ROGER MAKINGS JOHANNESBURG
South African Airways (SAA) and Qantas are to codeshare on otherwise loss-making routes between Johannesburg and Australia next year in a bid to make the service profitable for both airlines.
SAA was on the point of terminating its loss-making service to Australia until it entered into the agreement with Qantas which was in much the same predicament with its service to South Africa.
The airlines believe they will make the services profitable by dividing the three-stop route between them and "owning" 40% of seats in all three classes of each other's aircraft.
SAA was losing R70 million ($7 million) a year on its four weekly flights from Johannesburg to Perth and Sydney because the service offered uncompetitive connections to New Zealand, and the Perth to Sydney sector was unprofitable. SAA chief executive Coleman Andrews said that under the new codeshare, the airline hoped to turn its losses into a R20 million profit, rather than terminate the service.
"Passengers will benefit from increased frequencies and better connections to New Zealand as well as less time spent in the air," he says.
The agreement with Qantas comes into effect in mid-January, pending regulatory approval, and will see SAA fly the Johannesburg-Perth route and Qantas operate a non-stop Sydney-Johannesburg service. Qantas ended its Perth-Harare service at the end of October and now flies four return flights a week between Sydney, Perth and Johannesburg. SAA also does the same.
"The problem was that we lost about 35% of our passengers at Perth. The remaining 65% made the 4,000km [2,200nm) flight to Sydney unprofitable," says SAA executive vice-president Bill Meaney.
"Also, by the time we arrived in Sydney it would be too late to get connecting flights so passengers would have to overnight in hotels."
Meaney says that the two carriers would "own" 40% of each other's flights and would have to fill the seats or lose the revenue. "Passengers bound for Sydney and New Zealand will not only decrease their flying time by more than two hours, but will also get the same convenient connections as Qantas passengers" he claims.
"With 10 frequencies a week between us we are confident of not only meeting the competition from Malaysia and Singapore, but we believe we can grow the service by an extra 10,000 passengers a year," Meaney adds.
Source: Airline Business
