listing which will be used to buy more aircraft and expand its aircraft charter and aircraft maintenance businesses.

Reddy told the Sunday Times that he would continue in his quest to become the first black owner of a private airline.

“I’m looking at some options; otherwise I’ll try to set up an airline from scratch,” he said adding that he believed that there was room for a fourth airline operator in the country.

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Labels: South Africa - Airlines

1TIME Holdings is set to become SA’s second airline operator to be listed on the local bourse after Comair, operator of low-cost carrier kulula.com and a British Airways franchise. 1time Holdings, will be listed on the JSE’s AltX .

Company CEO Glenn Orsmond said the privately owned firm would raise R30m by placing 60-million ordinary shares before listing next month.

The cash generated from the sale of the shares would be used to buy two new planes, establish an engine maintenance facility and to bolster 1time’s charter service. The company also planned to launch an air freight business to compete with South African Airways’ SAA Cargo.

1time’s director of marketing and operations, Rodney James, said yesterday the new planes would bring to 12 the number of aircraft that 1time owned.

The additional capacity would enable the 1time to expand its domestic route network and also to venture into regional markets.

With less than 10% of South Africans presently using planes as a mode of long distance domestic travel, James said there were still prospects for further passenger growth in future. The low-cost carriers had not only cannibalised markets from full service carriers but had also grown the domestic market more than 30% in the past five years.

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Labels: South Africa - Airlines

SAA Technical clinches a deal with Comair to maintain the British Airways and kulula.com fleets

SAA Technical (SAAT) has clinched one of its largest and most significant maintenance agreements by forging a deal with Comair Limited (Comair) to maintain both the British Airways and kulula.com fleets of more than 22 aircraft.

The decision by Comair to move the maintenance of its fleet of Boeing 737-300s and 737-400s to SAAT once again confirms the extent of the organisation’s solid local and international reputation.

The agreement extends over five years, and is valued at more than 500 million rand over the period.

SAA CEO Khaya Ngqula says the fact that one of the airline’s competitors has decided to entrust the safety of its aircraft to SAAT is a great compliment and a proud achievement.

"Not only will SAA Technical be able to offer Comair a seamless service, the deal will also boost our revenue and further enhance our already excellent reputation.

"Comair’s decision to sign up with SAA Technical as its maintenance provider underlines the fact that the standard of maintenance we offer is amongst the best in the world."

SAA Technical is the largest maintenance facility in Africa, and its dispatch reliability, which affects the on-time departure of aircraft, has consistently remained within the top 5% to 10% when compared to the world’s top carriers.

Ensuring that an aircraft departs on time not only helps an airline to grow its revenue, but is also important for customer loyalty and service.

Comair joint CEO Gidon Novick says: "The excellent service levels we have had from SAAT in the past have enabled us to offer high service levels to our customers. We look forward to extending our relationship with SAAT further."

Until now, Comair aircraft have been maintained by both SAAT and Safair, a subsidiary of Imperial Holdings. Comair currently leases several aircraft from Safair and will continue leasing aircraft from Safair in the future.

In addition, the two companies will continue with their successful freight joint venture, called Imperial Air Cargo.

"We have already acquired two new, more fuel efficient and environmentally friendly Boeing 737-400s for kulula.com as part of our plan to replace our old MD-82s.

"We will complete this fleet upgrade process by the end of the year and look forward to placing these in the capable hands of SAAT," said Novick. SAAT will do daily and weekly A checks on the aircraft, while component and engine support will be outsourced.

SAA Technical CEO Jan Blake says transferring maintenance on Comair’s aircraft to SAAT has already begun from the beginning of July and will roll out over the coming months to ensure that there is a smooth transition. With the finalisation of the contract, the B737s will be the single largest fleet type under SAAT’s maintenance schedule, which bodes well for the future.

"The B737 is the aircraft for Africa in the future which puts SAA Technical in a good position to bring in additional work from the continent in the coming years. We will be focusing on neighbouring countries to expand

our services in line with our strategy of diversifying our revenue stream and sourcing additional work from outside SAA," he says.

Article from http://www.sundaytimes.co.za/
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Labels: South Africa - Airlines

ohannesburg - The future growth of air travel in South Africa would be significantly impacted by excessive increases in airport charges in the country, kulula.com said on Tuesday.

