Mango - all you need to know about it (threads merged)

[Deanw]

SAA may launch low cost carrier

Dikatso Mametse
Posted: Wed, 26 Oct 2005

SA Airways will decide soon whether to launch a low-cost airline to take on rivals Kulula.com and 1time.

SAA CEO Khaya Ngqula told Moneyweb Radio on Monday that the airline was considering bringing in a budget model to regional destinations such as Windhoek and Harare. (Click here to read/listen to the interview)

Ngqula said SAA was talking to its board and shareholders, and said that it ‘makes sense to go that route’. He said plans were still secret at this stage.

Gidon Novick, Kulula.com’s executive director, said that they wouldn’t be threatened by such a move, but that it would be a big challenge for the taxpayer.

“The SA taxpayers are already subsidising two airlines - SAA and SAA Express. I don’t think they’ll subsidise a third airline,” he said.

Rodney James, marketing manager for the other low cost airline in South Africa, 1time, agrees.

“The airline is already using R6bn of taxpayers money. As a taxpayer, I would be subsidising an airline with which I compete against. I think that’s unfair.

“They basically don’t need to make a profit. This would kill low cost carrier competition – we would not be on a level playing field. The government needs to privatise SAA,” he said.

The airline business’s biggest challenge this year has been the rise of fuel prices.

In the past six months crude prices have gone up by almost 50% to over $60 a barrel, which makes it difficult for airlines to be viable.

But there have been some airlines that have made it work, Ngqula says.

“Some of them are not the low fare, like you find in South Africa, because some of them have got plans of twenty-five years and older. But South West in the US does well, Ryan Air is doing well, Easyjet, Virgin Blue in Australia are doing well. And these are no-frills. They have cut costs down to the bone. People are packed like sardines. But it works,

Ngqula said that in South Africa, about 20% of the public don’t seem to mind flying in rough conditions. The market share of the low-cost or low-fare carriers is growing significantly which shows that there is an existing market, which doesn’t care about the frills.

“There is also the new market which has never flown before, which travels on buses from Johannesburg to East London, Jo’burg to Cape Town, Jo’burg to Durban.

“And that new market is saying, yes, the low-cost carriers are competitive, and people are starting to use that. So you’ve got new entrants into the market, and you’ve got some people who are moving from the existing market joining the low-cost carriers. It is a big challenge. It’s something we are dealing with, very aggressively,” Ngqula said.

The company has a dual strategy to compete with low cost carriers.

“We have to maintain the successful SAA, which has an image as one of the biggest and best airlines in the world. For the long hauls, from Johannesburg to Lagos, Johannesburg even to Angola, to New York, you can’t use low-cost, because there’s the question of inconvenience.

“But we need to simplify prices in the regional sphere. Johannesburg-Harare, Johannesburg-Windhoek, or even to Botswana, there you can look at coming up with low-cost carriers which can compete fairly with everybody else. We have been speaking to our board and obviously to our shareholders, Transnet and the government – I think it’s no secret.
there

“The other option is to sit back and do nothing and hope for the best. And the best might never come. We will just disappear as an airline. So we’ve taken the high road. Look at the original structure, look at the low-cost carriers, improve and upgrade the product, better our service at the existing SAA…market better.”

Moneyweb

[ZERO3L]

Why launch a low cost carrier when they are already competing with the LCC`s?(Just check out there fares on competing routes).

SAA continues to take the tax payers money by rolling over billions of lost hedging finance, and now competing with the Kululas and 1 times of the world by offering similar fares which can NOT be making them money, given the oil price and the modern fleet etc.

How wonderful is must be for our millionaire CEO, Mr Ngqula to strategize at state expense without ever having to worry about the bottom line??

More fool the gullible public paying for SAA to lose billions and then still supporting them.

It beats me....time for some justice here.

[George Tower]

I thought for a moment that it could be April 1st but alas its not.:p

Let SAA stay state owned for all I care, however I think priavtely owned carriers should not pay any tax, that is VAT, Corporation tax on profits etc. Of course no one will seriously consider this for one moment but just consider the huge injustice of the present situation.....

Comair, Nationwide and 1-Time operate in a competitive environment and make a profit. They are then taxed on that profit, (a reward for hard work, good decision making, investor confidence) and that money goes to the government which as far as airlines goes can't manage a piss-up in a brewery!!!!

Why should a company's hard earned profit go to subside a state-owned corporate shambles? What annoys me more than anything else is the sheer arrogance of the people that run SAA. The sad thing is that most people (SA Taxpayer) are so ignorant of how flagrently abused their Rands by SAA no one is ever called to account.

