Friday, November 25, 2011

Mango Airline at the forefront of low-cost flying in South Africa

SAA’s low-cost division, Mango, is five years old this week. And, in spite of the predictions when it was started – that the South African market was too small to support three low-cost and two full-service airlines – now has average passenger loads of more than 80 percent and has carried more than 7 million people.
With a fleet of only five aircraft it has a smaller route network than rivals and 1Time, but chief executive Nico Bezuidenhout says it has a 30 percent market share of the routes that it does fly. These, at present, are limited to the Golden Triangle between Cape Town, Johannesburg and Durban, with the addition of flights between Cape Town and Bloemfontein and Cape Town and Lanseria.
But Bezuidenhout says he is planning to extend the network when the airline has more aircraft and to expand beyond South Africa’s borders.
From the beginning Mango set out to attract people who had never flown before, and it succeeded. But since the economic downturn caused many companies to cut their travel budgets, Mango, like kulula and 1Time, has attracted an increasing number of business travellers. However, not all business travellers are willing to fly with a low-cost airline, even for a comparatively short distance.
So when SAA withdrew its coastal service between Cape Town and Durban, leaving it to Mango, Comair stepped in to fill the gap and reports that it, too, is doing well on the route.
Part of Mango’s success is due to innovative thinking. It encouraged first-time flyers by enabling them to book at the Money Market counters in Shoprite and Checkers while doing their shopping and later in Edcon stores, where they can pay the fares with their monthly store charge cards.
More recently, they have been able to book and pay by cellphone through FNB’s Cell Pay Point secure payment facility and Nedbank’s NPay remote payment facility. Its next innovation, according to Bezuidenhout, is to have wi-fi on board next year.
Pointing out that aviation serves as an economic multiplier, he says this has been shown by Mango’s Cape Town to Bloemfontein route in particular, which has led to increased demand for car rentals, employment of more airport staff and even increased retail spending.
He believes that there is scope for further growth in South Africa’s airline market – provided that air travel continues to be affordable. But, he warns, with a slow economic recovery on the cards, increases in airport taxes are hitting sector growth.
“In the current economy even a R50 increase could have a depressive effect on the market.”
SAA withdrew
In last week’s column I pointed out that German airline Lufthansa – which has returned for the summer after withdrawing its service between Cape Town and Frankfurt in winter – started this seasonal pattern of withdrawal at a time when SAA still flew from here to Frankfurt in winter and Qatar Airways had introduced more competition by offering indirect flights to Frankfurt by way of its home airport in Doha. Qatar, of course, is still here and so are Emirates and Etihad.
But SAA no longer flies to Germany from here and there are many local people who would like to have the option of direct, nonstop flights all year round.
This point was made this week by think tank Accelerate Cape Town in a meeting with the president’s review commission for state-owned enterprises. Guy Lundy, the chief executive of Accelerate Cape Town, told the commission that SAA withdrawing its direct flights from Cape Town to Frankfurt and other foreign destinations was “highly detrimental to our ability to do international business from here”.
SAA may not have a large enough fleet to serve Frankfurt and other important destinations from Cape Town and also follow the national policy of building Joburg up as the main hub for airlines flying into sub-Saharan Africa. But since it is no longer flying to Germany from Cape Town and there is certainly a demand for non-stop flights to Frankfurt, one can hope that Lufthansa may be persuaded to remain for the winter months.
Virgin Atlantic, which also withdraws from Cape Town in winter but has codeshare arrangements for SAA to carry its passengers to London then, is launching a new service between London/ Heathrow and Vancouver in May. Bookings will start on December 1. - Weekend Argus