May 17, 2013
Network changes likely to flow after SAA links up with EtihadBack
Abu Dhabi|Beijing|Johannesburg|Africa|Airbus|Aircraft|Aviation|Boeing|Components|Engines|Etihad Airways|Flow|Power|Projects|South African Airways|transport|Africa|Asia|South America|China|South Africa|United Arab Emirates|OR Tambo International Airport|Airline|Embattled Airline|Equipment|Flow|Maintenance|Services|James Hogan|Nico Bezuidenhout|Middle East
Following the signing of the memorandum of understanding by Etihad president and CEO James Hogan and acting SAA CEO Nico Bezuidenhout in Johannesburg, SAA would be in a position to place its ‘SA’ code on 12 Etihad destinations in the Middle East and Asia, serviced out of Abu Dhabi.
In return, the UAE carrier would place its ‘EY’ code on flights from OR Tambo International Airport to ten other destinations in South Africa, Africa and South America.
Bezuidenhout refused to be drawn on which routes might be terminated. But it had been widely speculated that SAA was keen to extricate itself from flying directly to Beijing, China, while still offering it as a destination through partnership arrangements.
He said the Etihad association could enhance yearly revenues by more than R100-million. However, it should also be viewed as part of a broader thrust to lower SAA’s operating costs and return it to profitability in the coming years.
The embattled airline, which reported a loss of R1.3-billion in 2011/12 and cumulative losses of more than R14-billion over the last number of years, was currently pursuing 38 separate ‘cost-compression projects’ and had reportedly shaved R1.2-billion off its costs in 2012/13 – its results would only be released at its annual general meeting in September.
However, Bezuidenhout indicated that the airline was still about 20% “off the mark”, compared with the operating costs of other airlines, and that part of the remedy lay in the use of partnerships.
There was also potential, in the longer term, for SAA and Etihad to combine their purchasing power in a bid to lower the cost of procuring everything from aircraft and maintenance services through to catering equipment and aircraft components.
Hogan said it was premature to speculate on what the relationship could mean for SAA’s wide-body refleeting plan, but he indicated that the airline had worked with a number of its other partners in sourcing aircraft, engines, components and catering services.
Bezuidenhout said SAA intended to engage with both Airbus and Boeing on its fleet needs, but also indicated that it would “avail” itself of Etihad’s prowess in this area.
Likewise, he saw a myriad of other “value-chain opportunities” arising out of the “scale” offered by the two airlines, which collectively transported 20-million passengers yearly.
For Hogan, the rationale for the tie-up arose from the fact that Africa had emerged as one of the fastest-growing aviation markets globally, with the International Air Transport Association forecasting yearly compound growth of 6.8% in African air-passenger travel between 2013 and 2016. Air cargo, meanwhile, was expected to rise by more than 4% over the same period.
Participation in that growth, Hogan said, was key to sustaining Etihad’s position as one of the fastest-growing airlines internationally.
Edited by: Martin Zhuwakinyu
Creamer Media Senior Deputy Editor
To subscribe email email@example.com or click here
To advertise email firstname.lastname@example.org or click here
Other News This Week News
Recent Research Reports
Automotive 2016: A review of South Africa's automotive sector (PDF Report)
Creamer Media’s Automotive 2016 Report provides an overview of South Africa’s automotive industry over the past 12 months. The report provides insight into local demand and production, vehicle imports and exports, investment and competitiveness in the sector, as well...
Energy Roundup – April 2016 (PDF Report)
The April 2016 roundup covers activities across South Africa for March 2016 and includes details of a North Gauteng High Court Judge’s dismissal of a court application to postpone the 9.4% electricity tariff increase, which the National Energy Regulator of South...
Electricity 2016: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2016 report provides an overview of South Africa’s electricity sector, focusing on State-owned power utility Eskom and independent power producers, electricity planning, transmission, distribution and the theft thereof, besides other issues.
Energy Roundup – March 2016 (PDF Report)
The March 2016 roundup covers activities across South Africa for February 2016 and includes details of the Department of Energy’s plans to announce the preferred bidders for the first tranche of the coal independent power producer procurement programme; the Council...
Steel 2016: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2016 Report examines South Africa’s steel industry over the past 12 months. The report provides insight into the global steel market and and particularly into South South Africa’s steel sector, including production and consumption, main...
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
This Week's Magazine
The two spent-fuel pools at Eskom’s 1 800 MW Koeberg nuclear power station, in the Western Cape, will be full by 2018, increasing the urgency on the State-owned utility to begin pursuing alternative storage options. Koeberg has, over the past 32 years, accumulated a...
South Africa lacks the skills necessary to implement the government’s plan to build 9.6 GWe of new nuclear energy capacity, warns nuclear-qualified Quality Strategies International CEO David Crawford. “Apart from the concern about the affordability of the programme,...
Cybersecurity multinational Check Point has released its latest 700-series cybersecurity systems for small businesses, which draw on its international threat intelligence to provide up-to-date cybersecurity, says Check Point South Africa country manager Doros...
Daimler Trucks and Buses Southern Africa (DTBSA) saw a marked slip in new-vehicle sales in 2015 compared with 2014, with sales dropping from 5 897 units to 5 300 units. The decline came as the South African new truck and bus market declined from 31 558 units in 2014...
Group of 20 (G-20) economies threatened to penalise havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion. The G-20 will consider “defensive measures” against financial centers and...