[beechbum]

Here we go again!!!! I think he's been flying too high in his chopper again. Clown!!!!!!!!

[fluffyfan]

I personally think that Khaya should stay away from such an endevour, but I can see why he thinks its a good Idea

It is very difficult for SAA to compete (price wise) with the other Airlines in SA, for example, one 737-800 has a price tag of around $40million (USD not R) and one DC9/737-200/MD82 has a price of around $1-2mill, you do the math.

yes SAA is tax payers money, but its also a taxpayers asset, its a modern airline flying the newest equipment out there with all the correct training devices, granted our management are shocking and they are a danger to themselves. Everyone complains about how the taxpayers money is being abused, and it makes my blood boil as well, but what would you like? SAA to dissapear? only have 20-30 year old aircraft flying the skys, with crew that are worked to the bone and payed peanuts while there bosses prosper and think of new ways to save money, ie there maintenance (its happened in other countries already) corner cutting in maintenance will only lead to an accident, its just a matter of time unfortunately.

Unfortunatley if Khaya goes this route, I doubt there will be much expansion in SAA, the low cost carrier will probably get the domestic routes (the rumour is that SAX will be the low cost carrier....flying 737-200's or DC9's) and this means no more intakes of pilots which is a pitty because I know there are many guys/girls out there who would love to fly for SAA. Khaya is no Richard Branson and it scares me that he has the arrogance to act the way he does

[beechbum]

The rumour that SAX becoming the low cost carrier of SAA has been spoken about for a while now - and I suppose SAA will do just about anything to crush the competiton even atat tax payers expense!!!! Lets hope that sense prevails at higher levels and the big guns are left to to do the job they started out to do.....anyway only time will tell. :ok:

[I.R.PIRATE]

Fluffyfan.....just because the media loves " informing " the man in the street about the LCC's " alleged " poor maintenance standards, dont jump on the bandwagon. Remember, the same govt that looks after its " flag " (not bok) carrier, also likes to read about the other less financially advantaged carriers in the news....not true?? The beast with two backs....

[fluffyfan]

Not accusing all the low cost operators of maintenance shortcuts, however I do believe that when there are financial pressures companies can and do take shortcuts, just ask Alaskan airlines about the lack of grease on the jack screw of the MD82, and that was a first world country where some bright spark thought he could save a few bucks, ok the time issue was also a factor they needed that aircraft back in service asap, the same thing can easily happen here in africa.......just dont think its a good idea to save money on maintenance, and I know its happening with one outfit who does there own servicing at Lanseria, you know who.

I am sure a few guys will respond and say I am talking sh*t, but its common sense, saw it over and over in the contract world. Also know for a fact that DDM requirements which state you CAN NOT DEPART have been overlooked, witnessed it myself. Dont defend someone for the sake of defending them or because you want to shoot the messenger, at least critisise things that are wrong............did that make sense?

[George Tower]

I have mentioned this before but even though the DC9/MD80's and B737-200 cost next to nothing to require they chow an awful lot of fuel. Now with the price of fuel going the way it has, at what point do the old aircraft become uneconomic?

Just out of interest does any one have some average figures as to what the various types of a/c might burn on average CT/JS sector? Be interesting to compare.

[Solid Rust Twotter]

Assets?:ooh: :rolleyes: :confused:

Last I looked most of Spoories' fleet was leased.

I suppose they think the taxpayer can stand a little more squeezing.:rolleyes: :* :mad:

[Deskjocky]

There is absolutely no future in SAA launching its own LLC arm- they have done the analysis and shown that its cheaper to use the existing fleet to compete with the LLC's. By definition these carriers have a very small cost base - hence their competitive fares- a slick paint job is not going to make SAA's cost base dissapear! the sad thing about SAA is that no one will be prepared to make the sacrifices nessesary to make the thing work- ie take pay cuts, agree to a change in working conditions etc etc- and Im not just taking about the chief and his millions but everyone- SAA pays very well across the board and generally speaking does not derive the reqired benefit in terms of productivity- Im speaking generally here, of course there are exceptions.

If you want to see SAA work- it has to start with the people, so why not close it down and restart it as a new public/private partnership ask everyone to reapply for their jobs and offer the successful ones performance based contracts- that are renewable if you perfrom to expectations. This worked in a slightly altered format at Air Lingus who have managed to bring themselves back form the brink.

The outlook is simplistic I know,but essentially SAA has all the fundamantal elements already in place to be a really sucessful airline- domestically and regionally/Internationaly, whats needed is the people side to come right and then things will start to happen.

