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Aviation History
1992
1992 - 0882.PDF
Van der Veer reasons that "...if a handi capped SAA [can have been] that success ful...it will be well-placed in a normalised market". He concludes that evolving market forces must work to benefit "the national interest, the passenger and the airlines concerned". He supports double-disap proval fares policies and wants to see full deregulation, with safeguards against preda tory pricing. SAA does not want to move away from the concept of bilateral air- service agreements, however, since that would prevent South Africa from determin ing its own policy. Since some European routes from South Africa have seen substantial devia tion from the nominal 50:50 capacity:frequency split be tween carriers (Sabena, for example, has taken 88% on the Brussels route, accord ing to van der Veer), he says that relaxation of the divi sion can now be considered. One bilateral under re view is that between South Africa and the UK. The first talks between the two coun tries for almost 50 years are expected to result in major changes and ratification is expected shortly. Although the UK Depart ment of Transport declines to discuss details, it is un derstood that double dis approval has been adopted on fares and the frequency split is 60:40 in favour of the UK. There will probably be two British scheduled carriers on the route. Virgin Atlantic had re quested seven flights a week, but may get only four — compared with British Airways' 11. Virgin hopes to begin opera tions to Johannesburg in November with a ninth Boeing 747, which will be added to its fleet once the bilateral is signed. Virgin has also applied to the UK Civil Aviation .Authority for licences to serve both Cape Town and Durban from London's Heathrow and Gatwick airports. Van der Veer's enthusiasm for competi tion does not extend to a second interna tional South African carrier. Citing the UK, France and Canada, he says few countries succeed with a policy of allowing multiple carriers in the intercontinental market. In deed, his airline may itself have to join forces with another airline: "With the ad vent of overborder mergers and alliances emerging, future competition will be even fiercer. As a small medium-sized carrier, [SAA] may have to look at aligning itself with a foreign carrier to survive." Having juggled resources, the carrier is now serving more than 20 African destina tions and has been flying twice a week to New York since November, as well as weekly to Australia. Reciprocal opportunities have flowed from the resumption of services by other carriers such as Austrian Airlines, Cathay Pacific, China Airlines, Egyptair, Kenya Airlines and Singapore Airlines. SAA's new Boeing 747-400s have arrived just in time. The first two were immediately put in service on the Johannesburg-London route (the most profitable for both SAA and Air Afrique, airline for ten nations, has had to cut costs to survive Air Botswana is co-operating with several SADCC member airlines British Airways), and have since been joined by two more. INTERIM POLICY Because of the pace of events, the South African government introduced an interim aviation policy in November 1991, to per mit speedier agreement on bilateral services with other countries, while its full policy was still being worked out. The policy provides a more liberal ap proach under which South Africa is willing to relax tariff controls; grant twice-weekly frequencies to all airlines; designate more than one carrier per route and promote both Cape Town and Durban as gateways in return for reciprocal rights abroad. In addition, to promote non-scheduled traffic, South Africa has dropped restric tions on peak-season tourist flights, export of perishable South African products and flights where no scheduled service operates. Unless there is uneconomic overlapping, charter services will now be permitted to countries already enjoying scheduled serv ices from South Africa. In preparation for subsequent privatisa tion, SAA has already been set up as an autonomous business unit with (for the first time) external auditors compiling financial statements in line with private sector crite ria. Under Johannesburg stock-exchange rules, the airline's performance over at least three years will provide the basis for valua tion when privatisation happens some time | after 1995. g In the first year of auton- gomous activity (the 12 s months to March 1991), a 4.5% downturn in interna tional passengers combined with rapidly escalating fuel and oil prices to produce an operating loss. SAA's operations are three-tiered: intercontinen tal (outside Africa); intra- African and domestic. The carriers throughout the sub- Saharan region have to con sider their response to SAA's flexing its muscles and some may seek alliances gwith the airline. §• Meanwhile, the airline s sees the need for rationalisa- | tion: executive manager Dr 33 Theons Kruger, in charge of of capital and engineering project planning, says that unprofitable routes will be severed in the drive for greater efficiency, allowing third-level operators such as Commair to expand. For the smaller national operators in other southern African countries, a similar philosophy has to be ap plied. A World Bank report last year warned that the ten Southern African Development Co-ordinating Conference (SADCC) coun tries must encourage commercial attitudes. If there is no co-operation, warned the Bank, collective losses could reach $40 million a year and put some airlines out of business within the decade. Many SADCC member countries wish to maintain intercontinental services for which they have bought modern widebodied air liners. Natural traffic growth, however, is not expected to be enough to provide the utilisation necessary to make money. Air Botswana has made several co operation agreements within SADCC, but, ironically, while airlines in the established, richer nations are eagerly seeking alliances and mergers as the only way to survive, southern African nations are reluctant to lose face by amalgamating their national flag-carriers. 34 FLIGHT INTERNATIONAL 1 - 7 April. 1992
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