South African Airways (SAA) is looking to expand its partnership with Emirates or Etihad to add a stop on its flights to Mumbai and Beijing, in a move geared to improve the profitability of SAA’s long-haul network and brighten the African airline’s prognosis for the future, according to Centre for Aviation.
All three of SAA’s Asian routes and all 10 of its long-haul routes are unprofitable, with Beijing seeing the largest losses per flight, and the plans for stop-overs flights in the UAE follow several unsuccessful attempts to improve the pick-up of the routes by changing the flight schedules and frequencies.
For the South African government the link to China is seen as economically and politically critical; but for SAA, the imperative to drop direct flights to Beijing is real regardless, as the thrice weekly service operating since January 2012 has cost the carrier over $28m a year.
CEO Monwabisi Kalawe commented: “We’ve got two partners in the Middle East – the big lever is to engage with these codeshare partners to see if we can stop-over in their hubs with our equipment and pick up additional traffic to Beijing.”
Mumbai is meanwhile an even bigger market from the UAE with about 62,000 weekly seats, and both Etihad and Emirates are generally keen to add capacity into India. As Abu Dhabi is the more sparsely frequented, the opportunity could be attractive to Etihad and its ‘Equity Alliance’ partner Jet Airways.
Though on the subject of Etihad’s fondness for equity partnerships, it is unclear how the Abu Dhabi airline might react to the idea of sharing any of its key routes with a non-equity partner, and indeed it recently dropped a non-equity partnership with the Indonesian airline Garuda, due to unprofitability.
If you can’t beat them, join them
Either way, there is a very real challenge for SAA in the heightened competition from the Gulf carriers and their offering of attractively priced routes from South Africa to the globe, and there is a strong argument for forging a strong partnership rather than trying to compete.
Emirates is also now the largest foreign carrier in South Africa with a 10% share of international seat capacity in the country according to August 2014 schedules, while Qatar and Etihad account for a 2% and 1% share respectively, according to the same benchmark.
SAA has also worked with Emirates for several years, though it has maintained just two codeshares on Emirates’ flights to Dubai; while a partnership with Etihad in 2013 established a codeshare on Etihad flights from Johannesburg and on through the UAE to other destinations.