This Is A Real Low Cost Carrier

AirAsia X is the king of low costs

AirAsia X has the lowest unit costs in the industry. It is the only airline in the world with CASK below USD4 cents.

This is aided by AirAsia X operating longer average stage lengths (about 5,000km) than other LCCs. AirAsia X’s shortest route is three and a half hours.

Other players in the medium/long-haul segment are not publicly traded or do not provide separate figures for narrowbody and widebody operations. But AirAsia X primarily competes against Asian full service carriers which have unit costs that are two to four times higher. AirAsia X is the only LCC on all 22 of its routes – although it does compete against other LCC groups on several connecting city pairs.


AirAsia X’s costs inched up in 2Q2014 due primarily to higher fuel prices. But cost controls and productivity improvements have resulted in lower staff, sales and marketing costs. The group expects lower CASK in 2H2014.

Airline Key Success Factors

During our popular ongoing Airline Commercial Management workshops we challenge participants to brainstorm a list of 5 key success factors in today's airline landscape. During the workshops we harvest the opinions of the airline delegates and attempt to distill their knowledge into the highlight list. Whilst there are diverse views of course, the following elements dominate the submissions:

1. Visionary,strong, and strategic leadership...
                     many names spring to mind including Kelleher, Fernandes, OLeary

2. Ruthless cost management

3. Multiple sources of ancillary revenue, and continuing to develop new sources

4. Effective use of information technology in distribution, yield management, and social networking

5. Deregulated environment with minimal government intervention/ownership

It should be possible to derive a success index, based on these factors, and a traditional SWOT and competitor analysis, that could form the initial basis for an airline success rating.

FlySafair Update

FlySafair have relaunched and announced that flights will commence on October 16th 2014. Initially they have offered JNB-CPT and CPT-PLZ at low fares. Baggage is not included.

The following from Travel News Online:

FlySafair has opened ticket sales for the second time, with plans to launch services in October - exactly a year after the airline initially planned to take flight.

FlySafair first opened ticket sales for flights between Johannesburg and Cape Town, in September last year, with the maiden flight scheduled for October 17, 2013. The airline was blocked from launching and forced to re-accommodate and refund passengers after the court granted an interdict sought by competitors, Comair and Skywise.

Now, the airline has opened bookings, with its first flight between Cape Town and Johannesburg set for October 16.

The LCC is advertising fares starting from R499 between Cape Town and Johannesburg and R399 between Cape Town and Port Elizabeth.

Dave Andrew, ceo of FlySafair, said in a statement: “These are not just opening specials or marketing showstoppers to announce the start-up. FlySafair is ready to bring you the value that you deserve.”

Fly Africa

Fly Africa, the new low-fare carrier, is set to launch operations on 23JUL14. Initially it will operate Johannesburg – Victoria Falls service 3 times a week, with Boeing 737 aircraft. The airline uses IATA code “Z7″.

Flight schedule:

Z7104 JNB0900 – 1040VFA 737 357
Z7111 VFA1420 – 1555JNB 737 357

UPDATE: Flights postponed due to Zimbabwean CAA finding problems with operational documentation.

Fastjet Update

The following article appeared in atwonline today:

"African budget carrier Fastjet has suspended operations at its Fly540 Ghana subsidiary as part of its long-running battle to curb its legacy Fly540 losses.

FastJet acquired African regional airline Fly540 to accelerate its low-cost launch, giving it instant access to air operators’ certificates in Angola, Ghana, Kenya and Tanzania. It used this as a platform to launchFastjet-branded Airbus A319 operations from Dar es Salaam, Tanzania, in November 2012.

However, Fastjet has struggled to secure route rights for its budget expansion—partly due to questions over ownership and control—and its legacy Fly540 business has been racking up losses. Earlier in May, Fastjet suspended Fly540’s Angolan operation—pending restructuring—and said Ghana was also on its watch list.

Ghana has now followed in the footsteps of Angola. “Fly540 operations in Ghana are being temporarily suspended pending further restructuring. Fly540 has served notice on the leasing agreement it holds on one ATR aircraft in Ghana,” Fastjet said in a statement. It has already put two ATRs, previously operating in Ghana and Angola, up for sale.

