SOUTH AFRICA: Challenges Facing The Aviation Industry

The fundamental problem in the African aviation industry is fragmentation and that protectionism of national airlines will not go away soon, according to Erik Venter, CEO of Comair and chair of the Airlines Association of Southern Africa (Aasa).

This fragmentation in the African industry makes it difficult to achieve the necessary scale to compete with international airlines from outside the continent, Venter explained during a panel discussion by airline CEOs at Aasa’s annual general assembly.

As for tourism, Venter said the product that must be marketed is the destination. Most people do not just fly to fly. They do so to go to a destination for a reason. This is why Venter would like to see more co-ordination in the way tourism, and especially the marketing thereof, is approached.

“If something is not happening, do something. Don’t just say it is out of your sphere of responsibility,” said Venter.

For Irfan Pardesi, CEO of Skywise, the latest low cost airline to enter the SA market, the airline is looking for unique opportunities in SA. He sees the student tourism market as one such opportunity for potential growth.

In his view it would be a great idea for the airlines in SA to work together to offer travellers one pass to use on them all so that they would then end up visiting more destinations in the country and accordingly boost tourism as well.

He also said the new unlimited travel pass that Skywise introduced on the Johannesburg-Cape Town route, is working well.

Nico Bezuidenhout, CEO of Mango, said it is all about meeting the requirements of consumers. He pointed out that the airline industry is one of the few where year after year the unit cost is reduced. He also pointed out that a ticket between Johannesburg and Cape Town is cheaper today than in the year 2000.

“One cannot do that without innovation and therefore the airline industry is a breeding ground for innovation,” said Bezuidenhout.

“We must operate from a position of excellence and best practice.”

For Inati Ntshanga, CEO of SA Express and newly elected chair of Aasa, the important question currently in the SA airline industry is whether it will become cheap but not sustainable.

“It is about selling the right ticket at the right price to the right passenger. A taxi from OR Tambo airport to Johannesburg is already more than R500,” he said.

In his view there is definitely room for consolidation in the SA industry and to him the biggest challenge for the industry is a non-alignment between different government departments in matters relating to the industry.

Sylvain Bosc, chief commercial officer of SAA, said airlines are often blamed for a drop in tourism. He pointed out, however, that SA is a long haul destination, far from the biggest source markets, and the airline industry is very competitive.

He said currently some international airlines are reducing their capacity to SA, because the market is oversupplied with seats at the moment in terms of demand.

“Prices in the market are not aligned with the cost of production. How is this possible?” he asked.

“It is because some of the carriers are not operating in the same playing field as us.”

Ben Dahwa, CEO of Air Botswana, also said Africa’s aviation industry needs to be innovative and cannot just continue to think in the same old ways. In his view the industry cannot afford the luxury of not forming partnerships.

“It is about finding each other. Airlines form just a small part of the big picture which brings tourists to our sub-region of Africa. We must work together by using follow-up forums,” he suggested.