Novelty’s in the air, but national airline SAA’s route is down to earth

● As SAA slowly makes its way out of its financial hole of the past decade, it will be flying in ever-more competitive global and African skies and alongside airlines that boast more efficient aircraft.

Last month, Airbus launched the latest aircraft in its A350 XWB family, the A3501000, with Qatar Airways taking delivery of the first plane. The aircraft, which seats 366, was 25% more efficient than the current version of Boeing’s 777, the 777-300ER, Airbus said. The aircraft also had better fuel efficiency and lower CO2 emissions, it claimed.

SAA’s main competitor on the continent, Ethiopian Airlines, has ordered 18 Airbus A350-900 planes, the previous model. It currently operates six of these aircraft. The airline reportedly indicated last year that it was evaluating the A350-1000.

Qatar Airways said it was considering upgrading some of its A350 orders to the newer model.

In December last year, the International Air Transport Association (Iata) said in a report that stronger forecast economic growth in Africa was expected to support demand growth of 8% this year, slightly outpacing capacity expansion of 7.5% in the airline industry.

Air traffic was growing, with passenger loads for African airlines at just over 70%, 10 percentage points lower than the industry average, Iata said. With high fixed costs, this low utilisation made it difficult to make a profit on the continent. “Stronger economic growth will help in 2018, but the continent’s governments need a concerted effort to further liberalise to promote growth of intraAfrica connectivity,” Iata said.

Didier Evrard, executive vice-president and head of programmes at Airbus, said last month that most of the aircraft the group was producing for African airlines were A330s and the newer model, the A330neo. The A330s are medium- to long-range aircraft, and it was a growth area, he said.

“It’s a question of traffic and a question of African airlines reaching the next step in size to enable them to embark [on] a new type of aircraft,” he said.

Fabrice Brégier, a former chief operating officer at Airbus, said there was huge potential for the airline industry in Africa, but it depended on economic growth. “Look at China — in 1995 we had less than 100 aircraft flying in Chinese skies. Now we have more than 1 500, so you will see, in less than 20 years, there will be many Airbus aircraft flying under African colours,” he said.

SAA CEO Vuyani Jarana said this week the board had approved a “clear strategy” and a five-year plan to turn the airline around. Most operations were sound, he said, and he wanted to build on those foundations to break the loss-making cycle.

The airline’s net loss deepened to R5.6billion in financial 2017, from R1.4-billion the year before.

Ultimately, SAA was going to invest in its fleet, but the priority now was making sure it could operate profitably and serve its customers better, Jarana said.

The focus was on remodelling SAA’s route network, he said. Once that was done, the group would have a sense of which parts of the world it could serve profitably, including those in Africa. The board could then make strategic-investment decisions.

“That being said, we also know we have to invest in the future, and the board will have to look into that in the not-so-distant future to say what the future holds for SAA in terms of investing in a new fleet.

“Our big focus is trying to get strategy under way . . . we have ambitions for Africa as it’s our back yard, and we think the SAA brand is very strong. We are known for passenger safety and sound operation, and we think we will be able to build on that and serve the continent successfully,” he said.

Aviation analyst Joachim Vermooten said an upgrade of SAA’s fleet for the domestic market could wait five to eight years. In the regional market, some carriers were moving towards small aircraft, and South African Express would have to consider that. On longhaul routes, aircraft such as the Airbus A350 and Boeing 787 could be looked at in the future. The critical factor was whether SAA could recover from its operating losses, he said.

“SAA’s position is dramatically different, and it needs to focus on becoming sustainable very quickly,” he said.

Comair said on Thursday it would take delivery of the first of eight Boeing 737 MAX 8s in early 2019. The group’s CEO Erik Venter said it marked the next step in its fleet renewal programme which started in 2011.

The delivery will see the company phasing out the remaining Boeing 737-400s and becoming the first airline on the continent to take delivery of the Boeing 737 MAX.

Venter said: “This will give Comair’s two airline brands, kulula.com and British Airways (operated by Comair) the benefits of increased seating capacity, lower operating costs, and lowered downtime for maintenance.”

Jarana said aggregation hubs and deep partnerships would be a bigger part of SAA’s strategy. “It’s not just big aircraft that are going to be critical, it is also a combination of assets that allows us to feed and serve [popular] traffic routes and aggregate them to a major city that allows you to actually long-haul those passengers to their final destination.”

We have ambitions for Africa as it’s our back yard, and the SAA brand is strong Vuyani Jarana SAA CEO