British Airways franchise Comair has secured Johannesburg-London but may have to create a new brand to operate it
Should British Airways co-operate with or compete against the operator of its South African franchise, Comair, on the lucrative London-Johannesburg route?
That is the tough question Comair has given BA as it prepares to launch long-haul services in late 2008. It seems BA will likely reject Comair's proposal to co-operate on London-Johannesburg and instead the carriers will be in a bizarre situation where they will compete on long-haul routes but be partners on short-haul routes within Africa.
"It's a dilemma for them," says Comair joint chief executive Gidon Novick. "It [Comair serving London] could be competition to them and they may see in the future the bilateral will open up and they can add their own capacity."
Both BA and Virgin Atlantic are interested in adding capacity to South Africa and all-premium carrier Silverjet wants to launch services to Johannesburg, but UK carriers are fully utilising their allocation in the current bilateral. "There is certainly a push for open skies from the UK side and our side is opening up to liberalisation," Novick says.
But first South African carriers are scrambling to use some of their 15 unused frequencies. Comair in late 2007 was awarded four of those frequencies and hopes to secure another three frequencies before launching long-haul flights, likely in late 2008 with Boeing 767s or 777s. South African Airways, which operates three daily flights to London, is sitting on six unused frequencies that could be returned to the pool if they are not used. Proposed start-up Civair has the other five and is hoping to launch services several months ahead of Comair but could have problems securing the required aircraft.
Comair, which carries about 1.5 million passengers annually under the BA brand, is one of only two remaining BA franchises along with Denmark's Sun Air. Although BA has decided over the last year to drop three of its franchises, the Comair relationship appears to be working well and the franchise, which dates back more than 11 years, was recently extended.
"It works very well. It's a very strong relationship. It's a very strong brand in South Africa," Novick says. He adds co-operating on domestic and regional routes while competing on long-haul routes "is not an ideal situation" but is workable.
Although a partnership seems unlikely, Comair says it is still talking to BA about potentially co-operating on the London-Johannesburg route. BA declines to comment on these talks but points out London-Johannesburg is excluded from its current franchise agreement with Comair.
Novick says "if BA doesn't want to work with us we'll look for another option", including possibly partnering with another carrier. He adds Comair has decided against using its domestic low-cost unit Kulula to operate the London route because the long-haul low-cost market is unproven and there is high premium demand in the Johannesburg-London market that Comair wants to cater to.
"We'll need a strong brand, particularly in the UK market," he says. "To enter the London market with a local South African brand, we're not naive enough to do that."
Whatever BA decides, Comair is determined to launch flights to London as a first step in a new long-haul operation that will eventually include several other routes. Kulula now carries 2 million passengers annually and just increased capacity by 18% but Novick says "growth opportunities do start becoming limited in the domestic market".
Comair is interested in expanding its BA short-haul international operation and is exploring a possible role in the privatisation of Air Malawi, but opportunities within Africa are limited due to restricted bilaterals. "We need to go into long-haul," Novick says. "There is a big opportunity to operate long-haul services to the UK and Europe."
"There is certainly a push for open skies from the UK and our side is opening up to liberalisation"
Joint chief executive, Comair