“I REMEMBER the days when we were
immensely proud of SAA – it was
among the top ranks. We’d love to
get back to that situation,” says Ben
Langner, md of CWT South Africa.
Industry experts gave TNW their
opinions on how SAA can be
profitable following National Treasury’s
appointment of consulting firms, Bain
& Company and Abacus Advisory, to
advise SAA on its future strategy. Many
say SAA drastically needs to change its
game plan by improving communication
with the trade and catch up with its
competition.
“SAA tells us that 75% of its
business comes from the trade, yet
they don’t talk to the trade and if
they did, perhaps agents, their sales
force, would give them some input on
what they should be doing to become
profitable,” says Marco Ciocchetti,
ceo of XL Travel group. “We try to bring
business to SAA but you can’t bring
business to someone who doesn’t
answer their phone.” Marco says,
unlike SAA, foreign carriers, whose
management is situated outside South
Africa, make the effort to engage with
agents and use their advice in the
airlines’ decision-making.
Garth Wolff, ceo of eTravel,
says currently there is still huge
uncertainty between SAA and the
trade because of the lack of
communication on contracts.
“Communication is a oneway
street with SAA,” says
Marco Cristofoli, md of Harvey
World Travel SA. “The trade
is resilient and at some point
we’re just going to move on
and find other carriers to sell.”
SAA needs new management
who can make sound business
decisions “based on the
numbers and not out of favour
or fear” he adds. “The airline
has just not kept pace with its
product or service and these
are not comparable to the
Middle Eastern carriers.”
A local aviation expert, who
prefers to remain anonymous,
says for the national carrier
to become more relevant it
needs to expand its network.
“The competition is growing
at a dramatic pace with new
airlines coming to Durban,
Cape Town and Johannesburg.
SAA has to invest in its
business to become profitable;
it can’t keep cutting routes.
They’ve already cut Beijing
and Mumbai, and are currently
sitting at about nine long-haul
destinations – nine is nothing
compared with other airlines
like Ethiopian, Kenya and
Turkish,” the expert says.
Rodger Foster, ce and md
of Airlink, says SAA is up
against highly competent longhaul
carriers like Emirates or
Turkish with extensive global
reach and as long as SAA
compromises its ability to feed
its own hub, its share of the
market will continue declining.
He says one way SAA could
contribute to its profitability
is to extend the utilisation of
its assets. “They could utilise
their opportunities in other
key points within Africa that
are currently underserved,
e.g. Accra, where SAA could
continue from Accra to London
– using their wide-body longhaul
aircraft,” he says.
“How can the industry be
viable when the leaders of the
industry are not sustainably
viable themselves? The
fundamental problem is that
the industry is structured
incorrectly and as long as you
have state-owned airlines that
constantly require funding
by the state you’ll have an
industry that follows that
example,” says Rodger.
