South African Airways (SAA)
SAA taken care of immediately deregulation by withdrawing from various domestic routes that were too “thin” to function profitably and focussed on the major routes, or what is often called the “Go/den Triangle” routes, namely:
Johannesburg-Cape Town;
Johannesburg-Durban; and
Cape Town-Durban.
Regarding its share of the domestic market in 1996, SAA spokesman at that time, Mr Leon Els, commented that the airline has lost almost 10% of their earlier market share during the last 2 yrs. After 1995 its share was estimated at 73% but since then declined to 67% in October 1996.
The above mentioned figure is indeed remarkable when compared to the airline’s 95% share before deregulation. According to Mr van Hoven, Chief Executive of BA Comair, this trend could be explained by SAA’s share of the market in terms of passengers carried remaining relatively stable in an otherwise growing market – while both BA Comair and Sun Air showed growth in the related period. Recently though, SAA improved its position in the domestic market by increasing its shareholding in SA Express (SAX) to become more prominent on the major and secondary feeder and distributor routes. It is estimated that SAA, SAX and SA Airlink currently serve in excess of 70% of the domestic market.
SAA continues to be State-owned, and as a division of Transnet Limited it is controlled by the Transnet Board of Directors. Government, however, is under tremendous pressure to privatise the airline and based on various press statements released throughout 1997, it certainly appears to be when the first steps within this direction is going to be taken during 1998.
SAA currently holds a 76% be part of SAX (through International Airline Holdings), which serves as a feeder airline for SAA, allowing the airline to withdraw from smaller, less profitable routes (SAA’s percentage share in SAX was confirmed by DOT officials, airline employees and also the bank involved in financing the aircraft acquired by SAX included in the restructuring agreement). SA Airlink may be the third partner in the three-tiered airline alliance. The agreement between SAA and SA Airlink offers a complete spectrum of commercial services to become provided by SAA. This includes reservations, sales and marketing, airport handling, in addition to yield and revenue accounting. At this stage SAA doesn’t have shareholding in SA Airlink, even though it has been a subject of discussion.
The airline further intends to respond to future competition with more aggressive and innovative strategies and better service standards than previously. Flysaa