The low-cost airline's warning follows a recent announcement by the Airports Company of South Africa (Acsa) that it plans to spend over R20 billion to upgrade airports, a cost that kulula believes is excessive.

Acsa is one of the most profitable companies in South Africa with a net return on turnover of over 40 percent, according to kulula.

"We have worked hard over the past six years to get more South Africans travelling by air and in that time the market has doubled in size. Our customers are now faced with escalating airport charges that will make flying considerably less affordable," said joint chief executive officer of kulula's parent Comair Limited, Erik Venter.

Venter added that an example of the excessive spending is in Durban where there is a plan to build a new airport at a projected cost of R7 billion instead of the much more affordable option of upgrading the existing airport for only R1 billion.

There are trends around the world to build much more cost-effective airports to facilitate the affordable growth of air travel. In Malaysia, a special low cost terminal was built at the country's main airport in Kuala Lumpur at a fraction of the cost of the main terminal.

A year ago kulula commenced operations from Lanseria Airport, north of Johannesburg, which has had an excellent take up and is more affordable and less congested than OR Tambo International Airport, the company said.

In order to raise customer awareness of the 'runaway' airport charges, kulula.com recently made the controversial decision to separate airport charges from air fares on its website. - I-Net Bridge

Article from http://www.busrep.co.za
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Labels: South Africa - Airlines

AIR travellers in SA are enjoying the benefits of a raging price war among the country's low-cost carriers.

With air fares expected to drop even further, the only question on most people's minds is whether the price war will be sustainable.

Besides the need to undercut each other's prices, the other big challenge facing budget airlines internationally was the indirect competition from full-service carriers, said Prof Nawal Taneja of Ohio State University's aviation department.

Taneja recently told the annual India and Middle East Low-cost Carrier Symposium in Mumbai, India, that the honeymoon was over for budget airlines as full-service carriers begin to fight back.

Taneja said the fight-back strategy by full-service carriers would cause turbulence for many weak no-frills airlines.

"Those who think they have got it made, well let me tell you, the honeymoon is over.

"Those that think that full- service carriers are dead will have some serious problems," said Taneja.

He said the demise of many low-cost carriers would follow the same spectacular trajectory that befell the technology sector several years ago.

"It is going to be like the dotcom boom. There will be many failures but a few that survive are going to become global players," he says.

Comair, which operates the no-frills airline kulula.com and a British Airways franchise in SA, cautioned its shareholders this week that its future earnings could be affected by the predatory ticket pricing of South African Airways (SAA) through its budget airline, Mango.

Comair suggested SAA was using Mango as a front to drive other airlines out of business.

It accused SAA of engaging in an "unprofitable ticket pricing war".

SAA denies the charge.

And as if to drive a spear into the hearts of kulula's worried shareholders, Mango yesterday made available 1000 seats for less than R100 each.

The special, dubbed the "lunchtime happy hour", saw one-way tickets between Johannesburg and Durban being sold for R75. Tickets on the Johannesburg-Cape Town route were R87 and all prices included airport taxes.

Mango said its prices were "up to 20% less than anything in the market" and promised to keep them that way. But Mango's competitors say the airline can afford to reduce its airfares to "unprofitable" levels because it has the government's backing, through state-subsidised SAA.

Comair's joint CEO, Gidon Novick, says it is unfair that the government continues to sub-sidise SAA with taxpayers' money, including with money collected from SAA's competitors.

"We remain of the view that the government should not invest in, nor compete for, domestic air services when the private sector is more than ready and willing to provide these services, and in a more efficient manner," said Novick, adding that the global trend was for governments to divest from their domestic airline services.

Besides SAA and Mango, the government also owns regional carrier SA Express.

While Comair recently cautioned its shareholders about the possibility of low returns on their investment in future, its other major competitor, 1time airline, plans to buy new aircraft and expand its routes.

1time parent company 1time Holdings says it will raise R30m by privately placing 60-million ordinary shares before listing on the JSE's AltX board next month.

The money will be used to buy two additional aircraft to enable the low-cost carrier to expand its services in both the domestic and regional markets.

Some of the planes will also be used for chartering.

Medium-term plans included setting up an engine maintenance facility near OR Tambo International airport, and launching an airfreight business.

"Prospects for 1time Holdings are extremely encouraging," says CEO Glenn Orsmond.

Overall, this has been quite an eventful week for SA's aviation industry.

