South Africa’s airline industry is becoming more competitive as its carriers fly new routes, operate out of more airports and prepare for a new low cost airline in March, giving consumers greater freedom of choice.
Last year, low cost airline 1Time was granted permission to fly between Johannesburg and Maputo, Mozambique, which until recently was reserved for South African Airways (SAA) and Mozambican national airline LAM, IOL reports. This week Gidon Novick, joint chief executive of Comair – which owns low cost carrier Kulula.com – said his company had also obtained air traffic rights to Maputo and planned to launch a service soon.
1Time is further strengthening its position by starting services from the private Lanseria International Airport north of Johannesburg. The airport previously had an exclusive agreement with Kulula.com that excluded all six of South Africa’s other main airlines, according to IOL. Kulula.com is a low cost division of Comair, which also manages British Airways flights in South Africa.
At the moment all domestic airlines are busy with a rush of passengers returning to work and were busier during the 2010/2011 summer holiday season than the same period last year. According to Rodney James, managing director of 1Time, bookings were up 4% in December 2010 compared to 2009. However, airlines anticipate that the rush will taper out towards the end of January as people return to work, IOL reports. Nevertheless, South African airlines are expected to continue growing in 2011.
In line with international trends, there has been a big shift away from premium airlines towards low cost carriers, Mango CEO Nico Bezuidenhout told the Financial Mail last month. For example, Mango took over all Durban to Cape Town flights from its South African Airways parent in December 2010, according to the Financial Mail. SAA was losing market share in this competitive area.
Bezuidenhout believes the low cost carrier trend is not limited to the recession as travellers don’t find it worthwhile to book more expensive flights just to earn frequent flier miles. However, Novick predicts British Airways to continue to do well in the new year as people enjoy the extra space, loyalty programme and larger baggage allowance.
Comair’s market share has gone from 25% to 37% over the last three years. This has mostly been due to growth from Kulula.com, which was South Africa’s first budget airline and is now ranked second biggest after SAA, the Financial Mail reports. Part of Kulula’s success has been due to its exclusive agreement with Lanseria, which is much cheaper to fly from than airports managed by the Airports Company of South Africa. This may change now that 1Time will also be operating from Lanseria. However, Lanseria is in urgent need of a new runway to cater for extra growth – in fact, Novick has asked them to construct one urgently, the Financial Mail says.
Africa has one of the fastest growing airline industries, the International Air Transport Association (IATA) said this month, and South Africa is no exception. For example, the Financial Mail reports, 1Time has a market share of around 15% and, although the global airline industry contracted in 2010, 1Time’s passenger numbers grew by 12% and this growth is predicted to continue.
In March this year South Africa is expected to get another low cost carrier in the form of Velvet Sky, which is in the process of receiving its license, according to Business Day. With the launch of South Africa’s eighth major airline, the competition is bound to become more cutthroat.