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
© Reuse this
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© Reuse this
Creamer Media Senior Deputy Editor
To subscribe email firstname.lastname@example.org or click here
To advertise email email@example.com or click here
Other News This Week News
Updated 47 minutes ago Telecommunications provider Vumatel has temporarily halted digging activity in Blairgowrie to secure cable locators that will assist the contractors in pinpointing the exact location of power utility City Power’s electricity cables. The area had been experiencing...
Updated 1 hour 15 minutes ago The Department of Cooperative Governance and Traditional Affairs (Cogta) in the Free State is confident there will be no electricity cuts in the province, despite municipalities owing Eskom R842-million. This after Eskom said if Free State municipalities did not...
Updated 1 hour 18 minutes ago Gibela CEO Marc Granger is positive the R51-billion deal that will see the Alstom-led consortium supply 600 new trains, up to 2027, to the Passenger Rail Agency of South Africa (PRASA), will move ahead swiftly this year. Up to the end of last year, Gibela awaited the...
Recent Research Reports
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...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
This Week's Magazine
Power and automation company ABB is in the launch phase of its highest payload, multipurpose industrial robot, the IRB 8700. The robot has a reach of 3.5 m and can handle a payload of up to 800 kg. “When designing the IRB 8700, we emphasised reach and payload, as...
Identity and Access Management (IAM) is a critical facet of a connected security ecosystem, as controlling the confidentiality, integrity and authorisation of data access and use is key to securing new digital business channels. However, companies face several...
Data underpins digital business models, the digital economy, the Internet of Things and the fundamental changes in the ways people interact and protecting data is crucial to securing new ways of doing business, says T-Systems South Africa information and...
The City of Cape Town will issue a tender for the procurement of electric buses for its MyCiTi service, in line with the council’s commitment to lower its carbon footprint, says executive mayor Patricia de Lille. The tender, to be advertised early in February, will...
The iSimangaliso Wetland Park Authority signed a R10-million contract last month with local tailings storage facility specialists Cyclone Engineering Projects to remove about 100 000 m3 of dredge spoil obstructing the natural course of the uMfolozi river, in...