South Africa maintains double-digit growth as World Cup fever builds

Map: South AfricaSouth Africa’s major airports have achieved double-digit growth for the second successive year as the country’s LCCs continue to stimulate new traffic demand, particularly on domestic routes. Traffic at the country’s four biggest airports – Johannesburg (JNB), Cape Town (CPT), Durban (DUR) and Port Elizabeth (PLZ) – was almost 34 million in 2007, up 13% on the previous year.

In the last five years traffic has grown by 60% across these four airports with all airports seeing traffic growth of at least 50%. None of the other airports in the country have yet broken through the one million passenger mark though East London (ELZ), George (GRJ) and Bloemfontein (BFN) are the next biggest.

Chart: South africa major airports
Source: ACSA
Image: FIFA
ANC President Jacob Zuma and FIFA President Joseph S. Blatter at the home of FIFA in Zurich on 29 January 2008. The 2010 FIFA World Cup is being held in South Africa.

Domestic market increasingly competitive

As highlighted in previous trendwatch features, South Africa’s domestic market is increasingly competitive with six major players each having at least 9% of the market. It should be noted that Mango is the low-cost subsidiary of SAA and Kulula is the LCC of Comair, which operates an all Boeing fleet as a British Airways franchise. A closer look at competition on individual routes shows that all six carriers compete on the top three routes.

Chart: ZA dom routes
Source: OAG Max Online for w/c 28 January 2008

The dominant position of the two major routes from Johannesburg to Cape Town and Durban is strikingly clear as they account for nearly 60% of all domestic capacity.

UK and Germany are leading country markets

Analysis of the international scheduled market shows that SAA offers around 35% of international capacity followed by British Airways, Emirates and Lufthansa. The UK is by far the biggest market in terms of seat capacity.

CHT ZA top 15 countries
Source: OAG Max Online for w/c 28 January 2008

In terms of frequencies fellow African nations such as Botswana, Mozambique, Namibia and Zambia perform well, but using smaller aircraft than on European operations.

The UK market has grown from under one million passengers in 1995 to 1.6 million in 2006 with British Airways, SAA and Virgin Atlantic all operating from London Heathrow to both Johannesburg and Cape Town. Nationwide also operates to London Gatwick. Flights are invariably operated during the night as the UK and South Africa are located in similar time zones.

According to the 2005 UK CAA passenger survey 51% of passengers were travelling to visit friends and relatives, the highest proportion of any of the top 15 country markets from the UK. Business passengers only accounted for 20% of the market with 54% of passengers originating in South Africa.

SAA offers price sensitive passengers a Mango

Logo SAASAA has been a Star Alliance member since April 2006 but so far this has not noticeably helped its financial performance. In the last five years SAA has reported a significant net loss in three of them (including the most recent) and barely made a profit in the other two. ASKs have remained fairly flat over the five years though load factors have improved resulting in passenger numbers increasing from 6.52 million in FY 2002/03 to 7.73 million in FY 2006/07 (ended 31 March 07).

Logo MangoIn response to the growing threat posed by local LCCs and 1time, in November 2006 SAA launched its own LCC, Mango, with a small fleet of 737-800s configured with 186 seats. It currently operates on just four domestic routes from Johannesburg to Cape Town and Durban, and from Cape Town to Durban and Bloemfontein.

Kulula leads the low-cost charge

Image: began flying in August 2001 with a mix of MD82s and 737s and was set up by Comair, which also operates in the domestic market as a franchise partner of British Airways. operates on nine domestic routes including six of the top 10 routes and in 2006 carried around 1.8 million passengers at an average load factor of 85%. Its aircraft operate in a variety of different, generally green, colour schemes including one that is part of the airline’s latest marketing slogan ‘What kind of jetsetter are you?’

Time to replace 1time’s aging fleet?

Image: 1time1time with its grammatically suspect slogan of ‘More nice. Less price.’ began operations in February 2004 and now operates on all the top seven domestic routes. Its DC9s/MD82s/MD83s are all at least 20 years old with some dating from the early 70s. Around two-thirds of its capacity is on the two key JNB trunk routes.

World Cup fever builds

Sport is a major activity in South Africa and after the triumph of the rugby team at the recent World Cup Final in Paris, the country is now eagerly anticipating hosting the FIFA football World Cup in 2010. Sadly South Africa are only ranked 77th in the world at present and only 16th best in Africa so overall victory is unlikely!


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