GCWALISILE KHANYILE
SOUTH AFRICA’S aviation industry is set for a fresh battle with the proposed entry into the sector by taxi bosses who are to launch their own airline come September 2011.
The entry by the South African National Taxi Council (Santaco), until this week an unlikely contender to the country’s skyline wars, can only mean cheaper airfares for South Africans reeling from the spiralling cost of living. But experts warn that the taximen may be in for a bumpy ride.
Most Kulula and 1Time customers are first-time travellers, showing there is great potential for low-cost airlines to boom, probably one of the reasons Santaco decided to enter this market. As happened when Kulula and 1Time entered the market, price wars are expected to follow Santaco’s arrival.
Santaco’s business development officer Nkululeko Buthelezi says their airline will provide the lowest prices. “We have not yet finalised the prices but the highest price will not be more than R700. We will be targeting first-time flyers, who could not afford plane tickets before,” Buthelezi said.
He added that although the prices will be affordable, they will be a bit higher than taxi fares, because they don’t want to compete with taxis.
He said there was no need to worry, because no taxi driver will fly the aircraft – at least not in the near future.
Santaco Airline will operate from Lanseria Airport to Bisho Airport in the Eastern Cape and Cape Town International Airport, to make trips shorter for their customers who normally travel long distances on the road.
Buthelezi said they will first operate with only two flights and the number will increase based on a demand for their services.
“Shuttle services will be free to Santaco Airline commuters. Our passengers will be taken from the taxi rank to the airport for free and when they reach their destinations they will again be taken from the airport to a taxi rank,” Buthelezi said, adding that they planned to sell plane tickets in taxi ranks to make tickets easily accessible.
However, Standard Bank economist Johan Botha warns that Santaco Airline might be in for a rough ride as other airlines are losing rather than making profits.
“This is a very difficult industry. Profits are very low. It is going to take more than just low ticket prices to get clients. People are currently cutting back on things that are not necessary and flying is one of them,” Botha said.
He added that low-cost airlines will be shaken by the introduction of Santaco Airline, but Santaco must build trust first in terms of safety, reliability and punctuality.
Buthelezi said they needed $10 million (R67 million) to run the airline and that all of their resources came from their members, because they wanted them to own the business.
“Our members are buying shares and we are still negotiating with other investors. We didn’t take a bank loan and government is not our investor,” Buthelezi said.
Botha warns: “If Santaco’s funding model is money from members, it might be risky. They should not risk losing their members’ money. But if they have other funding methods such as banks, they might be on the safer side because banks won’t give money willy nilly.”
Buthelezi said: “Everything will be run by well-experienced people – AirQuarius – on our behalf. They will provide us with aircraft, pilots, the flight crew, they will maintain our aircraft and also do skills transfers to our members.” Buthelezi said the airline would be competing with South African Express and SA Airlink, who are also operated by AirQuarius.
Santaco Airline will be officially launched on September 16 and the first commercial flight will take to the skies towards the end of November 2011.
Buthelezi said taxi hubs where their airline commuters will take shuttles are Park Station in Johannesburg, Bosman in Pretoria, Mdantsane in the Eastern Cape and Bellville in the Western Cape.
“We will not risk people’s lives. To prove that, soon after the launch our 2 500 delegates will be ferried by our very own aircraft around the country. So if anything has to happen it will affect our delegates first,” Buthelezi said, adding that their delegates will be going to Durban’s Inkosi Albert Luthuli International Convention Centre as Santaco will be celebrating 10 years on September 18, this year.
He said Santaco Airline was a result of the TR3 2020 strategy which is aimed at redefining, restructuring and re-positioning the taxi industry. He said that they will be launching a training academy in August aimed at taxi drivers and taxi owners.
“We are revolutionising the taxi industry and soon will be on railway systems,” Buthelezi said.
AirQuarius general manager Michael Goodwin said they were not at liberty to answer questions related to Santaco.
Kabelo Ledwaba, spokesperson for the Civil Aviation Authority (CAA), said the CAA was expecting Santaco to apply to the CAA and the Department of Transport for the necessary approvals.
“Once the necessary approvals have been granted, the operator (in this case an airline) will be expected to comply with all the applicable civil aviation regulations,” Ledwaba said.
An Air Operator’s Certificate (AOC) holder will be responsible for operations and compliance with all safety regulations, insurance, aircraft maintenance, crew and issuance of tickets.
He said if any advertising is done, it should be in the name of the AOC holder.
Mango Airline chief executive Nico Bezuidenhout welcomed the initiative that could make air travel more affordable.
“A large number of our guests have been and are first-time flyers, indicating that there is a significant market with growth potential for affordable air travel in South Africa,” Bezuidenhout said, adding that “transportation lies at the heart of the South African economy – who’s to say that airlines won’t start up taxi operations at some point in the future?”