SAA, Kenya Airways look to create pan-African airline group

28 Sep

SAA, Kenya Airways look to create pan-African airline group Carin Smith 0:00 play article Subscribers can listen to this article According to SAA interim CEO Thomas Kgokolo, part of the airline's broader growth strategy is to become a major player in regional travel. Silas Stein/Getty Images

South African Airways and Kenya Airways are signing a memorandum of co-operation with the long-term goal of starting a pan-African airline group.
The aim of the memorandum is to enhance the mutual growth potential of the two airlines.
It does not, however, preclude either of the airlines from pursuing commercial co-operation with other carriers within their route network.

South African Airways (SAA) and Kenya Airways want to look into a long-term goal of co-starting a pan-African airline group.

The two airlines are signing a memorandum of co-operation in this regard, SAA announced in a statement on Tuesday. The view is that such a pan-African airline group could, in time, "enhance mutual growth potential by taking advantage of strengths of the two airlines' busy hubs".

The agreement does not, however, preclude either of the airlines from pursuing commercial co-operation with other carriers within their route network strategy.

The next step is for both parties is to set up a joint working group to further discuss the memorandum and to put in place systems to achieve their joint objectives.

SAA, which was in business rescue from December 2019 to April 2021, started domestic commercial flights again on 23 September and kicked off regional services again on Tuesday. SAA stopped commercial flights in May last year when the rescue practitioners indicated that there were insufficient funds to continue with commercial operations.

According to SAA interim CEO Thomas Kgokolo, part of the airline's broader growth strategy is to become a major player in regional travel and enable business and trade on the continent. The joint memorandum with Kenya Airways is expected to help with that. In Kgokolo's view, working with Kenya Airways will also harness internal resources and capacities leading to sustainable and cost-effective growth. This includes shared services in the areas of route networks, fleet, maintenance, repair, and opportunities to achieve economies of scale. Kgokolo believes the memorandum will also help the tourism sectors in both countries.

For Kenya Airways CEO Allan Kilavuka, the future of aviation and its long-term sustainability is hinged on partnership and collaboration.

"Kenya Airways and South African Airways collaboration will enhance customer benefits by availing a larger combined passenger and cargo network, fostering the exchange of expertise, innovation, best practices, and adopting home-grown organic solutions to technical and operational challenges," said Kilavuka.

Performance

SAA said on Tuesday that bookings have been very encouraging and broadly in line with market trends.

"Johannesburg-Cape Town is the largest market of the initial restart routes and, as a domestic market is the easiest for customers to travel. Not surprisingly, this route has booked the quickest. Customers traveling on regional routes face the hurdle of PCR testing in both directions so bookings come later and will take more time to build," SAA responded.

Johannesburg-Cape Town has experienced the strongest demand with Accra and Harare also performing very well.

"Overall demand is still considerably behind 2019, but SAA has timed its relaunch to coincide with sustained increase in demand aligned to local and regional vaccination distribution. SAA is returning to the air in a measured way to ensure customers benefit from a healthy SAA and a healthy industry," the airline said.

When SAA went into business rescue, it still had many unused tickets and Voyager vouchers. The business rescue process protected these customers and they are currently being offered the choice of a refund or credits.

Looking at ticket prices, it seemed that SAA had some of the lowest fares in the market last week when it restarted. Comparing prices on Tuesday it seemed SAA had one-way tickets between Johannesburg and Cape Town for R1 745. It increased to just over R3 000 on Thursday and Friday. Flysafair had tickets for R1 321 for Tuesday on its later night flights and R3 271 for early afternoon. For the rest of the week one could still find rates of between R1 222 and R1 521.

Kulula.com offered one-way tickets between Johannesburg and Cape Town for R1 421 on Tuesday, R1 414 on Wednesday and R1 621 on Sunday, while British Airways had tickets for just over R2 000 on Wednesday, R1 831 on Wednesday and between R1 773 and R2 003 on the weekend. LIFT had tickets between Johannesburg and Cape Town for R1 745 on Tuesday, R1 385 on Thursday and Friday and Sunday and R1 565 on Saturday.

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