Wednesday, 4 March 2015

Another Inaugural Flight

Skywise took to the Joburg skies this morning, March 5th 2015, with their first "revenue" flight, and they follow the procession of Southern Africa start-ups that we have seen in the last while.

The consumer has benefited from more choice and lower fares, and the number of "specials" offered by the established players has increased tremendously, as expected.

Although South African Airways and SA Express take the limelight with their liquidity issues and government loan guarantees, the influence of the new entrants cannot be overlooked.

FlyAfrica continues to expand its network, with the Zimbabwe routes being the jewel in the crown for the time being. The backers of FlyAfrica still remain invisible, but they seem to carry influence in countries neighbouring South Africa. There have always been reports that Paramount Aviation is involved.

FlySafair has launched successfully, and should have benefited from the Christmas holiday rush. They have moved into thinner routes to George and Port Elizabeth, and it remains to be seen whether these are sustainable at low fare levels. The "pay for baggage" policy does seem to have generated much negative reaction. FlySafair is now flying a 4 aircraft schedule.

Skywise has sneaked into the picture without the normal fanfare, and their ownership is also obscure. They obtained the licence to operate by buying the company shell from the former owners of 1Time, and apparently purchased Global Airways with their AOC. The holding company is PAK which is a trans-africa trading company. The Mandela family are involved here.

What we would expect in a domestic market where 2 new entrants are trying to establish a footprint is some insane pricing at quiet times. The key indicator of success will be how soon the new airlines increase frequency.

Meanwhile, Mango's boss is now acting in charge of SAA. This must be changing some perspectives. Two fire sales have already taken place on the SAA website. Strong rumours abound that Etihad will soon take an equity stake in SAA. The government involvement will certainly make this exercise as interesting as was the Etihad-Alitalia tie-up.

At last there is some action in the local industry, and good news for African economies.

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