Article from http://allafrica.com/
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Labels: South Africa - Airlines

1TIME Holdings is set to become SA's second airline operator to be listed on the local bourse after Comair, operator of low-cost carrier kulula.com and a British Airways franchise. 1time Holdings, will be listed on the JSE's AltX .

Company CEO Glenn Orsmond said the privately owned firm would raise R30m by placing 60-million ordinary shares before listing next month.

The cash generated from the sale of the shares would be used to buy two new planes, establish an engine maintenance facility and to bolster 1time's charter service. The company also planned to launch an air freight business to compete with South African Airways' SAA Cargo.

1time's director of marketing and operations, Rodney James, said yesterday the new planes would bring to 12 the number of aircraft that 1time owned.

The additional capacity would enable the 1time to expand its domestic route network and also to venture into regional markets.

With less than 10% of South Africans presently using planes as a mode of long distance domestic travel, James said there were still prospects for further passenger growth in future. The low-cost carriers had not only cannibalised markets from full service carriers but had also grown the domestic market more than 30% in the past five years.

Article from http://allafrica.com/
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Labels: South Africa - Airlines

The future growth of air travel in South Africa will be significantly impacted by the excessive increases in airport charges in the country, kulula.com warned in a statement on Tuesday.

The warning comes after the Airports Company of South Africa (Acsa) recently submitted proposals to spend over R20-billion to upgrade airports in the country, a cost that is “way in excess of what is required”, the no-frills airliner said.

Acsa is one of the most profitable companies in South Africa with a net return on turnover of over 40 percent.

Durban plans

Joint CEO of kulula’s parent Comair Limited, Erik Venter, said, “We have worked hard over the past six years to get more South Africans travelling by air and in that time the market has doubled in size. Our customers are now faced with escalating airport charges that will make flying considerably less affordable.”

An example of the excessive spending is in Durban, where plans are afoot to build a new airport at a projected cost of R7-billion, instead of upgrading the existing airport for only R1-billion.

There are trends around the world to build much more cost effective airports to facilitate the affordable growth of air travel, it said.

Malaysian example

In Malaysia, a special low cost terminal was built at the country’s main airport in Kuala Lumpur at a fraction of the cost of the main terminal. A year ago, kulula.com commenced operations from Lanseria Airport, north of Johannesburg, which has had an “excellent take up and is more affordable and less congested than OR Tambo International Airport”.

In order to raise customer awareness of the ‘runaway’ airport charges, kulula.com recently separated the airport charges from air fares on its website.

Article from http://business.iafrica.com/
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Labels: South Africa - Airlines

Need to go somewhere? Low cost airline Mango will on Wednesday make 1000 tickets for its Johannesburg Cape Town, Johannesburg Durban and Cape Town Durban flights available for less than R 100.

Tickets between Johannesburg and Durban will be available for R75 all inclusive (per flight) while travelling between Johannesburg and Cape Town and Durban and Cape Town will cost just R87 all inclusive (per flight). To qualify for these special rates tickets must be purchased as part of a return journey and all travel must take place before the end of October.

The announcement of another 'Happy Hour' follows on the heels of controversy around the recently announced hike in airport passenger fees by ACSA.

“Despite the expected rise in fees,“ says Hein Kaiser, spokesperson for Mango, “consumers will still be able to enjoy more affordable fares on Mango. Mango continues to deliver the lowest fares in the domestic aviation market with current base fares starting at R191 all inclusive up to a maximum of R999 all inclusive. On average, making Mango ten to twenty percent more affordable than any of our competitors on a seat by seat basis, no matter what our competitors may claim.”

Quoting airfares exclusive of taxes and charges is a shameless attempt at creating the illusion of more affordable fares, says Kaiser, in response to a recent change in pricing policy from a competitor.

“Come save with us,” says Kaiser, “while our competitors are having fun juggling their pricing policies.”

The Mango Happy Hour takes place exclusively on its website, www.flymango.com between 1pm and 2pm on Wednesday 18 July.

Article fromhttp://travel.iafrica.com/
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Labels: South Africa - Airlines

COMPETITION among SA's low-cost carriers is set to get even tougher amid plans by 1time Airline's parent company 1time Holdings to raise R30m to buy extra planes after listing on the JSE's AltX board next month.

1Time announced its plans as the parent company of kulula.com, Comair Holdings, yesterday cautioned its shareholder of reduced future earnings because of predatory ticket pricing by South African Airways (SAA) through its subsidiary Mango.

