JOHN LAMOLA: SAA reborn

One of the unnoticed but burgeoning trends in the air-passenger transportation industry is the increasing number of airline code-share agreements.

There is no doubt that co-operative alliances are the future of the aviation industry, which is just starting to recover from the setbacks of the Covid-19 pandemic.

Research by management consultancy McKinsey provides ample evidence for the necessity of code-share partnerships. This sobering study says in part: “Although the Covid-19 pandemic hit airlines harder than any other aviation subsector, the industry was not doing particularly well before then.

“From 2012 to 2019, despite a favourable environment of strong economic growth and low fuel prices, airlines were bleeding, on average, $17bn in economic profit a year.

“But the average losses of airlines before the pandemic were only around one-tenth of their $168bn in losses for 2020. Their revenues plummeted by 55%, setting the subsector back, in nominal terms, roughly 16 years — to 2004.”

To survive, airlines have no option but to look for partnerships that will help extend their reach, while allowing airlines to concentrate on routes that serve their passengers efficiently and profitably.

SAA has code-share agreements with Emirates, Air Mauritius, LAM Mozambique, Egyptair, Ethiopian Airlines, Singapore Airlines and Kenya Airways. It is also a member of Star Alliance, a network of 24 airlines that prides itself as the world’s largest global airline alliance.

In addition, SAA has entered into a unique and ambitious partnership framework agreement with Kenya Airways. This entails an active code share and co-operation on aircraft maintenance services.

This month SAA will be celebrating a full year of returning to the skies after exiting business rescue. The market we now operate in is markedly different to the one we were forced to leave at the beginning of 2020. The landscape of the SA domestic market has changed radically as SAA is no longer the dominant carrier.

Operating costs are higher, driven by the impact of global political and social uncertainty, resulting in havoc with jet fuel pricing. Our response in reclaiming our slice of market share has been to concentrate on high-demand local routes — Cape Town and Durban — and carefully selected continental routes where passenger numbers remain encouraging.

Our expansion of international routes is primarily focused on code-share agreements and alliances that give SAA passengers effortless access to many international destinations. We are encouraged by the opportunity afforded to our passengers to reach more destinations with our code-share partners and the Star Alliance network.

We are also excited at the ongoing processes in the SA government aimed at freeing SAA from being a state-run airline. SAA is evolving into an agile airline with an operating model that can secure its financial sustainability, independent of the fiscus.

For the airline’s survival and growth, SAA management is seized with the crafting of a robust route network strategy, selection of the right technology at the right prices, meticulous market movement forecasting, effective marketing and branding campaigns, and most importantly strong strategic alliances.

This has become SAA’s driving focus as we celebrate our re-birthday month.

• Lamola is SAA interim chairperson and CEO.