Taking off in bid to beat ‘airline apocalypse’
But business travel only rule means gloomy skies ahead
Although level 3 lockdown regulations allow business flights, airlines say this market is too small to sustain operations and leisure travel restrictions need to be relaxed to prevent cash burn in what has been described as an “airline apocalypse”.
CemAir and Airlink, which have restarted operations, say that although initial flights had reasonable numbers of passengers due to a surge in demand from those stuck in various parts of the country under the earlier lockdown levels, sales could drop off as other airlines take to the skies again from tomorrow.
“I think this week is going to be pretty gloomy because not only are we going to be beyond that initial surge, but then suddenly you are going to have Mango and FlySafair and everybody on,” says Cem-Air CEO Miles van der Molen.
“Eventually it does us a lot of good because it draws people back into the system, but this week is going to be hard.”
CemAir and Airlink, which traditionally operate smaller aircraft to transport people to niche destinations around the country and on the sub-continent, are also now flying the “golden triangle” of Cape Town, Johannesburg and Durban, something which they never did in the past. This is because only those three routes are available to airlines.
CemAir was the first airline to fly out of OR Tambo, with a flight to Cape Town on June 5, and since then has experienced a mixed bag when it comes to passenger demand.
The proportion of travellers who fly in SA for business purposes, according to Airlink CEO Rodger Foster
“Passenger loads have been very erratic. We can have an outbound flight that gets pretty close to full but have a return flight with a very light load. It’s very unpredictable,” says Van der Molen.
“There used to be a flight every 20 minutes to Cape Town before Covid. Last Friday, when we started flying, an aircraft half the size of the bigger aircraft [which usually have about 189 seats] was doing two rotations the whole day and it had empty seats. The scale of the pullback of the market is vast. It’s an airline apocalypse, there’s no doubt about it.”
Airlink CEO Rodger Foster says Covid-19 and the lockdown have been “worse than devastating” as the airline industry had already been experiencing a contraction in air travel because of the sputtering economy.
He says the total shutdown of the airline industry in SA has completely “compromised the economy”.
“To try and find a way out of that is even more difficult because you have to encourage customers or the market to return, and I’ve seen the very humble beginnings of Airlink in 1992 when I took over as MD of the business. I know what it takes to develop new markets and we have a scenario right now where every market is a new market and it makes things enormously difficult.”
Covid-19 and the lockdown have been ‘worse than devastating’.
Foster says that generally about 20% of travellers fly in SA for business purposes and that, according to surveys, only 30% of all travellers indicate they would feel safe to board a plane again. This means that the business travel market has shrunk to 6% of travellers.
“You can’t operate successful, sustainable, viable air services on the basis of one small component of the overall business. How are you going to deliver capacity to 6%? Who is going to deliver that capacity?”
He says even with South African Airways and Comair both in hibernation because of their business rescue processes, there isn’t enough of a market for the airlines that can operate. With Mango and FlySafair resuming flights this week, the market will shrink even further.
Foster says passenger loads on the initial flights operated by Airlink on Monday “weren’t bad”, with an average load factor on a 98-seater plane of about 73%. “But for the rest of this week the booking take-up has been slower and the booking profile last-minute, with projected load factors of around 65%.
“No airline can run at sub-optimal load factors, so what we are doing is playing around with our fares to try and encourage customers back into flying. But the challenge we’ve got is that there is a perception that flying in an aircraft presents a threat insofar as the transmission of Covid-19 is concerned. But the threat in an aircraft is far less than the threat in a taxi and far less [than] in the Gautrain or in a bus or going to a local supermarket to fetch your groceries.”
Foster says there is no indication yet from the transport department or National Coronavirus Command Council when the air transportation sector will enter phase two of lockdown easing and that the airline industry was lobbying to open up completely sooner rather than later.
He says for airports to open they have to be able to offer port health services, which entails taking every person’s contact details, as well as screening.
The same onerous regulations are not applied to other forms of public transport, such as taxis or buses, or in supermarkets, he says. Foster believes the airline industry should be treated the same as these other sectors.
He says one unique feature of Airlink is that it operates smaller aircraft, which translates into lower trip costs for the airline than when using larger planes.
“That helps us to save burning cash. But when the others [airlines] come, for the time being they’re going to burn cash until the market comes back.”
Kirby Gordon, chief marketing officer for Safair, which owns low-cost airline FlySafair, says the airline will resume flights from tomorrow, offering 24 flights a day during the week, and 12 on Saturdays and Sundays. This represents about 20% of the capacity that was available to the airline before Covid-19.
Gordon says the take-up of tickets has been relatively slow, but the group isn’t “hitting the panic buttons yet”.