COMPETITION in SA’s domestic
and regional airlines is
heating up.
Ex-SAA ceo, Siza Mzimela, plans
to launch a new airline, Fly Blue
Crane, that will operate domestic
and regional routes. Fly Blue Crane
is a subsidiary of Siza’s consultancy
business, Blue Crane Aviation, which
she runs with Theunis Potgieter and
Jerome Simelane, also both ex-SAA.
The airline is remaining tight-lipped,
not offering many details about its
plans. Rich Mkhondo, executive:
chief marketing and communications
of Fly Blue Crane, would only confirm
that the airline had applied for an Air
Services Licence “for potential future
prospects of launching a regional
airline”.
According to Fly Blue Crane’s
application with the DoT, Siza, who
owns 70% of the airline, will be
the ceo. Theunis, with 20% of the
shares, will be coo; while Jerome,
with the remaining 10%, will take
the position of chief commercial
operator.
The application also states that
Fly Blue Crane will use Bombardier
Canadian Regional Jet (CRJ) 900
Series aircraft, not currently operated
by any other airline in South Africa,
and that the plan is to launch
services by January 2015. One of
the regional routes in which it has
expressed interest is Cape TownWindhoek.
Rodger Foster, ceo and md of SA
Airlink, says a new entrant in the
regional sector could lead to the
market becoming unstable. “A price
war is inevitable, and this will be
great for consumers for a while.”
Rodger says the thin routes have
inadequate volumes to sustain
competition. “We have seen
this time and time again, with
competitors falling by the wayside
after having entered markets such as
Polokwane (Velvet Sky) and Nelspruit
(Comair) in the past. As it is, on the
routes currently competed on by SA
Express and Airlink there is far too
much capacity, yields are inadequate
and the situation is unsustainable.”
Although Rich indicated that the
intention was for Fly Blue Crane
to operate as a regional airline,
the carrier has also applied
for a domestic licence, citing
Johannesburg and Cape Town as the
airports from where it would operate.
Aasa ceo, Chris Zweigenthal, says
new airlines are seeing a gap in
the market. “If Fly Blue Crane were
to operate on the JohanneburgCape
Town route, and if FlySafair
and Skywise were to commence
operations, that would lead to an
oversupply of seats on the route.”
He says, to be sustainable a new
airline needs to be sure that the
yields from passenger sales will
be able to cover the high operating
costs with as low an overhead cost
structure as possible. “There is a
need for growth in the market and
this would need to be sustained
beyond the time of introductory low
competitive fares.”
Comair, says Susan
van der Ryst, corporate
communications manager,
welcomes private
competition in the South
African aviation market, if
based on a level playing field
for all competitors. “The
Johannesburg-Cape Town
route is known as the trunk
route in the South African
domestic aviation industry.
Most new entrants would
naturally ply their capacity
and resources on routes
where an established volume
exists.”
Lorna Terblance, FlySafair’s
vp of passenger services,
believes Fly Blue Crane
would be competition for
SA Express and Airlink on
their regional routes, and
not for FlySafair operating
domestically. “We always
said there is only room
for one [new carrier], but
with Skywise having its
licence cancelled and our
understanding that Fly
Blue Crane is looking to fly
regionally, not locally, there
is just room for FlySafair.”
Lorna would not reveal a
launch date for FlySafair but
said it would definitely be
this year.
