Anti-Skid Inop,
This just shows your ignorance as to what is actually happening. It's time to wake up and smell the coffee. NTW fly near full capacity 4 times a week. They have an extremely high yield as well as an extremely profitable cargo contract ( min 8 tonnes per trip - every trip!!!)
Please make educated comments - seeing as though you are supposed to be MANAGEMENT.
The only one in need of an education here is you. Here is why:
Flying full means absolutely nothing if you are not achieving a yield that makes it worth your while. If one compares the weighted average fare Nationwide earns on the JNB LGW route with say what SAA earns on the JNB LHR route (excluding first class) Nationwide earns more than 50% less. (SAA and VS have almost identical average fares while BA is slightly higher than both) Not a good start and it gets worse. Nationwide sells most of its inventory through a very small number of travel agents- their supporters are generally agencies who focus on the leisure market and demand big discounts to get the numbers in- hence the low yield. To counter this, Nationwide has attempted to sell more inventory in the UK (60%) not a bad move but again the small number of operators and the deep level of discounts almost nullifies the exchange rate benefit. Furthermore travel agents are the most expensive channel to distribute your inventory- most carriers prefer to move their cheapest inventory via direct channels like the web and call centres to try and reduce the dilutionary effect of these cheap fares on the revenue mix. Nationwide has made little effort in this regard. These agents are also very fickle, if another carrier pops up with a better fare then Nationwide will either have to match or forgo revenue. Not a nice place to be. So Nationwide are coughing up between 12 and 15% -conservatively- in distribution costs before a passenger gets on the plane.
Coming back to the point I raised about competitive action from the desert carriers, the JNB LGW route is the poster child for why these guys exist. Nationwide own 40% of the market- sounds good, however the desert carriers between them own 39% market share (Emirates, Etihad; Qatar and Gulf) and Air Namibia comes in at 13%. Considering all these carriers go via another gateway- the only carrier going direct-Nationwide- is getting plastered. What is even more interesting is that EK (with 20% market share) has an average fare 5% higher than Nationwide’s!! As a point of comparison on the JNB LHR route, EK barely manages 3% market share and has an average fare 30% lower than the carriers operating direct. No prizes for guessing who EK think they can rob market share off in the South African market- with EK going to 18 frequencies per week shortly, this does not bode well.
Not being a cargo guy myself I had a chat with some of the guys in the business. Turns out the London route is a really competitive route for cargo and prices are very negotiable- especially for repeat bookers. Im told 8 tons will generate about ZAR 70 000 in revenue per flight- that equates to what SAA will earn out of selling 4 one way business class fares. Huge profit indeed.
So its really down to operational cost- we know already that Vern pays his pilots less than a call centre agent at SAA earns- so that’s not a problem, the aircraft- well given his desert raiding antics of the past perhaps he scored a bargain. Fuel, well that’s even as we all are in the same boat- save the difference in burn- but that must be measured by the aircraft’s capacity. ACSA, ATNS and other charges are the similar.
Therefore Anti-Skid Inop, do you think that by applying the above business model, Nationwide will be able to make money serving a number of long haul destinations with multiple weekly frequencies? How many cheap aircraft can be found in good condition? How long will he be able to get staff to donate their services virtually for free? (Even Roger the dodger has eventually had to cough up!) etc etc. Chances are you can get away with focussing all your energy on one aircraft- maybe even two, but in the end the model just will not work.