Fastjet CEO Ed Winter said the legacy Fly540 business is not part of its core low-cost model. He reiterated his ambition to launch Fastjet low-cost operations in both Angola and Ghana in the long term.

For the shorter term, Fastjet is focusing on East and Southern Africa; it is aiming to establish bases in Kenya, South Africa and Zambia. “These plans are progressing well,” Winter said. 

However, Fastjet’s international expansion has been sluggish and its tentative plans to partner with airlines and investors in Kenya, Nigeria and South Africa have been slow to materialize."

More Fun and Games at South African Airways

The following appeared in the Business Day newsletter today:

A CONFIDENTIAL report detailing alleged irregularities at South African Airways (SAA) was threatening to plunge the national carrier into yet another scandal, the Afrikaans daily newspaper Beeld reported on Tuesday.

In the report it is alleged that SAA interim CEO Monwabisi Kalawe kept the SAA board in the dark and even misled it about his alleged efforts to buy shares in an "insolvent" airline.

According to the report Mr Kalawe negotiated for five months without the knowledge or consent of the board to buy shares in the "insolvent" Senegal Airways.

Business Day reported in January this year about the transaction after SAA said it had been approached by the Senegalese government to acquire a stake in Senegal Airlines, and that it was considering the offer.

Once again we have evidence of the apparent in-fighting that is going on between the SAA board and SAA management. In view of the dire situation that the airline finds itself in, this is not too surprising. However, it would be in our best interest for all the brain power and energy to be focussed on strategic solutions, not personal points gathering.

Links to aviation partners:

www.eptaviation.com
www.cranfield.co.za
www.aeroservices.co.za
www.webb-elgin.com

Airfares in Africa 50% higher

Airfares in Africa 50% higher than rest of world

15 Thu, May 2014

Airfares in Africa are 50% higher than anywhere else in the world, and this needs to change. This is according to Tourism Minister Marthinus van Schalkwyk, who was speaking at the dialogue of African ministers at the Tourism Indaba in Durban this weekend.

According to van Schalkwyk, African countries need to increase transparency when it comes to airfares, taxes and fuel surcharges. He said: “Many governments actually add taxes on that the public doesn’t even know about because of the un-transparent nature of how prices of aviation fuel are being set. As African countries democratise, it is much more difficult for governments to continue with un-transparent systems.”

Alain St Ange, Seychelles’ Minister of Tourism, agreed and suggested African airlines should have preferential airfares for African citizens. He said: “To increase business, let’s look at our taxes. Recently, at an Indian Ocean commission, a resolution was passed to have preferential tickets for the inhabitants of the islands of the Indian Oceans. That is maybe something that we need to do with Africa.”

From SA Travel New Online

Links to aviation partners:

www.eptaviation.com
www.cranfield.co.za
www.aeroservices.co.za
www.webb-elgin.com

FLY BLUE CRANE

In an interesting reference to the national bird of South Africa, Blue Crane Aviation have submitted an application for a Domestic Air Services Licence.

The outfit is a collection of ex-SAA management including the past-CEO Siza Mzimela, past-CCO Theunis Potgieter, and Jerome Simelane. Initial statements have emanated from Ogilvy PR, whose executive was a past PRO for SAA. For this reason they are probably bound to generate some significant publicity. We can also expect some interesting responses from government and SAA.


The licence application reportedly mentions Johannesburg-Cape Town as first route, but statements indicate a more regional ambition. We could be looking at an interesting race between Safair and Blue Crane, to see who will take-off first. We should also watch out for possible alliances, with parties such as fastjet and flyafrica.com. The management can likely capitalise on past international networking connections, so a tie-up with a large overseas player may also be a possibility.

Africa has good economic growth, and South African consumers will welcome more competition, so there are some favourable industry conditions. The key, in our opinion, will be to understand the partnerships which Blue Crane is able to forge, and how its relationship with government will pan out. This is no longer a game for small players.

