South African Airways SAA

By Lark Ellen Gould

South African Airways with the help of its code share partner, Ethiopian Airlines, pretty much rules the African skies, especially for travelers coming from the US. And for those fortunate enough to travel on SAA, the ride can be good indeed. The airline makes daily nonstop flights from Washington/Dulles and JFK that take around 15 hours. The code shares from US cities with Jet Blue and Virgin America ensure seamless flights that allow baggage check-in from origin city to Johannesburg.

The airline is one of the few in the sky to offer business class passengers comfortable lie flat seats – with cotton mattress pad and matching duvet – that puts it right up there with competitors in Singapore Air, Emirates, Lufthansa and Virgin Atlantic and the airline continues to put its money where its mouth is despite the global challenges faced by all airlines these days.

SAA’s CEO Siza Mzimela addressed these issues at a recent meeting this month of tour operators, corporate travel managers and volume travel agents anxious to hear about the state of the airline and its plans for future development and expansion.

“There is no doubt we have been under pressure,” she said, pointing to cuts announced by Qantas, losses announced by Lufthansa and Emirates, the Chapter 11 filing by American, closures by SpanAir and Malev, sputtering at Malaysian, TAP, Iberia. “It’s never been this bad for the airline industry. We’re seeing higher costs at a time of declining passenger demand.”

She continued to flesh out the bad news: spikes in the billions for added fuel costs, proliferation of airport user fees, weaker currencies – and particularly in Africa the requirement of full infrastructure to be in place to service destinations in demand coupled with the imposition of limited access and permissions to actually service these destinations profitably.

“These are only a few of the issues facing African airlines these days,” she added.

However, SAA continues to invest in its product – expanding in breadth, brand and Business class seats on SAAamenities to keep the airline up and at top of mind when considering the world’s best airline companies. The company is making modest improvements in a product that is already at standards. These include introducing wifi at very low session rates per one-way on its regional airline, Mango, in a test that will likely result in expanding the service fleetwide on SAA. As a member of Star Alliance it is able to leverage its reach but also hopes to be expanding its of 50 aircraft and add to the 6.5 million passengers it currently serves. A five-year plan calls for the delivery of 22 A320s and six A330-200s to replace less efficient longhaul aircraft.

New routes? Beijing to Johannesburg launched in January and targets the corporate managers who sending company executives in and out of China. But the airline is also now serving Kigali (Rwanda), Bujumbura (Burundi), Ndola (Zambia), Pointe Noire (Congo) and Contonou (Benin). A new flight to Maun in Botswana allows US travelers to leave JFK at 11:15 am, arrive in Johannesburg at 7:45 am and catch the SAA connection to Maun at 10 am that arrives in Botswana at 11 am and puts them on their African safari by noon.

All flights connect through Johannesburg, which has a spanking new airport thanks to the World Cup and even links the facility to nearby Sandton to downtown Johannesburg with an easy and quick light rail right from the arrivals area.

SAA sells 75 percent of its inventory through the travel trade, says Todd Neuman, SAA’s Executive Vice President for North America. “When it comes to seats out of North America it’s more like 85 percent. And what is driving that is the fact that a lot of consumers considering South Africa are considering it for leisure purposes and as a destination, South Africa is still relatively unknown. We target the trade for this reason and we work with a number of consolidators,” to make the sales accessible, he adds.

South African Airways economy class

However, as a zero commission carrier, it is up to the agent to find the best net fares or work with tour operators to wrap profit into the ticket price.

Neuman notes the newest target for SAA has been the business sector and this is where he sees most of the sales growth coming for the company in the next few years.

“Within the agency channel we are predominantly positioned as a leisure oriented airline so we have really strong relationships with tour operators, consolidators, even religious missionary organizations active in Africa. But one of the areas emerging for us is the area of business travel. So we are strengthening our relationships with Carlson Wagonlit and other travel management companies. We’re seeing more and more companies investing in Africa and establishing operations here – and that means more business for us.”

Most recently the airline went to its single shareholder, the South African government, with a capitalization plan that would allow it raise capital in the marketplace and invest in the airline’s product going forward. Neuman laments the proposal was not well received, but this is often a lengthy process with such ups and downs.

“Being a 100 percent owned, you have only one stake holder and what was presented as a request for capitalization was perceived as a bailout. But there is a big difference between a bail out and a capitalization request. We are not asking for money to maintain the airline, we are looking to invest in it,” Neuman said.

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