8 April 2004
South Africa’s national carrier, SAA, is facing stiff competition from no-frills airlines offering budget deals to the local and international flier.
The most recent player to taxi onto the runway is Civair, which intends to offer low-budget flights direct from the UK to Cape Town and Durban later in 2004. A return ticket from Durban to the UK is expected to cost about R3 000.
Low-cost carriers have flourished in developed markets where population densities are high, but, according to Business Day, there are several examples of successful ventures in Africa.
Locally, BA-Comair’s kulula.com, which has offered a cheap, no-frills alternative to SAA flights for the past two years, is already being challenged by another new entry in the market, 1Time. 1Time aims to offer three domestic flights a day between Johannesburg and Cape Town.
The new market entrants have sparked something of a price war. Kulula.com recently announced that it had slashed fares to Cape Town, Port Elizabeth, George and Durban by up to 30%, with one-way tickets going for as little as R199 (previously the tickets ranged from R400 to R900).
1Time countered by offering a guaranteed maximum fare of R581 or less on one-way journeys between Johannesburg and Cape Town.
The industry has a history of failed challenges to SA Airways, such as the original Sun Air, Phoenix, FlightStar and, more recently, Intensive Air.
Now kulula.com has generated sufficient revenue to buy its own fleet of aircraft – a development which doesn’t appear to be bothering SAA.
The national carrier, as well as its sister outfit, SA Express, both owned by transport parastatal Transnet, won’t be cutting corners to challenge the budget airlines.
SAA says it’s not a low-cost carrier and therefore has no reason to change its market positioning. Most of its passengers are discerning business people who value the frequency, convenience, punctuality and reliability of flights the most, it told Business Day.
The battle for the skies and consumers’ pockets mirrors a global trend. With airlines struggling in the wake of global terrorism and war, as well as economic downturns, carriers with fewer overheads and flexible costs are managing best to turn a profit.