Johannesburg
13 May 2014

e-Learning in Airline Crew Training

e-Learning in Airline Crew Training

One of Johannesburg's leading training schools has initiated a new format for Cabin Crew training based on online e-learning techniques. This approach reduces the cost of training significantly, and also reduces the time spent in classroom.

The school website can be found here.

The Cabin Crew Member Licensing Programmes comprises of the following two essential components:

AAA - Online Learning Component for Cabin Crew Member Licensing – This is the e-learning section of the Programme and focuses on the theoretical aspects of the syllabus relating to cabin crew member licensing. Approximately 260 hours (within a two month period) is available to the learner to complete this section of the programme. Interaction with instructors and fellow students takes place via Classroom Discussion Forums

BBB - Mandatory Residency Component for Cabin Crew Member Licensing – This is the component when all examinations and practical assessments for the licensing of cabin crew members is undertaken. Learners are required to attend this component at the premises of EPT Aviation Training for a two week period.  Learners are required to successfully complete all aspects of the Online Learning Component prior to attending the mandatory two week residency period.

The cost involved is R8000 - which is approximately half the usual cost.

The CAA has approved this option.

Click here for more information.

Safair Granted Domestic Air Services Licence

Good new for air travellers is that Safair have finally been granted a Domestic Air Services Licence, after legal challenges to their original application.

Safair have re-engineered their shareholding structure to comply with local ownership principles, and have introduced an employee ownership scheme.

There is not as yet any news regarding start dates, but it is unlucky for consumers that they have missed the Easter rush. May is traditionally a poor month for domestic air travel, so we would expect first flights in June/July.

It is understood that Safair are in a high state of readiness, as a result of their efforts in 2013. The expectation is that 2 Boeing 737 aircraft would operate an initial schedule of 4-6 daily return flights between Johannesburg and Cape Town.

Initial reaction from Comair is that passengers should not expect to see lower fares. However, historically there have always been good bargains on offer when a new airline entrant starts operating, and there is no obvious reason why this should not be true in this case.

Safair established good rapport in the social media during its initial aborted launch and so the public will probably show some support for the new services.

You can read the full Safair press release here: http://www.flysafair.co.za/data/FlySafair_announcement.pdf

Visit our website here: http://www.webb-elgin.com

No joy for Skywise

The travel press are reporting, and Skywise founders have confirmed, that the Air Services Licencing Council have rejected a request by Skywise for an extension of their Domestic Air Services Licence. Basically this means that the whole process will have to be restarted if Skywise still wishes to commence operations. The official reason given by the council for the rejection is that Skywise has failed to obtain an AOC.

Industry insiders have suggested that the failure to take off is possibly due to a failure to raise sufficient start-up capital funding.

In an interview, one of the founders, Rodney James, suggested that they are still pursuing alternative avenues and hinted at some form of co-operation. Other projects which may be candidates for a joint venture include Fastjet, Santaco, Safair, and FlyAfrica.

Conditions in the domestic air market in South Africa remain tight, despite Comair posting exceptionally good results, and ordering new aircraft. There have, however been a few small developments in the feeder service segment which could eventually lead to meaningful competition.

Comair Orders 8 B737 MAX

Comair's good fortune continues. The absence of serious competition, and the prospect of African skies opening up, has placed them in a position to make a strong commitment. Share price continues to rise.

The following report by Reuters:

Johannesburg - South African airline Comair Ltd said on Wednesday it has ordered eight 737 MAX 8 aircraft from Boeing with a list-price of $830 million (R9 billion), sending its shares up sharply.

The order makes Comair, which operates the kulula.com budget airline, the first African airline to order the new aircraft.

The franchise partner for British Airways said it would take delivery of the first four planes in 2019 and the remaining four over the next two years, chief executive Erik Venter said.

The airline, which is ordering the new planes to replace aging ones, has the option to take a further eight of the narrow body aircraft that can seat 189 as currently designed.

Comair expects to receive the last four of an earlier order for eight 737-800 craft in 2015 and 2016.