[fluffyfan]

Its not just a paint job, the rumour is that someone else will be the LCC ie SAX, they are smaller, lower paid etc and just need to get rid of there expensive RJ's and get old 737's or DC9's. Another rumor is that Khaya wants the 800's and A319's flying into africa on the high yield routes (apparently he wants to expand into africa) , not domestically competing against the LCC's

Deskjocky......I have heard it said before that SAA staff are overpaid but I disagree, the problem is that there are too many people employed in that building who do nothing, the jam stealers of this world, I dont have exact figures but a rough guess would be that one aircraft supports about 500 people at SAA and at the LCC one Aircraft supports about 10 people.

If you are refering to the pilots who are overpaid then I just shake my head in confusion, I have said this before,they are not overpaid, the others are underpaid. And in fact the SAA pilots union is doing a major study at this point in time to see how SAA pilots salaries compare with other airlines and with a similar position in Industry, its a complicated formula which involves disposable income etc, not just a figure. I suspect SAA pilot salaries will be way under the rest of the world average.

Solid rust, you are correct most of the aircraft are leased that is the new world norm with aircraft that cost this much, not many (except maybe the oil states) can afford to buy these aircraft outright, but my point is that at least these modern aircraft are here in SA giving the public the opportunity to choose the most modern safest aircraft ever designed over a 20-30 year old design, was looking at the saftey stats on the notice board the other day the JT8D-15/17 engine which is on the 737-200 has had a fair number of shutdowns in the world this past year (cant remember exact figures), the CFM56 which is on the 800 has already proved to have the highest dispatch reliability, in the world, its old technology versus new. Cant understand it myself, how a passenger will drive to the airport in a brand new Volvo with all the saftey features and then get onto a 30 year old jet and save himself a few rand.

That being said, I dont agree with what SAA have done by giving the George-JHB to SAX and also the coastal routes away, SAX cant handle the load so they hire contract aircraft which fly old DC9's and 737-200.............so after all my ranting and raving, if you buy a SAA ticket hoping to fly the latest greatest, you may just be shocked to find you are on a pre 1980 piece of sh :mad:

[four engine jock]

dear fluffy fan
its seems to me that your a SAA fan and good for you.
but if SAA funds a Low cost airline it will only do it to get rid of the comp.
They can do this cause the tax payers will pay for it.

As for the so called 30 year old airplane , come on you just got lucky to fly the new 737-800. or the scare bus. that the hard working South African is paying for.

I feel that every tax paying South Africa should fly SAA for free . they own the airline dont they.

The pilots in SAA want to make the same as a pilot with BA or lufthansa. Thats a joke. You cant compare the cost of living in SA to Europe.

And the rest airline in SA are very under paid. your correct there.

[I.R.PIRATE]

I agree fully Jock, even though SAA would not neccesarily be making a killing by introducing a LCC. What they would however do, is to put the competition (of SAA) out of business, and I suspect that is the motivation behind a move of this kind. Face the facts, Im sure no-one can even attempt to hide the facts that 1-Time, and Kulula hurt SAA on the domestic front, because in my opinion every single domestic passenger that boards these LCC's, is an EX/POTENTIAL saa passenger. Only differrence is that SAA can afford to lose of bit more of the taxpayers money, in an effort to bury the competition. History repeats itsself....

[MysticFlyer]

Reminds me of a story of a lady that once went into the boardroom, after being invited to the cockpit after TOC was reached.

Her masterplan entailed wonderful cost savings on the HR side.."... two crew is not necessary, ....they just idle around anyway.":ooh:

Throw peanuts into the cocpit and cabin - will keep them all occupied and prevent the pax from damaging the seats! Who said you have to feed them anyway!

Out comes the "smiley"(halved sheepshead), "Mamelodi Katkop"(halfloaf, chips and atchar) and the Woolies Salad........

If only it was so easy to attract competent BEE directors...ones not so expensive as a Coleman (nice neighbours he now has) or the price of a villa (and it's upkeep) in the south of France.....most successfull LCC & FSC CEO's has some knowledge of Operations!

I say the next problem with the current state of crime, violence etc.will be an EXODUS. Excellerated command of non-reflectives will also be a bit unfair then. All the years of experience of the people in how to compete with the privates, LCC and other Phoenix, Shooting Star operations would be lost, after it cost the taxpayers soo much, then to be left without any assets, Haouw!

Now that, is what I call a very expensive Bokkie, wouldn't you say old Spotty?! (Hey I need some following here, your research skills far outweigh my time available....:E hey, better go, my bouillion de légumes is Beecomming a Sous'a in da keetchen!)

