The number one challenge facing the South African airline industry is the devaluation of the rand. “It’s a big challenge,” affirmed Comair CEO Erik Venter to Engineering News Online on Thursday. “It has devalued by about 25% over the past year. This has had immediate impacts on fuel prices. It also has an impact on maintenance and other costs.”
The slide in the rand increases local fuel prices even when the oil price stays stable in dollar terms. When the dollar oil price goes up, local airlines are doubly hit.
“The only way to meet this is greater efficiency,” he noted. “And, unfortunately, some of the increases have to be passed on to the customer.” As a consequence of these price increases, the local air travel market has been in decline over the past couple of years.
“For the past 15 years or so, Comair has been slowly upgrading the size of its aircraft, the efficiency of its aircraft,” he reported. “Now we are putting the first [Boeing] 737-800 into service with our BA [British Airways] fleet.” (Comair operates two brands: British Airways in South and Southern Africa, and the Kulula low cost airline.)
The 737-800 delivers a 6% reduction in fuel consumption in comparison to the old Boeing 737-300 models it is replacing. Yet it also provides 40% more seating.
The weakness of the rand against most major currencies could boost foreign tourist air travel into South and Southern Africa. Comair is closely linked to international carrier British Airways, which is now introducing the Airbus A380 Superjumbo to its London to Johannesburg route, increasing capacity.
“I think the combination of the increased capacity and the exchange rate will increase traffic into South Africa,” he opined. The coordination between BA and Comair would generate increased internal and regional air traffic, involving oversea tourists, for the local company.
Domestic centres served by Comair (BA and/or Kulula) are Johannesburg, Durban, East London, Port Elizabeth, George and Cape Town. Regional services (under the BA brand) are run to and from Windhoek, Livingstone, Victoria Falls, Harare, Maputo and Mauritius. “The African market is growing very rapidly, but it is still very small in terms of numbers,” he pointed out.