POSSIBLE MH370 WRECKAGE SIGHTING

Reports are now surfacing that satellite images show a possible 25m piece of wreckage 2500km from Perth. Orion aircraft observer tweets suggest strong radar returns.

It will take some time to confirm, but this is the most substantial evidence that has emerged since the MH370 departed KL on March 7th.

The search for flight recorders will be difficult, but the seabed is believed to be abyssal, which is a positive. However, given that the CVR will only hold 1 hour of data, we may not glean much from the recorders. The wreckage is more likely to throw light on whether the train of events was intentional or accidental.

Update 24 March - still no confirmed positive sightings

STILL NO SIGN OF MISSING MALAYSIAN BOEING

This is not strictly a South African aviation topic, but anyone connected with the industry must be following the saga at some level as it unfolds. For South Africans, there are some similarities with the 'Helderberg' tragedy.


Despite the high volume of so-called "facts" there is still no definitive information regarding MH370, except for 2 electronic clues which indicate that the airliner deviated from its planned course. Whether this was due to deliberate human actions, or due to aircraft malfunction is still a guess. All that we know from past experience is that the longer that the search continues, the less likely it becomes for us to find any wreckage.

There will now be renewed calls for more relaible aircraft tracking, especially as cell phone technology has put most of us in touch with an electronic network at all times.

Thoughts must be with the relatives and friends of the passengers, who are in complete uncertainty as to the fate of their fellows.

The following report from airlineratings.com

New focus on area 1000km south-west of Perth, Australia.

The search for Malaysia Airlines flight MH370 has now been expanded deep into the southern hemisphere off the south-west coast of Western Australia.

An armada of 10 planes has arrived in Perth Western Australia to search for the missing Boeing 777.

Malaysian investigators say Flight MH370 was deliberately diverted during its flight from Kuala Lumpur to Beijing on March 8 and then flew on for up to seven hours.

Investigators suggest hijacking, sabotage, or pilot suicide, and are examining the backgrounds of all 227 passengers and 12 crew members. They are also looking into backgrounds of ground crew.

Malaysian Defence Minister Hishammuddin Hussein has not ruled out finding the plane intact.
“The fact that there was no distress signal, no ransom notes, no-one claiming responsibility, there is always hope,” said Mr Hishammuddin.

Australian search authorities says that they have evidence that the missing plane may be off WA and major search assets have been re-deployed to Perth from Malaysia.

Leading the search is the US Navy’s latest sub hunter the P8A Poseidon.

It’s a commercial plane but with a sting!

The Boeing P-8A is based on the world’s biggest selling plane, the 737, but comes with a suite of electronics and armaments designed to find and destroy the most elusive submarines and ships.

It can fly for 7,500km and has been strengthened to make 60 degree turns and operate just 60m off the ocean.
And once it has detected the enemy it can launch an array of bombs or missiles – in fact 10,000kgs of them.

These include torpedoes, depth charges, SLAM-ER missiles and Harpoon anti-ship missiles.
It has the very latest in communications with over 10 separate radios and data links across the VHF, UHF, HF and SATCOM spectrums.

Like the Lockheed Orion it is designed to replace the P-8A has advanced sensors and mission systems which include advanced multi-mode radar, a high definition electro-optic camera, sonar buoys and an acoustic system.

However, rather than hunt submarines the P-8 and the four Lockheed P3 Orions will be searching for metal debris, such as tail or wing of MH370 Boeing 777 that may be floating on the water.

They will also be using their underwater detection ability to search for a large object.

The P-8 can cover an area of 38,850 square kilometres in a nine-hour flight.

Visit our website at www.webb-elgin.com to learn more about our software and training services.

New focus on area 1000km south-west of Perth, Australia.

Boeing P8A Poseidon

Search Area for MH370

The search for Malaysia Airlines flight MH370 has now been expanded deep into the southern hemisphere off the south-west coast of Western Australia.

An armada of 10 planes has arrived in Perth Western Australia to search for the missing Boeing 777.

Malaysian investigators say Flight MH370 was deliberately diverted during its flight from Kuala Lumpur to Beijing on March 8 and then flew on for up to seven hours.