The competition among the no-frills airlines will greatly benefit customers, and with less than 10% of South Africans using air travel, the sky war could result in a sharp increase in passenger numbers.

1Time Holdings said yesterday that it would raise R30m by privately placing 60-million ordinary shares before listing on AltX on August 14.

The money would be used to buy additional aircraft to enable 1time to expand its operations in the domestic market. There were also plans to introduce regional flights as demand increased.

Part of the cash would also be used to capitalise 1time Holding's aircraft maintenance business, Aeronexus Technical. Director of marketing and operations Rodney James said the airline would acquire two new aircraft.

The airline has 10 aircraft and operate s 33 flights a day on eight domestic routes.

"Notwithstanding the significant growth achieved by low-fare airlines, less than 10% of South Africans travel by air," said James.

"This bodes well for the future of this market segment as 1time Airline expects a 20% increase in passengers," he said.

James said some of the planes would be used to meet the growing demand from governments, international bodies and corporate clients for charter flights.

1Time also planned to launch an airfreight business and would also establish an engine maintenance facility.

"Prospects for 1time Holdings are extremely encouraging," said 1time Holdings' CEO Glenn Orsmond.

"We commenced business (in 2004) with a clean slate and no historical overheads. In addition, low aircraft acquisition costs and a standardised fleet have also contributed to our success, along with our own technical maintenance operations."

Meanwhile, Comair, which operates kulula.com and the British Airways franchise in SA, has cautioned its shareholders that its future earnings could be negatively affected by SAA's predatory pricing and high fuel prices.

The privately-owned company said although its headline earnings a share and earnings a share for the year ended last month were about 40% higher compared with last year, the feat may not be repeated next year.

The JSE-listed firm blamed SAA for using its new low-cost subsidiary Mango to engage in "unprofitable ticket pricing".

Comair suggested that SAA's behaviour was anticompetitive and was aimed at driving other domestic airlines out of business.

"Shareholders are cautioned ... that unprofitable ticket pricing by the state-subsidised SAA, through its new subsidiary Mango, negatively affected industry profits in the fourth quarter of the financial year to June, and may also affect future results," Comair said in a statement.

But SAA has rejected Comair's allegation of predatory pricing, saying that "Comair's response to Mango is an indication of how Mango has raised the bar in the low-cost category."

SAA GM of commercial Rushj Lehutso said while Mango was a subsidiary of SAA, the low-cost carrier operated as a completely separate entity and that SAA had no direct say in its operations or in its pricing structure.

"SAA's decision to launch the low-cost carrier was based purely on meeting market demand for low-cost carriers," said Lehutso.

Article from http://allafrica.com/
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Labels: South Africa - Airlines

Johannesburg - Local low-cost airliner kulula.com has issued a warning that the future growth of air travel in South Africa would be significantly impacted by the excessive increases in airport charges in the country.

The company's warning follows a recent announcement by the Airports Company of South Africa (Acsa) that it plans to spend over R20bn to upgrade airports in the country, a cost that kulula believes is way in excess of what is required.

Acsa is one of the most profitable companies in South Africa with a net return on turnover of over 40%, according to kulula.

"We have worked hard over the past six years to get more South Africans travelling by air and in that time the market has doubled in size.

"Our customers are now faced with escalating airport charges that will make flying considerably less affordable," said joint CEO of kulula's parent Comair Limited, Erik Venter, adding that an example of the excessive spending is in Durban where there is a plan to build a new airport at a projected cost of R7bn instead of the much more affordable option of upgrading the existing airport for only R1bn.

There are trends around the world to build much more cost-effective airports to facilitate the affordable growth of air travel. In Malaysia, a special low cost terminal was built at the country's main airport in Kuala Lumpur at a fraction of the cost of the main terminal.

A year ago, kulula commenced operations from Lanseria Airport, north of Joburg, which has had an excellent take up and is more affordable and less congested than OR Tambo International Airport, the company said.

In order to raise customer awareness of the 'runaway' airport charges, kulula.com recently made the controversial decision to separate airport charges from air fares on its website.

Article from http://www.fin24.co.za/
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Labels: South Africa - Airlines

If you buy your plane ticket at SAA’s airport offices, be prepared to pay an extra R500 for an overseas or regional flight, and R200 for a domestic flight from 1 August this year.

