Airlines turn their attention to Africa and focus on new markets

THE LATEST International Air Transport Association (Iata) survey issued this week shows more people are flying, with demand for air travel, which picked up late last year, continuing to grow. African and Middle Eastern airlines experienced the biggest increase in passengers in May, according to the latest available figures.

The number of passengers travelling on African airlines rose by 9.8 percent that month – nearly twice the rate of increase in most of the rest of the world.

Iata economists put this down to improving business and consumer confidence in many countries and the need for connectivity, especially to emerging markets. The fact that more Africans are flying is not surprising given the increasing prosperity in parts of the continent and the growth in its middle classes.

This is one of the reasons why our tourism authorities are so anxious to encourage more leisure and business travel from Africa, and why African business people are being targeted by our conference industry.

It’s also, clearly, one of the reasons the government encouraged SAA to withdraw its direct flight to London from Cape Town – its last remaining service to Europe from our airport – and use the aircraft on expanding its African route network. It’s also the reason why British Airways has increased the number of African destinations it flies to.

But airline travel from and in Europe also picked up in May after lagging behind most of the rest of the world. Iata economists put this down to an improvement in consumer and business confidence.

Michael Tollman, chief executive of Cullinan Holdings, which owns Thompsons Travel and spe- cialises in outbound travel, is among many in the industry who regard SAA’s withdrawal of its London flight from Cape Town as a serious mistake.

Tollman, incidentally, shares my opinion that despite its financial troubles, SAA is operationally an extremely good airline with dedicated people on its staff. Its pilots are sought after by other airlines on the occasions when it has decided, or been forced, to reduce their number, and its safety record is exceptional.

Thompsons Travel opened an office in China last year to encourage travel to South Africa and Mauritius on SAA and Air Mauritius, and Tollman now visits the country twice a year. He says we can expect a big increase in Chinese visitors next year, although most Chinese going overseas still want to visit Europe.

But in spite of the fact that more people are travelling, high taxation and airport charges and the high cost of aviation fuel mean that most airlines are making little profit.

Tollman points out that the average profit is $4 a passenger – which he describes as “just enough to buy a sandwich in most parts of the world”.

Iata director general and chief executive Tony Tyler warns that this means that the industry may not be able to attract the $4.5 trillion in capital investment needed to modernise its fleet and increase the number of aircraft to meet a forecast continued rise in demand.

He said a recent Iata study supported by analysis from McKinsey & Company shows that in the 20042011 period airline investors would have earned $17 billion more a year by taking their capital and investing it in bonds and equities of similar risk.

Calling on governments, airport authorities and oil companies to co- operate in order for the industry to grow, he said: “We need to find ways to improve returns for investors.”

● Meanwhile, airlines are ordering new aircraft following the Paris Air Show.

The merged Air France and KLM, which fly Airbus and Boeing aircraft, have finalised a firm order for 25 Airbus A350 XWB (extra-wide bodied) planes with options to acquire another 25.

The group’s new chairman and chief executive, Alexandre de Juniac, who attended the Iata annual general meeting in Cape Town last month, said the order would ensure the growth of its long-haul business while achieving significant cost savings.

The A350 XWB and Boeing’s Dreamliner are being offered to SAA for its new long-haul fleet.

PICTURE: REUTERS DEMAND TAKING OFF: The new Airbus A350 flies over Toulouse-Blagnac airport during its maiden flight in south-western France. Air France and KLM placed an order for 25 of these planes to add to long-haul fleets.