Investigators suggest hijacking, sabotage, or pilot suicide, and are examining the backgrounds of all 227 passengers and 12 crew members. They are also looking into backgrounds of ground crew.

Malaysian Defence Minister Hishammuddin Hussein has not ruled out finding the plane intact.
“The fact that there was no distress signal, no ransom notes, no-one claiming responsibility, there is always hope,” said Mr Hishammuddin.

Australian search authorities says that they have evidence that the missing plane may be off WA and major search assets have been re-deployed to Perth from Malaysia.

Leading the search is the US Navy’s latest sub hunter the P8A Poseidon.

It’s a commercial plane but with a sting!

The Boeing P-8A is based on the world’s biggest selling plane, the 737, but comes with a suite of electronics and armaments designed to find and destroy the most elusive submarines and ships.

It can fly for 7,500km and has been strengthened to make 60 degree turns and operate just 60m off the ocean.
And once it has detected the enemy it can launch an array of bombs or missiles – in fact 10,000kgs of them.

These include torpedoes, depth charges, SLAM-ER missiles and Harpoon anti-ship missiles.
It has the very latest in communications with over 10 separate radios and data links across the VHF, UHF, HF and SATCOM spectrums.

Like the Lockheed Orion it is designed to replace the P-8A has advanced sensors and mission systems which include advanced multi-mode radar, a high definition electro-optic camera, sonar buoys and an acoustic system.

However, rather than hunt submarines the P-8 and the four Lockheed P3 Orions will be searching for metal debris, such as tail or wing of MH370 Boeing 777 that may be floating on the water.

They will also be using their underwater detection ability to search for a large object.

The P-8 can cover an area of 38,850 square kilometres in a nine-hour flight.
- See more at: http://www.airlineratings.com/news/254/search-for-mh370-widens#sthash.kktHxdOl.dpuf

New focus on area 1000km south-west of Perth, Australia.

Boeing P8A Poseidon

Search Area for MH370

The search for Malaysia Airlines flight MH370 has now been expanded deep into the southern hemisphere off the south-west coast of Western Australia.

An armada of 10 planes has arrived in Perth Western Australia to search for the missing Boeing 777.

Malaysian investigators say Flight MH370 was deliberately diverted during its flight from Kuala Lumpur to Beijing on March 8 and then flew on for up to seven hours.

Investigators suggest hijacking, sabotage, or pilot suicide, and are examining the backgrounds of all 227 passengers and 12 crew members. They are also looking into backgrounds of ground crew.

Malaysian Defence Minister Hishammuddin Hussein has not ruled out finding the plane intact.
“The fact that there was no distress signal, no ransom notes, no-one claiming responsibility, there is always hope,” said Mr Hishammuddin.

Australian search authorities says that they have evidence that the missing plane may be off WA and major search assets have been re-deployed to Perth from Malaysia.

Leading the search is the US Navy’s latest sub hunter the P8A Poseidon.

It’s a commercial plane but with a sting!

The Boeing P-8A is based on the world’s biggest selling plane, the 737, but comes with a suite of electronics and armaments designed to find and destroy the most elusive submarines and ships.

It can fly for 7,500km and has been strengthened to make 60 degree turns and operate just 60m off the ocean.
And once it has detected the enemy it can launch an array of bombs or missiles – in fact 10,000kgs of them.

These include torpedoes, depth charges, SLAM-ER missiles and Harpoon anti-ship missiles.
It has the very latest in communications with over 10 separate radios and data links across the VHF, UHF, HF and SATCOM spectrums.

Like the Lockheed Orion it is designed to replace the P-8A has advanced sensors and mission systems which include advanced multi-mode radar, a high definition electro-optic camera, sonar buoys and an acoustic system.

However, rather than hunt submarines the P-8 and the four Lockheed P3 Orions will be searching for metal debris, such as tail or wing of MH370 Boeing 777 that may be floating on the water.

They will also be using their underwater detection ability to search for a large object.

