FLUG REVUE July 2005: South African Airways recovers

July 2005

SAA HOPES FOR BETTER FUTURE

By Stephan Wünsche

South African Airways flight SA263 from Frankfurt to Cape Town: every seat is taken on this A340-600 night flight in April. The clearly improved security situation and many tourist attractions are luring more and more visitors to the country. South Africa is booming. On top of that, business travel in sectors such as mining, agriculture and the automotive industry is expanding as well. BMW, DaimlerChrysler, Toyota, VW and Ford also produce cars here for export.

Thus in the last year, 237,500 passengers have flown just from Germany to the Cape of Good Hope with South African Airways (SAA). Globally, the airline transported some 7.3 million passengers.

After an extensive fleet renewal programme, SAA is currently planning how to deploy a fleet of 61 aircraft. These include eleven Airbus A319-100’s, six A340-200’s (formerly operated by Lufthansa), six A340-300E’s, nine A340-600’s, eight Boeing 737-200’s, 21 Boeing 737-800’s and eight Boeing 747-400’s. Whereas the elderly Boeing 737-200’s are all to be replaced this summer with brand-new A319’s, two jets from the jumbo fleet are to be retired by 2006 in favour of new A340-600’s. These 747-400’s are currently used on the popular route to London, amongst others, in a three-class configuration. South African Airways was also one of the first airlines to order the Boeing 737-800 with winglets.

South African Airways was founded in 1934 when the Union of South Africa acquired the private airline, Union Airways, and transformed it into its new, national airline. Over the decades, the airline has had a checkered history that was closely linked to the turbulent political developments in its homeland. Thus, during the years of apartheid SAA had to cope with foreign boycott campaigns. In 1986 even the New York flights had to be suspended due to economic sanctions. It was six years before the service was resumed. Again, flights to Australia had to be suspended from time to time. Only when apartheid was abolished in 1994 did the airline start growing rapidly. The codeshare agreement concluded with Lufthansa in 1995 was a step in the direction towards the airline’s present network and perhaps even the first step towards joining the Star Alliance, founded in 1997.

Today South African Airways flies to 34 destinations in 28 countries on its international routes. Europe is its most important market after its home continent, Africa. With 40 flights a week, SAA offers the greatest number of connections between Europe and South Africa. Services to the hub of London Heathrow are flown up to four times a day and up to 23 times per week. Other European airports are Frankfurt (dating back to 1952), Paris CDG and Zurich. Seasonal flights are also flown to Milan.

“On the Germany-South African route we are currently able to offer our passengers ten direct connections per week,” said Christof Hückelheim, SAA Marketing & Sales Manager, in an interview with FLUG REVUE in Frankfurt. “We operate a daily service to Johannesburg and fly three times a week non-stop to Cape Town. From 13 September 2005 when the peak tourist season begins, South African Airways will step up its three weekly flights to a daily non-stop connection to the Cape.”

On its domestic routes, the airline provides a link between the major metropolises of the country. There are hourly services between Johannesburg and Cape Town and between Johannesburg and Durban. 33 percent of domestic flights are booked over the internet, compared with only four percent on international flights.

On the regional scene, South African Airways flies to 26 African destinations, including many capital cities of neighbouring states. These include the airports of Abidjan, Dakar, Dar es Salaam, Entebbe, Gabarone, Harare, Kigali, Kinshasa, Lagos, Lilongwe, Lubumbashi, Lusaka, Mauritius, Nairobi, Windhoek and Walvis Bay. Many domestic flights and also flights to Namibia, for example, are operated by SAA’s affiliates, South African Airlink, in which it has a 10 percent financial stake, and South African Express, a 100% subsidiary. Another affiliate is Air Tanzanian, in which SAA owns 49 percent. According to SAA managers in the company headquarters in Johannesburg, Zanzibar in Tanzania (twice a week), Livingstone in Zambia and Bamako in Mali are expected to be the next destinations in the African market.

America has also developed into an expanding market. Thus, SAA flies daily flights from Johannesburg to New York via Dakar and also daily flights to São Paulo. On top of this, SAA offers a daily codeshare service to Atlanta (via Sal / Cape Verde) in collaboration with Delta Air Lines. In March 2005, South African Airways announced a third destination in the US market: Washington Dulles. The United hub is expected to enjoy four flights a week via Accra (Ghana) with a Boeing 747-400 in a three class configuration from July.

SAA CEO Khaya Ngqula commented on the route announcement as follows: “Our American connections are experiencing excellent growth. Now that we are flying to a third destination in North America, the fantastic prospect of expanding our global network is opening up. With the Washington hub we now have access to 95 additional American destinations and 450 daily flights operated by Star Alliance partner United Airlines. At the same time we are stepping up the existing, four times a week service to Accra and thus we are strengthening our position in West Africa.”

