End the Rumour
Sunday Times 1 May 2005
SAA dumps an old partner
01 May 2005
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ROGER MAKINGS
SOUTH African Airways (SAA) will end its long-standing relationship with feeder carrier SA Airlink.
The national carrier has served notice on its partner of its intention, which will become effective from November.
Both SAA and SA Airlink were tightlipped over the decision this week despite the fact that staff on both carriers are fully aware of the decision.
SAA said the airline “chose not to comment at this stage”.
Rodger Foster, the chief executive of SA Airlink, said: “I can’t comment.”
SA Airlink will have to take on new livery and seek out partnerships with other carriers once it leaves the alliance it has had with SAA and SA Express for about eight years.
This will now make SA Airlink a competitor rather than a partner on the domestic and regional routes it serves.
The reason for the split, according to sources within SAA, which owns 10% of SA Airlink, is that SAA fears questions from its nemesis, the Competitions Commission, over its “anti-competitive” association with SA Airlink.
SAA has the threat of a R1.6-billion fine hanging over its head for giving override incentives to travel agents.
This has yet to be ruled on by the Competition Tribunal.
On top of this, SAA is also facing possible punitive civil suits from its rivals, BA/Comair and Nationwide, in this regard, not to mention further allegations of price collusion.
An SAA source said this week that under its existing relationship with SA Airlink, it prescribed to the feeder carrier what size aircraft it could fly and which routes it could and could not operate.
“We have identified that this could be a problem and be construed as anti-competitive by the commission.”
The source said that although the two airlines could continue their code-share relationship, or keep selling seats on each others’ flights, SAA would have to end SA Airlink’s use of its reservation and revenue accounting systems.
The same does not apply to the other feeder carrier, SA Express, which is wholly owned by SAA parent Transnet.
SA Airlink, which bought a 25-year franchise from SAA in 2000, is said not to be unhappy about the development.
“This means Airlink will be free to pursue more lucrative relationships with other airlines that are seeking to open up alliances within a burgeoning Southern Africa market,” said one industry observer.
SA Airlink is known to have had preliminary talks with the likes of the European-based SkyTeam alliance — which is headed by Air France — with a view to growing routes between East and Southern African destinations.
SA Airlink owns 19 aircraft and operates 3400 flights to 27 destinations, carrying around 65000 passengers a month.