The P-8 can cover an area of 38,850 square kilometres in a nine-hour flight.
- See more at: http://www.airlineratings.com/news/254/search-for-mh370-widens#sthash.kktHxdOl.dpuf

New focus on area 1000km south-west of Perth, Australia.

Boeing P8A Poseidon

Search Area for MH370

The search for Malaysia Airlines flight MH370 has now been expanded deep into the southern hemisphere off the south-west coast of Western Australia.

An armada of 10 planes has arrived in Perth Western Australia to search for the missing Boeing 777.

Malaysian investigators say Flight MH370 was deliberately diverted during its flight from Kuala Lumpur to Beijing on March 8 and then flew on for up to seven hours.

Investigators suggest hijacking, sabotage, or pilot suicide, and are examining the backgrounds of all 227 passengers and 12 crew members. They are also looking into backgrounds of ground crew.

Malaysian Defence Minister Hishammuddin Hussein has not ruled out finding the plane intact.
“The fact that there was no distress signal, no ransom notes, no-one claiming responsibility, there is always hope,” said Mr Hishammuddin.

Australian search authorities says that they have evidence that the missing plane may be off WA and major search assets have been re-deployed to Perth from Malaysia.

Leading the search is the US Navy’s latest sub hunter the P8A Poseidon.

It’s a commercial plane but with a sting!

The Boeing P-8A is based on the world’s biggest selling plane, the 737, but comes with a suite of electronics and armaments designed to find and destroy the most elusive submarines and ships.

It can fly for 7,500km and has been strengthened to make 60 degree turns and operate just 60m off the ocean.
And once it has detected the enemy it can launch an array of bombs or missiles – in fact 10,000kgs of them.

These include torpedoes, depth charges, SLAM-ER missiles and Harpoon anti-ship missiles.
It has the very latest in communications with over 10 separate radios and data links across the VHF, UHF, HF and SATCOM spectrums.

Like the Lockheed Orion it is designed to replace the P-8A has advanced sensors and mission systems which include advanced multi-mode radar, a high definition electro-optic camera, sonar buoys and an acoustic system.

However, rather than hunt submarines the P-8 and the four Lockheed P3 Orions will be searching for metal debris, such as tail or wing of MH370 Boeing 777 that may be floating on the water.

They will also be using their underwater detection ability to search for a large object.

The P-8 can cover an area of 38,850 square kilometres in a nine-hour flight.
- See more at: http://www.airlineratings.com/news/254/search-for-mh370-widens#sthash.kktHxdOl.dpuf

Update

On our website you can read more about our software, training, and other services. We offer training in airline management, scheduling, and yield management. We supply crew and flight scheduling software services.
http://www.webb-elgin.com

STRATEGIC OPTIONS FOR SOUTH AFRICAN AIRWAYS

For more than 20 years the fate of South African Airways has been a matter for regular discussion, and as time goes by, the debt mounts, the results deteriorate, and the problems become deeper. World airline competitiveness is constantly improving, and in spite of fuel price and aircraft purchase price increases, major carriers do still manage to make profit, albeit relatively little compared to the associated risks. IATA recently documented that the overall global profit per airline passenger was less than 3% of the ticket price.

With each change of management a new 10 year plan is invented, usually accompanied by a major aircraft investment. It is not unlikely that the aircraft manufacturers play a significant role in generating each version of the SAA strategy. It must be noted that the so-called "fuel guzzling" aircraft used by South African Airways are also used by a number of profitable airlines, and that SAA in fact has one of the youngest fleets in its class, just over 10 years according to airfleet.net, whereas some of the major competitors flying into Johannesburg have fleet ages in excess of 15 years.

The strategic variables that need to be considered are:

• ownership
• capitalisation
• network

and none of these can be considered in isolation.

