Business travel sources have reported that troubled State-owned national carrier South African Airways (SAA) has slashed the discounts it gives to corporations for business travel. Further, the airline’s cutbacks on certain routes have also adversely affected major businesses. The consequence is that these big enterprises are increasingly using budget airlines, also known as low-cost carriers (LCCs), for executive transport on domestic routes. (SAA is a full-service, or legacy, carrier.)
According to Cummins South Africa travel manager: Africa & Middle East Nikki Fonzari, SAA has cut its business discount rates “significantly” and, in some cases, all the way to zero. And route cutbacks have created “a very big challenge” for corporations. The effect is to remove most of the reasons for major businesses to use the national carrier.
“While there are still those corporate travellers loyal to legacy carriers, we are seeing a change where low-cost carriers are concerned,” said Global Business Travel Association Africa and South Africa regional chairperson Howard Stephens. Sure Viva Travels MD David Pegg reported: “There is no doubt that LCCs have taken a bigger market share in general.”
In addition, the country’s three major budget airlines, FlySafair, Kulula and Mango (the last, perhaps ironically, being wholly owned by the SAA group) all operate scheduled services to and from Lanseria International Airport, which lies south-west of Pretoria and north-west of Johannesburg. Lanseria is an easier airport to use than the much larger OR Tambo International Airport, east of Johannesburg, which is SAA’s base. Stephens observed that this was boosting the popularity of the LCCs with business.
Of course, the LCCs also offer lower costs. “Although, when you’re headed to see a client, cost is not always the biggest consideration – you have to make sure you arrive on time,” he highlighted. FlySafair sales and distribution head Kirby Gordon highlighted that international airline data management company OAG had rated his airline as the world’s most on-time carrier for two seasons in a row. “I myself fly FlySafair all the time and certainly don’t have a problem sending our travellers on the airline,” assured Fonzari.
These and other factors have been working together to end corporate reluctance to use LCCs for business travel on domestic routes. Although some major enterprises remain committed to SAA, in part because of existing contracts (or “back-end agreements”), big business, as a whole, has begun to embrace the LCC option for staff.
Regarding travel agents, the demise of commissions means that the move to LCCs will not have any bad financial effects on them. Sure Dynamic Travel MD Angela McLoskey explained that, although businesses might find the execution of back-end agreements a challenge, the function of the travel agent was just to supply clients with both full-cost and low-cost options and let them decide which to employ. XL Travel flight specials GM Franz von Wielligh affirmed that the increased competition was very good for passengers.
FlySafair itself operates to and from Johannesburg (OR Tambo and Lanseria), Cape Town, Durban, East London, George and Port Elizabeth. It has so far carried more than four-million passengers and won the Airports Company South Africa ‘Best Performing Airline’ award in the LCC category in 2017 for the second year in a row. It reportedly now operates a fleet of 14 Boeing 737 single-aisle airliners, composed of nine 737-400s and five 737-800s.