The Mystic 1

[Deskjocky]

fluffyfan...wasnt really talking about flight ops, my comments were aimed more at the "gravey trainers" I agree that the rest of the industry- especially pilots- should be earning more. Just have a look at how many staff SAA needs to employ at the airports to get the job done- same in most other departments, productivity is dead and buried!!

[Solid Rust Twotter]

Productivity?

Don't be silly.:* Why should you get off your huge sadza fuelled posterior when you have a job for life with a taxpayer funded parastatal?:mad: :mad:

Plus ca change, mes amis....


It appears the ****'s the same, only the flies have changed.:rolleyes:

[MysticFlyer]

Yip, too many wêna's not bringing their side! This gravy thing!

It's just like the government, making peace in Africa, running this whole PAP thing almost from the comfort of his BBJ (it is Business afterall), long before the mielies is off the land.

Spoories first needs to prove that they could operate solo - but for that, we don't need Nostradamus either. Now already talks about a LCC, jonawê, I can't believe.

Meknows this is heading towards the extinction of a fine specimen - the Bokkie (symbol of old regime thing).

Maybe they could get in another great - World Airways, hey even US Airways for example- type of guy, with experience in filing (chapters of course), who could help Spoories.....Striking that in Africa, so many fine examples of have emerged with years of experience in most fields of industry, if they were overseas, great art of concealing their past achievements.

Soo many SA people abroad, yield should look excellent even if you double the fequencies and half the price over the major holiday period! More to enrich the handlers and cabin staff, who's reputation for vanishing acts excels, seeing that the ammendments are in place. Quick, anyone has Vernon or PARC's number?

PAP Airways! Viva!

[fluffyfan]

Dear four engine jock
but if SAA funds a Low cost airline it will only do it to get rid of the comp.
True Story...thats why I said I am against such an Idea, plus you dont give the LCC management enough credit, current SAA management could not organise a piss up in a brewery never mind start a LCC that would be effective against the current operators.........they will probably make it a BEE enterprise and all the crap that goes with that rather than just listening to the customer like the others have done.

As for the so called 30 year old airplane , come on you just got lucky to fly the new 737-800. or the scare bus. that the hard working South African is paying for.
Another true story, I did get lucky

I feel that every tax paying South Africa should fly SAA for free . they own the airline dont they.
Ok well I will go for that, but also would like free electricity, water, medical, education, fuel, telephone calls, road travel...ie no more tolls etc I am sure there must be many more, because we are all tax payers and we own these services too dont we??



The pilots in SAA want to make the same as a pilot with BA or lufthansa. Thats a joke. You cant compare the cost of living in SA to Europe.
A common misconception, and I did try to explain in my last post that its not that simple, its a huge formula that takes a whole bunch of things into account, most importantly disposable income, ie after all costs of living.....and I think it would be safe to say that SAA is behind the rest of the world.

[African Tech Rep]

Couple of points for fluffy
738’s are more expensive than 732’s – but SAA are Leasing them – not buying – so using “purchase price” isn’t an accurate picture.
Where’s the Asset ? – almost everything is Leased in – it’s an asset for the lease company but a liability for the airline.
I’ve seem SAT’s maintenance and the guys are GOOD – but they are still pressured to get it out the door – just like the guys at Lanseria .
(actually maybe not as much – in some cases they need a bit more of a push)
SAA doesn’t lease it’s equipment because “it’s the new world norm” – they lease them cause a CEO was tasked with making as much profit as he could in a limited time – selling all the assets and leasing their replacements made this EASY.

It looks argumentative – but is meant as clarification.

If the plan isn’t to use the SAA LCC to kill the other LCC’s and revert to high cost – the SAA management need a few more psychiatrists on staff – It should be the plan cause that would be good business.
It’s also why it shouldn’t be allowed.

I’ll be fascinated by the result of the pilot salary survey – I am definitely of the impression compared with average SA earning they are well above and they seem to have more “disposable” than equivalents abroad – until you get to senior Captains etc who seem to get a salary I’d like no matter which flag carrier you look at.
If anyone is underpaid – look on the hanger floor.

SA NEEDS SAA – the only African nation with a reasonably respected Flag Carrier (although Kenya is getting there) what it doesn’t need is a state owned LCC.

[Reduced Thrust]

African Tech

why do you guys call yourselves Engineers? what do you Engineer, most Engineers I know go to University for 4 years and get a degree then get registered with the Professional Engineers Association..............you are not Engineers..............you are technicians.

It seems Fluffy did mention that the 737-800's were leased maybe you should read the posts before jumping in, and that figure that he gave is an accurate amount for financing costs.