According to Business Report on Friday, all bookings made at its city offices in Johannesburg, Cape Town or Durban will attract a R200 service fee.

The move is intended to cut costs by encouraging the online purchase of electronic tickets, and to end long queues at SAA's airport offices.

Industry executives said it should not come as a shock to SAA customers.

Many carriers have already introduced service fees and the International Air Transport Association is encouraging member airlines to cut costs by abolishing paper tickets by next 1 June.

According to a study by World Wide Worx, only eight percent of South Africans will have access to the internet by the end of the year.

South Africa's three budget airlines sell most of their tickets online. Gidon Novick, the joint chief executive of Comair, said no charge was made for booking with Comair.

A charge of between R20 and R30 was made for booking with low-cost division kulula.com through a call centre or at the airport office.

Travel agents, who will attract travellers without internet access or a credit card, have welcomed the news.

Article from http://www.southafrica.info/
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Labels: South Africa - Airlines

Fare quotes could prove even more misleading soon

MANGO, the low-cost airline recently launched by state-owned South African Airways, says it ‘‘remains the lowest-fare carrier despite competitor discounting”. But when shopping around for air fares, The Times found that kulula.com appeared to be cheaper.

Marketing director of kulula. com Glenda Zvenyika said: “I believe that our fares are very competitive. We have no travel classes; business or economy class, as with most airlines, but we have different fare classes.

“Our pricing structure is a simple one; the cheapest fares per flight are bought first, followed by the next cheapest and that is how it works. This is inclusive of the airport tax.”

Some airlines are notorious for advertising cheap flights, which then turn out to be more expensive because their advertisements omit to include the Airports Company of South Africa’s fees.

Though the company charges according to airport and not airline, a consumer investigation found airlines were multiplying these by up to threefold on passenger’s bills. SAA was singled out as the worst culprit.

According to Mango chief executive Nico Bezuidenhout, other airlines are now guilty of excluding the airports company’s fees in their advertised prices.

“The fact that some of Mango’s competitors are now quoting both their regular fares and sale prices exclusive of taxes, means that consumers will pay up to 25 percent more than the advertised pricing of some our competitors.”

But air fare quotes are likely to become more misleading in October when the airports company hikes its fees by 40 percent.

The increase is to help cover its R20-billion expansion programme for major airports ahead of the 2010 World Cup.

Company spokesman Solomon Makgale said the passenger service charges for domestic flights will increase from R12.27 to R38.59 while international flights will rise from R70.18 to R105.26.

Makgale said passenger service charges are built into the air fares that passengers pay to airlines. The airport operator gets its share from the airlines.

SAA is following the trend among low-cost airlines to cut overheads by encouraging passengers to pay online.

From August, it will charge up to R500 extra for international flights and R200 for domestic flights that are not bought online.

Article from http://www.sundaytimes.co.za/
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Labels: South Africa - Airlines

From August 1 SAA will charge an extra R500 for an overseas or regional flight and R200 for a domestic flight on tickets bought at its airport offices. All bookings made at its city offices in Johannesburg, Cape Town or Durban will attract a R200 service fee.

The move is intended to cut costs by encouraging the online purchase of electronic tickets, and to end long queues at SAA's airport offices.

Industry executives said it should not come as a shock to SAA customers. Many carriers have already introduced service fees and the International Air Transport Association is encouraging member airlines to cut costs by abolishing paper tickets by next June 1.

According to a study by World Wide Worx, only 8 percent of South Africans will have access to the internet by the end of the year.

South Africa's three budget airlines sell most of their tickets online. Gidon Novick, the joint chief executive of Comair, said no charge was made for booking with Comair.

A charge of between R20 and R30 was made for booking with low-cost division kulula.com through a call centre or at the airport office.

Travel agents, who will attract travellers without internet access or a credit card, have welcomed the news. - Audrey d'Angelo

Article from http://www.busrep.co.za/
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Labels: South Africa - Airlines

THERE is still scope for more growth in South Africa’s low-cost airline industry.

This is despite the launch of South Africa’s third low-cost carrier, Mango, during the peak holiday season last year.

At the time of Mango’s launch, analysts said that though Mango would bring a price correction in the airline industry, the market was not big enough for three low-cost carriers and one carrier would suffer.

Jackie Walters, a transport economist from the University of Johannesburg, said the position of the other two airlines remained unchanged and Mango had in fact stimulated the market to a certain degree.