At a time when the Middle East airlines are on the acquisition trail, and are already active in Africa, it seems fairly likely to me that some form of ownership deal with one of the Middle East carriers is a serious option. It is the Middle East carriers who are eroding the profitability of a large portion of long-haul flights due to their own growth and yield strategies. There would be some tricky discussions around the current debt book, but considering that Etihad is in advanced discussions with Alitalia, the Italian national carrier, I would assume that the SAA problem is somewhat smaller by comparison, and could be resolved. According to the New York Times - "The largest sticking point to a deal remains Alitalia’s debt of nearly €1 billion. The airline’s lenders, who now also happen to be among its largest shareholders, have so far refused to restructure, according to a person familiar with the discussions who requested anonymity because the talks are confidential."

Such an arrangement with a foreign airline would necessarily require a radical revision of the SAA network, and it would possibly take the form of the significant reduction in long-haul, or intercontinental, flights. This would eventually suggest that SAA and SA Express (the regional feeder airline) become a single entity. It would also result in a different aircraft  fleet composition.

The South African government has two vested interests in SAA, if we cast aside the financial burden, as it has been ignored for many years now. These interests are national presence (brand), and employment targets. If we follow the "do-nothing" strategy, these objectives will in any case dissolve.

What is clear to me, and most South Africans, is that major change is necessary, before the monolith simply implodes under the weight of debt and job creation.

On a morning when the mystery of MH370 remains headline news, a quick look at the ratings:

Top of the ranking from AirlineRatings.com of the safest carriers in 2013 is the Australian airline Qantas.

Awarding it a full seven stars, the website cites the airline's fatality-free flying record from the beginning of the jet era in the early 1950s.

Other airlines sharing the seven-star rating and winning a place among the top 10 safest airlines are, in alphabetical order, Air New Zealand, All Nippon Airways, Cathay Pacific Airways, Emirates, Etihad Airways, Eva Air, Royal Jordanian, Singapore Airlines and Virgin Atlantic.

There can be some debate about the list, but it remains apparent that the Far East is the home of some of the most impressive large carriers, with the Middle East a close second.

Following on the introduction of the A380 superjumbo on the route, SAA respond by reducing capacity. The A330 will however also reduce fuel cost on the route.

From Travel News Online today:

SAA will be replacing the A340-600 on Johannesburg-London route with an Airbus A330-200 from March 28.

The A330-200 is smaller than the A340-600, which will result in SAA decreasing its capacity on the route.

When asked why SAA was decreasing capacity on its London route, SAA Spokesperson, Tlali Tlali, said the decision was informed by customer feedback “so that we are able to meet the expectations of our passengers”. The airline has admitted that all its international routes are loss making.

British Airways recently increased capacity on its route between Johannesburg and London, with the addition of three weekly A380 services to the airline’s existing B747-400 weekly services. BA will add a further three services by March 6.

SAA seeking another govt bailout

Feb 19 2014 20:05

news24.com

 

Cape Town - SA Airways remains constrained by a weak balance sheet and needs a capital injection from government to thrive, airline executives told MPs on Wednesday.
Briefing parliament's select committee on labour and public enterprises, SAA CEO Monwabisi Kalawe said he remained confident the airline's long-term turnaround strategy would yield results by 2018.
"Somewhere between year four and year five, the business should either break even or show a small profit," Kalawe said.
MPs grilled him on the continuing bailouts by government, which have seen the airline severely criticised. Kalawe explained the bailouts were in the form of government guarantees which allowed the state carrier to borrow from banks.
"Against those loans we pay heavy interest." This was setting the airline back even more.
"When SAA was taken out of Transnet, it is our view... that the balance sheet was undercapitalised," he told MPs.
Poor management?
He insisted the call for a capital injection was not as a result of poor management by the current board and executive management.
"We inherited a business with a balance sheet that was not properly capitalised. All we are asking for is give us a fair start, shareholders," Kalawe said.
He could not publicly say exactly how much they were asking for.
"I'm not able to give you ratios or numbers because if I do that, I will compromise the confidential conversations that are taking place between DPE [department of public enterprises], our shareholder, and National Treasury," he said.
DPE deputy director general Kgomotso Modise confirmed her department was in talks with Treasury to ask for the capital boost and said the numbers were currently being "worked out".
 A capital boost
SAA chairperson Dudu Myeni threw her weight behind the airline's request for a capital boost.
"The issue of being bailed out all the time, every year, is not something that augurs well with the board... There must be an end to when we go to government with a hat," Myeni said.
The lack of a capital injection meant the airline would continue to make losses on specifically international routes, where older "gas guzzlers" aircraft were still being used. As a result of the weak balance sheet new wide-body planes could only be delivered by 2018.
The fuel price, a volatile exchange rate, and loss-making routes were some of the issues blamed for the over R900m loss the airline made last year.
The long-term turnaround strategy would include "aggressively" negotiating fuel costs, closing loss-making routes or reviewing them, and improving sustainability.
New routes
The South Africa to Kigali route had already been closed, and flights to Buenos Aires were to be withdrawn.
The loss-making Johannesburg to Beijing route would remain open, as government saw it as a key route for maintaining relations with China.
Myeni confirmed that SAA would most likely open up flights between Durban and Cape Town.
"We made a mistake by just closing the route altogether. We probably should have... looked at the frequencies... maybe, Monday, Thursday and Friday, instead of seven days a week."