I am so glad you get the impression that the pilots are well paid, maybe you should get the facts too.

[Deanw]

Let's not forget the last time SAA was involved with a LCC. Anyone remember Sun Air? :E

[Deskjocky]

Deanw...... not to be pedantic but Sun Air (and I assume you refer to one that had its head office next door to Ceasers) was no LLC- in fact they operated at the opposite end of the scale- big on service/comfort/rewards, price was not a key selling point.

Now since I was on the recieving end, so to speak, during this sorry episode I think I can offer a version of events that may just cast a slightly different shade on what the general public has heard. Firstly SAA were involved up to their necks but only only at the end- the real conspirators got away scott free- Comair When Sun Air was privatized the government in its infinite wisedom, allowed a BEE partnership to partner with Comair and purchase 30% of Sun Air- Comair's principle competitor at the time. The result of this was that Comair appoined a representitve to the Sun Air board who then could report back as to any new initiatives Sun Air was planning. Needless to say it wasnt long before the man from Comair started influnecing other board members as to the ability of the Sun Air management team- result- 3 top execs were shown the door and replaced by incompetent fools appointed by the principle BEE shareholder. Lots of great plans in the pipline suddenly stopped- new routes etc.

Their next move was to cut Sun Air off from it support base- the corporate travel agencies who booked Sun Air for their clients. Smaller airlines pay very handsome back end commisions to the larger travel agency groupings to ensure they get traffic- its basically money for jam to the agents but the deals are structured in such a way that they off sell the airlines that dont pay them what they want. Comair knew the deals Sun Air put forward and instead of bettering them they then told the agents that the plan was to merge Sun Air with Comair and so dont worry about signing the Sun Air deal. Result- the biggest travel agency group in the country stoppped selling Sun Air and revenue dropped by 30% overnight. No airline will survive that for long.

Next- symaltaneously both SAA and Comair lowered their fares- mmm.. strange that. As Sun Air never sold on price this was going to make it hard to compete as it was used to selling a premium product at a good price. From then on the writing was on the wall.

The Comair man on the board then suggested to the other BEE partners on the board that perhaps the ship was sinking and a buy out should be orcestrated to save the money they had paid for the airline. A brilliant move as it they suggested that SAA may be interested in buying- enter Coleman. He must have thought it was christmas! he quickly promised the BEE chaps that he would gladly buy. Before the ink was dry on the document Coleman announced the purchase the the closure of Sun Air due to its precarious financial position. Notice here that Comair never uttered a word- they had millions pumped into Sun Air and they quite happily let it flow down the drain- but their pay off was the increased market share they thought they were going to get.

The real joke of the whole thing was then the BEE guys asked for their cash- Coleman refused to pay! nice. In fact SAA only paid the liqudators a few months ago- 14 million, cheap at the price.

So Comair's name was never dragged throught the mud and SAA took the heat. The last part of the story is also quite interesting becuase SAA had not paid for Sun Air, some of the ex management of the airline found another backer and offered a counter deal to the BEE guys- Sun Air still had its operating license and had aircraft available - this was based on the premise that the leases on the MD82's were paid up and were therefore legally still avialable for use. Not so, Comair and SAA saw this coming and did a deal with Safair to not release the aircraft to the new company. The essence of the deal was that Comair commited to take the leases on all the Sun Air MD82's over, after a cooling off period during which the aircraft were sent overseas- today they are back and flying in Kulula green. SAA sweetend the deal by selling SAFAIR its B737-200 fleet and leasing it back.

Where SAA were really sharp was the day Sun Air closed down they had senior management over at the Sun Air offices hireing key staff and managers as well as getting the frequent flier database onto Voyager. Comair sort of woke up a few days later but by then all the key people and information was already at Airwasy Park and therefore inacessible to them.

Comair also didnt get all the Sun Air passengers as they had hoped- the real winner here was Nationwide as this event really allowed them a foothold in the market. Today Nationwide is bigger, in market share terms, than Sun Air was and their key competitor is Comair (of course both compete very effectivley with SAA too!)

Whenever I see Comair bleeting about SAA and its uncompetitive
tactis I remember the Sun Air episode -they were quite happy to play dirty with SAA to get what they wanted.

[I.R.PIRATE]

I need some clarification on a point that keeps on raising its head here. Will someone please explain to me why we NEED a flag carrier airline? Who is the equivalent in the US? Some ideas would be appreciated....

[Deanw]

Thanks DJ, made interesting reading.

[Deanw]

Business Day: 31 October 2005


Flying low

SEPTEMBER 11 2001 was a watershed for the airline industry, a seismic event that finally forced the already struggling industry to make some tough decisions.