“Mango has not had a negative impact on 1time or kulula.com and the market definitely still has a lot of room for growth.”

South Africa’s three low-cost carriers, Mango, kulula.com and 1time, enjoy about 30 percent market share.

Despite the fact that low-cost airline tickets cost almost the same as a long-distance bus trip, only 7.5 percent South Africans fly.

Low-cost airlines are vying to increase those figures and South Africa is slowly joining the global community in offering options for cheaper flights.

Mango is riding on the tail of SAA, its parent company, and Walters believes that it has taken some of SAA’s full-fare paying passengers.

Kulula.com says it is not perturbed by Mango or its low ticket prices and the six-year-old airline remains the strongest player of the three low-cost airlines in the South African market.

Glenda Zvenyika, communications manager at Comair, the owners of kulula.com, said: “We were the first player in the local low-fare market and the first to revolutionise local air travel and have never compared ourselves to other players.”

Article from http://www.sundaytimes.co.za/
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Labels: South Africa - Airlines

Want to get away from your own backyard this winter? kulula.com has announced a fantastic sale for one day only — today! — and you can pick up tickets across SA for as little as R199.

The sale started at 6am and runs until midnight on 10 July, and the seats sell out first come, first served, so they're subject to availability. You can book to travel on the discounted flights between 17 July until 30 November 2007. The tickets will be available on most flights, but will exclude peak periods like school holidays and sporting/live events

Tickets start at R199 one-way between Jo'burg – Durbs, but remember that for the first time kulula is quoting price excluding airport taxes.
Fares from Jo'burg – Cape Town, George and between Cape Town – Durbs start from R299 one-way, but again exclude airport taxes. Taxes vary depending on which airport you fly out of, but are between R42 and R50 one way per person.

Tickets can only be booked online at www.kulula.com

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Labels: South Africa - Airlines

Johannesburg - South African Airways (SAA) is to launch a series of new routes from the continent to markets in the Americas and Europe as it attempts to steal a greater share of the lucrative business market from its rivals.

SAA chief executive Khaya Ngqula announced these plans as he unveiled the airline's results, which showed an R833m loss for the period that ended in March.

He blamed depreciation in the value of the rand against the dollar and escalating fuel prices.

Ngqula said the writing had long been on the wall that the airline needed to restructure to cut costs before it was forced to close shop.

"The next 18 months will be tough times at SAA, where some people would opt to go. Job contents would also be changed and we have already started doing that. The challenge will be about keeping those who are good for the airline and those who want to be at SAA.

'Not nice to retrench people'

"It is not nice to retrench people and has never been nice. We could have gone the shutdown route. But the government has given us the go-ahead to restructure the business," Ngqula said.

SAA indicated in November that it intended retrenching 1 000 employees. In May, when it unveiled details of its restructuring programme, it backtracked and said it had not finalised the number of people who would be affected by the restructuring process. The national airline had 10 085 employees at the end of March.

Labour has indicated its objection to retrenchments, arguing that alternative revenue-generating initiatives should be explored.

South African Transport and Allied Workers' Union president Ezrom Mabyane said the union had a blueprint it intended to present to management.

Sources close to SAA said the unions would object to the proposed changes in employment conditions.

Wage talks

Some of the changes SAA is planning to institute include reduction of allowances and standardisation of sick leave. SAA is also about to embark on wage negotiations and unions at SAA are said to have tabled a 12% demand across the board.

Bhabhalazi Bulunga, SAA general manager for human resources, said all conditions of employment would be subject to negotiations with labour.

He said no wage offer had been determined by SAA.

Regarding retrenchments, Bulunga said 30% of its 600 managers would be affected by the restructuring. Junior-level worker negotiations are expected to start in August.

Ngqula said the plan to simplify and streamline the business had started. He said SAA was in a fortunate position in that it was implementing its restructuring amid a growing business environment and economy.

He said revenues were beginning to shoot up, which would mitigate costs.

"The end result is to offer our customers a truly remarkable service that will allow SAA to compete with the best in the world. We are a premium airline offering all services," Ngqula said.

Mango making inroads

SAA chief financial officer Gareth Griffiths said a glance at the latest financial numbers showed that the business had to be changed, restructured and turned around to be placed on a sustainable path.

Energy costs had increased to R5.7bn from R4.9bn and he said that SAA had R2.3bn in the bank at the end of March.