But SAA is also present on other global markets. Thus, in March 2005 South African Airways expanded the connection it has maintained for ten years to Bombay, India into its present daily service. With SAA’s codeshare partners, its passengers also have access to Dubai and Tel Aviv. Again, SAA offers a daily service to Hong Kong in the Far East. SAA also has a presence on the Australian continent, operating a service to Perth airport four times a week.

SAA’s Business Class (known as “Premium Class”) is very popular with customers and also scores highly in many surveys and assessments: in 2004 alone it won 13 awards. Commenting on this, Christof Hückelheim says, “Along with the onboard service we selected, the new reclining seat in Premium Class is definitely one of the critical factors in our popularity with the passengers. Onboard the Airbus A340-600 (42 seats) and the Airbus A340-300 (38 seats) Premium Class offers a seat width of 61cm, a seat pitch of 1.85m and a lumbar massage function available at the click of a button. But best of all is the possibility of transforming one’s seat into a completely flat bed, with a movable partition to protect one’s privacy.” The cost of the approx. $20,000 luxury seat almost certainly pays off, given that SAA’s Premium Class utilisation is 90 percent. In any case it is not just good for the image to have the “the world’s best” Business Class seat on board. But the question arises of whether one then needs to offer a First Class, or rather, of how to differentiate this product.

In March 2004, South African Airways announced its intention of joining the biggest airline alliance in the world, the Star Alliance. In the run-up to this decision, SAA had compared various airline alliances in a decision process that lasted a whole year.

“Altogether, a catalogue of 55 individual chapters has to be harmonised with the common standards in a laborious integration process between the members,” said Marcus Purfer, Director Alliance Development, in a presentation to members of the Aerospace Press Club in Johannesburg. “The only exception is the onboard product. Every member retains its own individual features, otherwise one would not be able to satisfy all of the market’s demands.”

On 14 December 2004, SAA’s CEO, Khaya Ngqula, signed a preliminary agreement regarding membership of the alliance in Bangkok, in the presence of the CEOs of all 15 Star Alliance member airlines. “When SAA officially joins the Star Alliance at the beginning of next year, its customers will overnight be able to enjoy a whole series of benefits,” said Ngqula optimistically. To everyone’s regret, the planned official joining of SAA then had to be postponed by another year, to 31 March 2006. The reason for this was a detail on which SAA did not yet meet requirements: “IT compatibility”. This is essential if the members are to be able to carry out secure data synchronisation. To satisfy this last requirement, South African Airways is currently working on the integration of a common reservation system. The old SAA system dates from 2000 and was taken over from Swissair. If the system hardware and software is working without problems at the beginning of 2006, no further obstacles will lie in the way of SAA’s full membership. Up to now, it has had individual agreements with nine partner airlines altogether, including Air France, Delta, Cathay Pacific, bmi, Lufthansa, Varig, Qantas and Emirates. Some of these arrangements will fall by the wayside once SAA becomes a full member of the Star Alliance as some of the airlines belong to other alliances.

The South Africans have a partner company which is responsible for its aircraft maintenance. “SAA Technical (SAT) is the biggest and most experienced provider of aircraft maintenance and repair and overhaul work in the entire African continent,” said CEO Rob Bulder at a presentation. “The company employs a workforce of 3,200, 66 percent of whom are aeroengineers. As well as South African Airways, its customers include numerous local and international airlines. Minor work is carried out for around 40 airlines which fly to South Africa. Altogether, SAT’s global clientele numbers about 70 customers.”

SAT’s main base is at Johannesburg airport, but it also has outposts in Cape Town, Durban and a few smaller centres. Since 2000 SAT has been operating as an independent, autonomous arm of South African Airways, with its own separate management. As Bulder explains, “SAT has a total hangar capacity of 85,000m2 of floor space. This includes a new 36,000m2 hangar at Johannesburg airport. This is the biggest hangar in the entire African continent. Up to six Boeing 747’s can be simultaneously maintained there. Moreover, in March 2004 a multi-purpose dock in which work can be performed on the A340-200, -300, -600 and A330 and on the Boeing 747 and MD-11 entered into service. This dock cost about $10 million. It means that the amount of time an aircraft has to be idle for maintenance work to be carried out can be reduced.”

SAT performs all the major maintenance work for the entire SAA fleet. However, its customers also include a number of European and African airlines plus others from Middle Eastern countries. Thus, for example, D checks have been carried out on the Boeing 747 for Lufthansa, Saudi Arabian Airlines and the Saudi Arabian Kingdom holding company. Customers for Boeing 737 C and D checks include Air Tanzania, Air Kenya Ltd., TAAG, Air Seychelles, Comair and Air France.

From FLUG REVUE 7/2005

Last updated 10 June 2005

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