SAA battling to stay relevant as global competition erodes market share

The world has moved on

significantly since the good

old days of South African

Airways (SAA) and it will

be extremely difficult for

the national carrier to be

as relevant as it was twenty

years ago.

This is the opinion

of Comair CEO, Erik Venter.

Speculating on what

the future holds for SAA

following its latest bailout,

Venter said that there

had been massive growth

in competition from

Middle Eastern carriers,

particularly in the case of

Turkish Airlines, in the last

ten years.

“Between the Middle

Eastern carriers and

Turkish Airlines, they

are covering just about

everything. Many people

are unaware that Turkish

Airlines f lies 45 routes

into Africa and Emirates

does 23 routes into the

continent. Turkish Airlines

has literally taken over

Africa on the international

routes,” he said.

Venter explained that

both Emirates and Turkish

Airlines were enormous

airlines that achieved

“phenomenal” economies

of scale. “They’ve both

got indirect state support

and effectively, their cost

per seat is something

that no other airline can

realistically compete with.

SAA is going to have a

great struggle to ever get

the economies of scale

that the massive Middle

East carriers are achieving.”

Sitting at the southern tip

of Africa did not give SAA

any geographical benefit

in terms of international

traffic either.

“On international routes,

SAA is always going to

have a cost disadvantage

on a cost-per-seat basis

compared to the capacity

coming into South Africa.

That is a big

change from

where SAA

used to be

twenty years

ago,” Venter

continued.

He added

that all

regional routes

in Africa that

used to f ly to

Johannesburg

no longer did

so, eroding

what was once a hub of

international f lying activity.

“People used to have

to f ly from Africa to

Johannesburg and then f ly

north into the rest of the

world. That is no longer

the case. All those African

destinations are now being

serviced directly, not only

by Turkish Airlines and

Emirates, but also by many

other carriers. From almost

every point in Africa, it is

no longer necessary to come

south to Johannesburg.”

This reality is having

a huge impact on SAA’s

regional network

and the

situation is not

much better

domestically.

“The South

African market

domestically

has moved

significantly over

the years, too. SAA on its

own, excluding low-cost

airline Mango and Airlink,

is only catering to 23% of

the capacity in our market,

which could easily be

absorbed by its competitors.

“It is going to be

phenomenally difficult to

turn SAA around and the

culture of the airline

will also be extremely

difficult to fix,” he

said.

INSERT & CAPTION

From almost every

point in Africa, it is

no longer necessary

to come south to

Johannesburg.

– Erik Venter