On a positive note, passenger numbers had increased by 7.9% to 7.7 million. The growth in passenger numbers reflects a buoyant economy with more people flying, said Griffiths.

Mango, SAA's low-cost airline, which was launched in November last year, has captured 10% of the market and is planning to expand its fleet.

Public Enterprises Minister Alec Erwin announced last month that the government would support SAA if the airline successfully implemented the restructuring programme. SAA received a R1.3bn lifeline in March.

Erwin said the government was planning to finalise a further R1.3bn cash injection by October. He said the next tranche would be delivered in the next financial year.

Article from http://www.fin24.co.za/
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Labels: South Africa - Airlines

Gidon Novick joint CEO of Comair (JSE: COM) saw how the bigger players in the US air carrier market were struggling to adapt their business plans to a changing environment. The fact that a relatively small airline, Southwest Airlines, became the dominant force, lent the incentive to start Comair in South Africa and enter a market which was 100% dominated by South African Airways.

"It's getting the model right and managing it well", Novick told Moneyweb's Alec Hogg on the CNBC Africa Power Lunch. "SAA is five times the size of Comair but the international component skews things a bit". Novick says that Comair now has 30% of the market share.

In January of this year, Bidvest (JSE: BVT) bought 20% of Comair and Novick believes that this helps the airline enormously, albeit behind the scenes. "It was very flattering to have a company the size and stature of Bidvest being our single biggest shareholder in the business".

Novick says the fact that Bidvest is involved in the airline industry through its airline services business and travel services business, means that there is a strong connection with Comair. He emphasised that Bidvest does not prescribe any kind of management style since it's not very involved in the Comair business itself.

January also saw Investec Asset Management's John Biccard tip Comair is his stock pick for the year which had a positive influence on the airline's share price. "It was very flattering that someone of his calibre tipped us as his stock. But it's the old thing. We don't go to work worrying about the share price, we try and make the business better", says Novick.

Comair's brands include the budget airline Kulula.com and British Airways. Novick says Comair wanted a global partner that represented a strong international brand and that could introduce a frequent flyer brand, so BA was a natural choice.

The BA mandate for southern Africa is routes out of South Africa since it is difficult to fly between countries in the region. "There is a lot of protectionism in the region", he says, "both from other countries protecting their own airlines and the SA government protecting SAA".

Comair is currently involved in an anti protection dispute with SAA relating to the abuse of its dominant position and what Novick describes as the incentives that SAA pays to travel agents. He says it involves hundreds of millions of rands and has been dragging on for five years with possible resolution through a court hearing date set for early 2008.

Novick says that Comair wants SAA to succeed but that it should be a private enterprise rather than a state owned entity if the industry was to be healthy. He believes that service delivery would be better in a private environment.

At the time that SAA's low cost airline Mango was launched, Novick was quick to criticise it as a loss making entity. He now believes that the only reason it survives is because it is heavily subsidised.

Comair pioneered low cost flying in SA through Kulula.com, which Novick says enables the airline to upgrade equipment with more fuel-efficient aircraft. "The other impact is environmental which is significant because the emissions happen at a high altitude".

Novick says the Comair model was built on a high fuel price and that it covers increasing prices through hedging programmes. A one dollar move in the oil price adds or takes away approximately R8m to the bottom line.

Article from http://www.moneyweb.co.za/
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Labels: South Africa - Airlines

Stories by Kenneth Ehigiator

Management of South African Airways has said its decision to restructure the airline was predicated on the need for profit.The airline’s Chief Executive Officer, Mr. Khaya Ngqula, said though business had continued to improve for South African Airways, its accounts continue to be in the red.

According to him, the restructuring is inevitable, especially as the government which injected 1.3 billion Rands into the airline in March 2007, is also insisting that it gets in the way of profitability.

He said: “Business has improved over the recent years, yet SAA’s performance has lagged behind that of its peers. While other international airlines and network carriers have produced profits, SAA is in red.

“To turn this around, the airline needs improvement of 2.7 billion Rands in its finances. The government allocated 1.3 billion Rands as a capital injection in March 2007, and one of the key conditions attached for the funding is that SAA must return to profitability.”

He said the board of South African Airways (SAA), which saw the airline returning profitability within 18 months, approved the restructuring plan.The initiative, according to him, is far more than just a financial recapitalisation or organisational reshape.