Cemair, the ORT based operator, is continuing its cautious safari into scheduled service and now is adding Plettenberg Bay to its network. In December, they added Margate. They are operating King Airs and filling in some of the gaps left by Airlink.

In another league, British Airways first regular A380 service from Heathrow landed on schedule at OR Tambo International this morning.

The attached article appeared in Travel Online this morning. Comair are doing their best to discourage competition, as we would expect from a listed company.

Comair profits up, but prices stay the same 

12 Wed, Feb 2014

  

Comair has effectively doubled its profit, as was forecasted at the end of January. But ticket prices won’t come down.

Comair’s revenue also grew by 23%, which, the airline said, was attributable to the 15% increase in capacity arising from the replacement of Boeing 737-300s with the larger 800s. The airline has ordered another four new Boeing 737-800s, which are expected to be delivered in late 2015 and 2016. Cash generations were strong, resulting in a cash balance of R695m, the airline reported.  

Despite the positive results, Erik Venter, CEO of Comair, said in a statement ticket prices would remain the same as the levels are necessary to recover the escalating costs of fuel and the continued devaluation of the Rand. He added that the domestic market was plagued by overcapacity.

Take a look at the latest article from Comair - trying to convince us and shareholders that new entrants will not lower fares !!

Airfares won’t come down - Comair

07 Fri, Feb 2014

  

Domestic travellers aren’t likely to see airfares come down, even if new carriers should enter the market. 

This is the word from Erik Venter, Chief Executive of Comair, who says a drop in airfares would not be sustainable. 

Comair is expecting its profits to double when it announces its financial results this week. The airline indicated last week that earnings per share and headline earnings per share for the six months ended December 31, 2013 were expected to be between 32 and 35 cents per share. Comair’s EPS for the same period in the previous year was 16,4 cents, when the company generated R262 million. 

Fastjet has vowed to bring down domestic fares if the airline succeeds in entering the South African market. CEO, Ed Winter, says the current duopoly created by SAA and Comair is keeping airfares at an all-time high. “Prices went up by 35% after 1time fell. Fares are higher than they need to be and, in peak season, capacity is not there. For the South African consumer, a third airline would be a huge benefit.”

However, Venter strongly disagrees: “Of course every start-up airline makes a lot of fuss about how it will sell cheaper tickets but the reality is that it is just not possible.” 

He says there is an 8% excess capacity in the market, partly created by the fact that domestic travel market has shrunk by 5%. “There is already strong competition for passengers between kulula and Mango, keeping prices as low as they can realistically be. The only way to get prices lower is to go bankrupt.” 

Venter says that in the last financial year, Comair made a profit of R46 per passenger. “Talk of reducing fares by 20% with the entrance of a new airline is nonsense. On an average fare of around R750, this would mean a reduction of R150 or, put differently, a loss of R104 per passenger.”

Although the local travel industry has seen the crippling effect of high fares on the domestic travel market, industry players are also doubtful that a significant drop in airfares would be feasible. They are wary of yet another fare war that might result in bankrupt airlines and stranded passengers.