More than four years later the pressure has in no way abated, with surging oil prices now adding to the industry’s woes. Airlines have adopted a range of strategies to compete in this new, challenging environment, some with more success than others. It has become clear that traditional airlines, with their high overheads, are finding it increasingly difficult to do business.

In Europe there has been vast consolidation. Air France has merged with the Dutch flag carrier KLM, and Lufthansa has bought Swiss International Airlines, the Swiss carrier that stared bankruptcy in the face once too often.

It is hoped that through consolidation, overheads will be brought under control by sharing certain costs. While Air France-KLM’s first set of results as a merged entity were encouraging, it is perhaps too early to pass judgment on the success of this strategy.

One strategy that has undeniably succeeded the world over is that of the low-cost airline. In Europe, Ryanair has grown its share of the market to the extent that is now one of the world’s biggest airlines.

In SA kulula.com, and more recently 1time, have also been enormously successful.

In the US, several of the main carriers have sought to emulate the success of the low-cost model by establishing separate airlines. While these low-cost airlines are all profitable, they have not helped the traditional carriers that own them come to terms with their own unwieldy cost structures: four of the major carriers — Delta, Northwest, United and US Airways — are currently operating under the US Chapter 11 insolvency rules.

Against this background, it is difficult not to raise an eyebrow when South African Airways (SAA) CEO Khaya Ngqula starts talking about creating a separate low-cost airline, possibly with a regional presence.

SAA has not escaped any of the turbulence in the industry over the past few years. It has been profitable in some years, and wildly unprofitable in others, although its earlier unwise hedging policy played a role here. It still has to contend with high overheads, large management structures and heavy oil prices. SAA has targeted the continent as an area of growth — a market it sees as being lucrative for the airline.

So where does a low-cost airline fit into this scenario? Assuming the new airline will be created as an entirely separate and ring-fenced entity, will it compete head-to-head with SAA?

Certainly the low-cost model must be alluring to legacy carriers and SAA may be seeking a piece of the action. And, given the pricey tickets for flights to African destinations, a low-cost airline could be appealing to business, particularly on key routes such as Lagos to Johannesburg. It would follow kulula’s launch of daily flights to Windhoek and Harare and possible services to other destinations in the region.

On domestic routes, a low-cost airline would allow SAA to win back market share from kulula and 1time.

However, there are warning signals. SAA should be careful how it uses its dominant position in the local market. It has been accused in the past of using its weight to crush competitors. Such tactics in the low-cost market cannot be tolerated.

Furthermore, a low-cost airline might well add an additional burden to the management team, which already has its hands full trying to sort out its existing problems. Then there is its second airline, SA Express, which is in the process of upgrading its fleet, a costly exercise.

As a state-owned entity, any expansionary failure could ultimately become government’s problem. The business case for any such move into the low-cost market needs to be extensively interrogated before SAA goes ahead.

[George Tower]

Then there is its second airline, SA Express, which is in the process of upgrading its fleet, a costly exercise.

Any one know what they're upgrading to? Not DC-9s and B737-200's????;)

[reptile]

Understand Airbus briefed SAX board late last week - looking at A318/A319.

[Solid Rust Twotter]

RT

The engineer monicker goes back to the days of steam ships which carried engineers. Same goes for Pursers, Captain, F/O and so on...

[African Tech Rep]

Sorry RT – only just saw your question.

I’ve obviously touched a nerve somewhere – but to try and clarify :-
If by “you guys” you mean the hanger guys I’d guess it’s because some of them have CAA issued licence that say’s “Aircraft Maintenance Engineer”.

Fluffy gave a “price tag” whereas a lease rental has actually little to do with the “price tag” – it’s more to do with profit for Lease company / length of lease / amount of MR vs likely drawdown etc.

My impression is that SAA pilot get paid a sufficient – taking into account what they do and the conditions within the country – I did say I’ll be fascinated by the result of the survey.
I have worked with pilots from and in many countries and some I belive are overpaid whilst others underpaid and some sufficiently paid – to me the SAA guys I have dealt with seem sufficiently paid.

