SAA and other South African airlines are facing increased competition from Fly 540, the aviation division of the UK-based Lonrho group, in their aim to provide connecting flights between countries in sub-Saharan Africa.
Fly 540, based in Nairobi, aims to become a pan-African airline and has already expanded into neighbouring countries.
It reports that in the three months to December it launched a new service from Nairobi to Mwanza and Bujumbura and began a scheduled service connecting Zanzibar to Kilimanjaro and the Serengeti.
"Further growth will continue in Tanzania with two further aircraft being deployed to the fleet during the second quarter. The application processes for air operators' certificates in Ghana and Angola are nearing completion and both hubs are gearing up to launch operations. Local infrastructure is complete, staff have been recruited and training is ongoing."
Fly 540 is already competing with SA Express, the South African state-owned regional airline, in the copper-mining town of Lubumbashi in the Democratic Republic of the Congo, where Lonrho is completing the $20 million (R154m) refurbishment of the Hotel Grand Karavia. It has a 50 percent stake in the hotel plus a management contract.
Lonrho states in its quarterly report that "the recovery of the copper sector in Lubumbashi continues and demand for quality hotel rooms is expected to be even stronger in 2010".
The group also has a hotel in Maputo - the Hotel Cardoso - in which it has a 59 percent stake as well as a management contract. It completed a refurbishment of this hotel, with its restaurants and conference facilities, during the present quarter. South African low-cost airline 1time is about to start a service between Johannesburg and Maputo, a route which until now has been served only by SAA and Mozambican national airline LAM. The lack of competition kept fares high and the route has been SAA's most profitable one.
Another South African airline, Inter-air, has been given air traffic rights to fly between this country and the Angolan capital of Luanda, a route that until now has been served only by SAA and the Angolan national airline, TAAG.