SAA eyes Africa lift from rise in flights to SA
As international airlines attempt to claim a piece of the African pie, adding routes and taking full advantage of the number of flights permitted in bilateral agreements, it is unclear how the troubled SAA will fare in the face of increased competition.
The Lufthansa Group has four of its airlines flying to South Africa and will introduce Austrian Airlines in October with a route between Cape Town and Vienna. Last year Eurowings - another of its airlines - began operating between Cape Town and Cologne-Bonn in Germany.
Lufthansa group chairman and CEO Carsten Spohr said on Thursday that it had seen an increase in tourists visiting South Africa as well as South Africans using Lufthansa to travel to Europe - a "nice dynamic from both perspectives".
South Africa is Lufthansa's top destination in Africa, followed by Nigeria, with the local market accounting for 1% of the group's $18-billion (about R215-billion) annual revenue.
André Schulz, Lufthansa's general manager of sales in Southern Africa, said Cape Town was booming from a tourism point of view as it offered value for money. Johannesburg was more of a commercial hub for the group.
Schulz said there were no immediate plans for Eurowings to service the Johannesburg route, nor were there plans to extend Lufthansa's services to Durban's King Shaka International Airport.
But even so, the direct flights Eurowings is now offering from Germany to destinations in Africa could affect demand for SAA flights to the same cities from South Africa. Potentially helping SAA is the agreement between Lufthansa and SAA whereby travellers arriving in South Africa could use an SAA flight to reach another destination in the country. The same applies for Lufthansa in Europe.
SAA CEO Vuyani Jarana told Business Times he was not concerned about the increase in flights by international airlines into Africa. A growing market brought opportunities for everyone, he said.
"In the current African context, to win does not mean somebody else must lose," he said. "You have to make sure you take your proportional share of the growth in the market ... but we are not necessarily seeing a win-or-lose scenario."
Jarana did emphasise that business from the rest of Africa would become increasingly critical for SAA.
He said that while he was busy with the transformation programme at SAA and restructuring of the airline, a big part of the strategy was to invest for growth on the continent. And it was important that SAA improved its product on the continent.
Bloomberg reported last year that SAA would revive a plan to seek an equity partner that is able to provide cash and assist in achieving operational savings to help the state airline turn around.
When asked if Lufthansa had any plans to get involved in SAA or buy a stake in it, Spohr said this week that the South African economy needed a strong national carrier as it was dependent on air travel. "Your government will realise putting SAA back into shape is of interest to the economy. I think it will be done and that is why we don't have any plans for this market in considering SAA."