Personally I’m a Consultant – who used to be a Mechanic (and still have a valid Cert saying so) and a Technician (as some countries I worked in called me this) and an Engineer (s other countries called me this)

IR Pirate

The US definition of Flag carrier is

Flag operation means any scheduled operation conducted by any person operating any airplane described in paragraph (1) of this definition at the locations described in paragraph (2) of this definition:
(1) Airplanes:
(i) Turbojet-powered airplanes;
(ii) Airplanes having a passenger-seat configuration of more than 9 passenger seats, excluding each crewmember seat; or
(iii) Airplanes having a payload capacity of more than 7,500 pounds.
(2) Locations:
(i) Between any point within the State of Alaska or the State of Hawaii or any territory or possession of the United States and any point outside the State of Alaska or the State of Hawaii or any territory or possession of the United States, respectively; or
(ii) Between any point within the 48 contiguous States of the United States or the District of Columbia and any point outside the 48 contiguous States of the United States and the District of Columbia.
(iii) Between any point outside the U.S. and another point outside the U.S.

(from FAR 119)

So they have more than one Flag carrier.
A simpler version is “the National Airline” – ie BA is the UK’s Flag carrier – I belive SA needs an International Airline and for better or worse right now SAA is it – it gives the Country a world wide presence and should be a symbol of how good the Country is (not saying all are doing this well) – ignoring status symbols etc a Country with no Flag carrier is just too dependant on others.

BTW – I know SAA isn’t the only International airline we have – but it’s the one with the routes.

[I.R.PIRATE]

Thanks ATR, i have really been wondering about the definition of the so called flag carrier. As for SAA being our flag carrier, im just wondering whether a fantastic looking, brand new, leased machine is maybe window dressing in this case. There are definitely better Airlines in SA. Unfortunately they do not have the " financial backing".

[Parrot]

The idea of SAA running a low cost airline must surely be a joke.

If SAA really believe they can be competitive ...in any form ...why dont they...in particular ... allow/not object to additional carriers on the "African" routes. It really pi$$es me off to have to pay mega premium to fly to places like Nigeria... which, with due respect to our Nigerian based pprunes is not a place I relish visiting anyway..especially after I have been ripped off by the Honourable Nigerian Embassy for the requisite green sticker.

And whilst I am at it ... why is it that the Zurich route, which I fly regularly always has the dogs of the fleet allocated to it. The seating in the Lufthansa outcast A340-200's just does not cut it. My ticket last week was R42 000 (bus).....no joke...but unless I routed via Qatar ... the other airlines were playing the same pricing game that week...

OK.. bitch & moan over ...that feels better...I am sure I will be Ok ...that is until I have to fly with them again !

[fluffyfan]

There are definitely better Airlines in SA. Unfortunately they do not have the " financial backing".

Thats quite a claim

[slapfaan]

All this fuss about SAA...when:

The company ALREADY is a LOW COST AIRLINE....!!!!

I paid R57 one way JNB-CPT April this year,airport tax was a killer at R300...

R57...come on...how much lower must they go before being classified as a "low cost"...??? www.flysaa.com

They even threw in a nice meal and drinks,yes..wait for it...FOR FREE...!!

Certainly beats those dispicable green and red flying "steam-engines" of kakalula and lastime...(the latter still refusing to carry little paraplegic girls)....

Good on SAX for looking into the future...and especially for looking at THE BUS..ooooohhhh,even if they buy them just for it's sexy wing...

:O

[George Tower]

Good on SAX for looking into the future...and especially for looking at THE BUS..ooooohhhh,even if they buy them just for it's sexy wing...

I'm too fussed so long as they employ some sexy hosties:E

[African Tech Rep]

IRP
(If I may call you that)

There are good financial reasons for having the nice new planes (better fuel efficiency / lower maintenance requirements) – but in the case of a Flag carrier they would look a bit daft flying 707’s around.
But having had the opportunity of flying in all three classes on both SAA and Virgin to and from SA I see your point about “window dressing” – given the choice I’d be on Virgin every time.

Slapfaan – I think part of the concern is that they (SAA) can afford to give this rates not because of efficiency but because the rest of their costs are covered by the taxpayer – thus if the LCC goes ahead you may well see 1ZAR tickets until they have got rid of the other LCC’s – then bye bye SAA LCC and back to high prices.

It’s not a fair playing field – exasperated by SAA being almost Assetless – if one of the current LCC’s need cash they go to the bank and can mortgage their planes, SAA can’t do this so are reliant on government loans / handouts.

BTW - Of course the wing of the scarebus is the best bit - look who made it

Fluffy – I think our main point of disagreement is the reason SAA lease most (if not all) the planes – the high rate of leasing worldwide for 738’s currently is because lease companies have most of the ones coming off the line – SAA could have bought theirs but the CEO at the time could show more profit on paper by selling assets and leasing replacements – this in the long term is costing SAA LOTS of money and making the lease companies LOTS of profit.
The paper profit has now dissipated, so without a major cash injection SAA can’t really afford to buy many planes.
While I agree SAA have many “hangers on” I do actually feel sympathetic for the CEO’s since the big sell off – the task of making profits from an airline that’s been raped is not an easy one – but I do question their interest to actually rebuilding the airline to somewhere near the status it once had vs their interest in bonuses / golden parachutes and intention to do a bit and then move on.

