THIS should be a good year for South African passengers, according to Business Day, a local newspaper. Following the failure of 1time Airline in 2012, four new low-cost carriers—FastJet, Skywise, FlySafair and a resurrected version of 1time—are poised to enter the market and inject some competition. At present state-owned South African Airways (SAA) and privately owned Comair are the only noteworthy scheduled passenger operators.
But Business Day’s outlook may be rose-tinted. Two of the four new entrants have already faced legal challenges. And SAA has made scant progress with a turnaround plan. Until its balance sheet is in better shape, the South African authorities are unlikely to liberalise the sector any further.
FastJet, which aims to become Africa’s first pan-continental low-cost carrier, had planned to launch domestic South African services early in 2013. After its bid to buy 1time’s air operator’s certificate failed, it signed a deal with Edward Zuma, the son of South Africa’s president, to establish a subsidiary alongside a local partner, Federal Airlines. That plan also came unstuck, though it was not formally abandoned and FastJet insists it will fly domestically in South Africa soon. The airline already operates international flights to Johannesburg from its Tanzanian base in Dar es Salaam.
FlySafair, a proposed subsidiary of Safair, another local charter operator, had hoped to begin flying last October and will continue its efforts this year. And Skywise’s hopes for a 2013 launch were also slowed by unspecified regulatory obstacles. A revivified 1time now intends to launch services again in March, thanks to renewed interest from Pak Africa, a Pakistani aviation group that owns part of Global Airways, a South African charter operator.
Passengers will welcome these airlines. South Africa has the continent’s largest economy and its most developed aviation market. Heightened competition between low-cost carriers should push down airfares and push up traffic, as it did in Europe during the 1990s. But incumbent operators will push back. Comair has already filed legal challenges against both FastJet and FlySafair, alleging that their proposed corporate structures fall foul of foreign-ownership laws. Erik Venter, the boss of Comair, argues that protectionism runs rampant across all corners of Africa. Why should South Africa allow foreign airlines to set up shop, he says, when its own airlines cannot do the same elsewhere? This argument is not fully convincing, but South Africa does indeed need to protect the health of its aviation sector.
Loss-making SAA is also in no rush to welcome low-cost rivals. When the airline hosted the IATA AGM in Cape Town in June, its interim CEO, Nico Bezuidenhout, said it was finalising plans to renew its widebody fleet, consolidate its route network and review its subsidiaries and partnerships. He was then replaced by Monwabisi Kalawe, a businessman with plenty of experience running South African parastatals, but little running an airline. Some modest progress has been made recently—SAA has expanded its codeshare partnerships to place more passengers on flights operated by affiliates such as Etihad, Air Seychelles and Rwandair—but there have been few other developments of note. The airline continues to publish rambling statements about its vital economic contribution to South Africa, yet makes little effort to clarify either its overarching strategy or its path to profitability. Much like Australia, South Africa is an end-of-line destination that can ill-afford to cling onto its vainglorious flag-carrier of yesteryear. Johannesburg may be a vital regional hub, but it is not an important global one. Yet whereas Qantas has evolved and improved through its strategic partnership with Emirates, SAA seems to be muddling on regardless.
Mr Kalawe must follow through on the preliminary plan drawn up by Mr Bezuidenhout. SAA urgently needs new widebody aircraft to replace its fuel-guzzling Airbus A340s. It also needs a deep-rooted alliance with a big global carrier offering intercontinental traffic flows. (Etihad is the obvious candidate.) If SAA becomes a viable commercial entity, then South Africa’s politicians and regulators will have less reason to make life difficult for new market entrants. If it remains lame, passengers can expect more delayed launches, more rising airfares and more dispiriting court cases. 2014 may be a boon year for South Africa’s civil aviation sector. Then again, it may just be more of the same.
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