Just when World Airways thought it was safe to file for US-South Africa traffic rights held by bankrupt and grounded airline USAfrica, along came Continental Airlines. The Houston carrier has given the international startup with clipped wings a lease of life - if it can find the financing and convince the Us Department of transportation that it deserves another chance.
USAfrica's brief, eight month existence as a scheduled, passenger-service operator between Washington/Dulles and Johannesburg was, in retrospect, a trial run in its fullest sense. The brief period was successful in proving that there was room in the US-South Africa market for more than South African Airways, which has held an enviably high-yielding monopoly on the New York and Miami routes.
But it also tested out some less successful concepts - no traffic feed from a major codesharing partner, the consequent low load factors, and late payments on two leased MD-11s owned by American Airlines, which repossessed the aircraft last February and forced USAfrica to close.
Ever since, USAfrica's president Greg Lewis has been attempting to salvage a company that may have had the right idea but operated from the wrong place and did not have the right support. These concerns may be taken care of with the codesharing agreement USAfrica has signed with Continental and the move from Dulles to Newark.
Serving the New York area means head to head competition with SAA, but it also means tremendous traffic feed from Continental. With the agreement in hand as of late July, the refinancing of the carrier - enough to cover three months of operations - is 'well on the way' to fruition, according to Lewis, who plans to use DC-10s this time.
This, however, does not discount the desires of other airlines that want to take over USAfrica's franchise, which technically is in force until January but could be taken away under 'use it or lose it' provisions. World, TWA, United, Northwest and Delta have all expressed interest in serving South Africa, though the latter three propose doing so via their own codesharing partners in Europe.
For the near future, the codesharing proposals are not being considered by the DoT because recent aviation bilateral negotiations between the US and South Africa in Pretoria closed after four days without agreement on third country issues that would permit, say, KLM to carry Northwest's US-originating passengers from Amsterdam to South Africa.
Of the two remaining candidates, World appears to be the most likely contender, and is certainly the one applying the most pressure on DoT. In 1994, World lobbied hard for scheduled passenger rights to South Africa, but lost to USAfrica. This was particularly galling to World, primarily a cargo-passenger charter carrier, since it saw South Africa as a perfect opportunity to relaunch itself back into the international scheduled passenger realm, from which it had been absent since the early 1980s. After that failure, World decided to serve Israel from New York, a route which it finally inaugurated in July after a year's delay.
While USAfrica seeks new financing, it also must contend with the DoT's increasing reluctance to allow it to continue holding its unused rights when other carriers could use them. Sources say there will be a hearing to decide whether USAfrica should retain its rights, and which carrier should be awarded the new frequency. However, Department officials see 1 December as the date for the winning carrier to begin service because this marks the start of the peak season.
This means USAfrica must have its financing finished by September, so it can have at least 90 days to have its operating certificates reissued. '(DoT officials have) already gone to some length for USAfrica,' says a source close to the airline. 'This decision will mean life or death for it.'
Source: Airline Business