He said it involved an overhaul of SAA’s entire business model, including strategy, processes, people and systems with a view to simplifying and rightsizing the business. “We envisage that the airline will be unbundled into seven subsidiaries, anchored by a full-service passenger airline. In addition to the existing subsidiaries, SAA Technical (SAAT), low cost carrier Mango and SA Travel Centre, SAA will establish loyalty programme Voyager, SAA Cargo, airport operations and the passenger airline as stand alone entities.

“These seven subsidiaries will be housed under an investment holding company,” the airline’s chief executive said.He said the restructuring plan was aimed at turning the airline into a world class entity that delivers sustainable profits.“In the face of a high cost base created by, amongst other things, uncompetitive ownership and aircraft lease costs, excessive headcount and fuel price volatility, SAA must overhaul its entire business if it wants to survive.

“We will do this by aligning the cost structure to that of our peer groups, improving the quality of service we offer to our customers and instilling a culture of performance and accountability,” Ngqula added. In the short term, the restructuring will revolve around group-wide operational and revenue improvement initiatives that will be employed to achieve a R2,7bn turnaround over the coming 12 to 18 months.

Ngqula spoke of the airline’s decision to ground SAA’s fleet of B747-400 aircraft, of which SAA currently owns one and leases an additional five.The fleet, according to him, is an expensive, small sub-fleet of SAA with high costs versus the revenue generated by the aircraft.“SAA has also embarked on a comprehensive programme to consider its current fleet structure, having agreed to put the planned fleet upgrade and acquisition strategy on hold,” he added.

The airline’s other global initiatives include a better coordination of SAA’s schedule which, according to the management, will see SAA improving the co-ordination of the schedule design and the day-to-day operation of aircraft as well as optimising the airline’s relationship with feeder airlines, such as SA Express and SA Airlink.

On revenue and cost improvements, SAA said it will implement a range of cost and revenue improvement initiatives across all departments, including headcount reductions, organisational redesign and outright spending reductions.

It added that revenue initiatives were aimed at improving revenues, which are to be implemented across various regions of SAA’s route network. The management noted that with a stronger marketing approach to grow revenue, the airline would concentrate on a redesign of Voyager as well as the frequent flyer programme, with a refocus on its sales channels, namely retail, government and corporate.

Ngqula dismissed insinuations that SAA had planned to remove food from its domestic flight and stressed that SAA would remain a full service airline. On route development, the airline said it had the mandate of its Board to continue to deliver services on popular domestic routes, with a concentrated effort on flights between Johannesburg, Cape Town and Durban as well as provide seamless connectivity for inbound and outbound international passengers.

“We will continue our operations on the more marginal routes to East London and Port Elizabeth and are committed to finding ways of making these routes more profitable,” said the SAA chief executive officer.

On the international front, he said SAA had plans to rationalise its routes and deliver services into each of the major continents linking to key cities and airports.

According to him, SAA will focus its operations on those routes that show profit and add capacity to them, while wrapping up operations in those markets that are not profitable.

Consequently, the airline has already wrapped up operations in Zurich and will close the Paris route in October. Paris is currently underperforming with severe losses such that it can be considered “cash-negative” flying.

SAA has, however, identified new routes that will be introduced this year, notably Munich, while we will begin flying to Libreville (Gabon) in September.Ngqula also said SAA would continue to leverage its membership of the Star Alliance by flying its Star Alliance carriers’ major hubs.
Article from http://www.vanguardngr.com/
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Labels: South Africa - Airlines

By Bathandwa Mbola

Mafikeng - The Mafikeng Airport has started to operate Sunday flights between Johannesburg and Mafikeng.

This has been introduced due to flight demands, as the service was initially available twice a day on weekdays.

The newly appointed MEC for the Department of Transport, Roads and Community Safety, Phenye Vilakazi has called on the community of Mafikeng and neighbouring areas to make use of the airport for more convenient travelling.

"Should the demand keep on increasing, we will increase the frequency of the flights," said MEC Vilakazi on Sunday.

The airport forms part of the Mafikeng Industrial Development Zone (MIDZ) initiated by the North West Provincial Government.

The MIDZ aims to reduce unemployment, grow the provincial economy, develop people's skills and attract investment.

Other projects of the MIDZ include the recently launched Bio-diesel Project, the Mafikeng paving project, the Industrial Park, an Export Hub as well as the Mafikeng growth and development initiative, of which the Crossing Shopping Centre is part.<