SAA's Airbus A330-200 at Heathrow in London, the UK. Picture: 123RF
SAA's Airbus A330-200 at Heathrow in London, the UK. Picture: 123RF

SAA’s cancellation of domestic and international flights this week caught global travel firm Flight Centre Travel Group by surprise, with the Australian Stock Exchange-listed company frantically making alternative arrangements for more than 100 travellers.

Flight Centre, which came to SA in 1994, is one of SA’s largest travel companies with a total transaction value of more than R6.5bn and 121 retail outlets. The total transaction value refers to the total value of all air tickets, package holidays, touring holidays, travel insurance, hotel accommodation, car hire, tours, and cruises in the year ended June 30, 2019. Stark said the company expected sales in the 2020 financial year to exceed R7bn.

Andrew Stark, Flight Centre MD for Middle East and Africa, said on Wednesday the flight cancellations on Monday evening “significantly” affected the company’s corporate travellers.

“For us the news broke on an international media website. We immediately looked at our global distribution system which is where our bookings originate from. We started seeing flight cancellations without any notification from SAA.

Passenger pays

“We had to make a few decisions. We contacted our customers who had early flights on Tuesday and inform them of the changes. We gave them a choice — either we wait for SAA to make an announcement or we accommodate them on another carrier at their cost.”

He said that the company contacted more than 100 travellers on Monday evening. Most of the customers were travelling to local destinations.

Half of Flight Centre business is equally split between corporate and leisure travel. In 2010, 95% of Flight Centre’s sales volumes was leisure. The company employs 1,200 people in SA.

“We completely see where SAA is coming from with regard to the need to maximise their aircraft and costs per route. All we need is communication in advance. If we had been informed on the Monday afternoon there would have been no need to contact travellers via social media platforms. [The cancellations] caught us off guard,” Stark said.

Stark said this week’s developments did not trigger huge cancellations of SAA bookings.

“SAA felt that pain post-December 5 when they went into business rescue,” he said.

In November, Flight Centre informed its customers that its insurance provider, Travel Insurance Consultants, a division of Santam, would no longer offer the travel insolvency benefit cover for SAA. The travel insolvency benefit cover protects travellers from the insolvency of a travel provider such as an airline.

“That decision was not taken lightly. It was a commercial decision to protect ourselves and our customers. It was the right decision,” he said.

As a result, the company, which has a 17% market share in SA,  sold SAA tickets without the travel insolvency benefit only to those customers still keen on the airline’s tickets.

“At the moment we only sell SAA tickets to customers that sign disclaimers that they are aware that there is no insurance cover.”

Stark said Flight Centre awaited the release of SAA’s business rescue plan at the end of February.

“SAA has our full support [depending] on a sound business rescue plan that our insurer [will] see as sound [enough] to reinstate the insolvency cover. A sound business plan will trigger a domino effect in the right direction for SAA. We are all in this together. We want the right thing for SAA and our country,” he said.

njobenis@businesslive.co.za