South Africa is now paying for actions that happened some years ago.

Oh – and while CFM56-7 (738 engines) may have best dispatch reliability right now the CFM56-3 (733/4/5 engines) have best “on wing” time (MTBR) with their reliability unfairly “skewed” nowadays by poor third world operations.

[George Tower]

ATR (if i may call you that)

Can you perhaps compare the efficency of the new generation of a/c i.e. B738 / A319 to the other types ie. 737 classics, MD 80s etc that are being flown by other operators.

Obviously these older a/c cost sweet FA to acquire yet burn much more fuel. No problem when fuel is cheap but at around 60$ per barrel things are a lot different to 12 months ago. At what point will things become critical for the likes of Nationwide/Kulula etc that operate old kit?

[reptile]

Things started getting tough when the oil price went trough $50 a barrel. One LCC in SA facing serious cash-flow problems - their budget worst case scenario was $54 a barrel!

[crause]

:cool: Hi There I R Pirate and ATR my view about a Flag or National Carrier;

In principal mostly Coutries that colonised other countries created an enviroment where they could profit from the public transport system of their colonies,Once thses countries became independant their new goverments continued to supply this kind of services. The rail networks and airlines springs to mind.

The USA however won their war against the European colonial powers ,then created their own laws and for one dicided not to allow their goverment to compete with its citizens, hence all USA airlines are private airlines.

Here in Africa we have a situation where Goverments own airlines and use their powers to protect them etc etc this means That Nationwide's taxes goes directly in to SAA feul tanks? its a sick system.

The Goverment should try to govern and leave commerce to ordenary citizens.

And we will all prosper.:ok:

[I.R.PIRATE]

Hear hear....:ok:

[African Tech Rep]

George – only if you want to pay me :D

A “top of the head” assessment is that things are getting critical for the 732’s now – especially if they haven’t had their lap joints done and if the FAA do issue the Boeing Blanket AD (aka the MD one).

Fuel Burn is one of the factors – but you also need to factor in Maintenance costs – a 319 gets it’s first real major at 12Y (there is a lesser at 6Y) whereas it’s generally taken that the 8Y is sort of a biggy on the 738 (although this can be argued with) – Structural cutting in at about 24000hrs on the 319 – so as far as these are concerned you can expect quite cheap maintenance for the first 10Y / 24000hr.
Conversely a 733 just out of D will cost more than one close to it so the airlines “liability” depends on where in the maintenance cycle the plane is.

You also need to factor in how the airlines is doing it’s maintenance – they could be doing “block checks” which require a quite large amount of downtime for the check (I know of one MD that was down for a year for it’s D & Blanket Mod – not here though) or they could be “phasing them” which spreads the downtime over the “between check interval” – ie once a C cycle is finished you immediately start doing parts of the next C.
It seems “phasing” is good on a new’ish plane but you lose the advantages the older it gets.

So if you have a 732 coming upto it’s D with lap joints and a blanket mod – it’ll be cheaper to scrap it and get a 733, your future maintenance costs will go down and you’ll get better fuel efficiency – if you’ve got a 732 with say 6Y to go and you can get good pax loads you may as well fly the a**e off it – but if your pax loads are low ………….

All in all it’s better to get the newest you can afford – but in the long term it’s better to own your own planes than Lease.
It’s also better to have a “compatible fleet” – in the case of SAA and their 319’s/738’s they could almost halve their spares stores and training costs if they could make up their minds.

Another item to think about is what you want – are you in it for the quick buck or long haul – unlike some LCC’s it appears that SA’s are in it for the long haul – SAA though do seem more interested in the “quick buck” which could be a function of it not being run by airline people but CEO’s etc on fixed contracts to make as much as they can in a set time
Another way of putting this is a “long haul outfit” will be happy making a sustainable lower profit than the quick buck outfit.

Crause – sort of agreed – but it would be sad day in SA if SAA was lost – just as it would be in the UK or Oz if BA or Qantas went (I wouldn’t miss AF though – another story).
I’d be happy supporting Government involvement in keeping SAA as International Flag Carrier or it becoming private with Govt support for “bad cost but politically good routes” – but they can leave the Regional and most of the internal to those LCC’s we have.

BTW – you may call me whatever you like – I might even give an award if you can better some of the things I’ve been called :ok:

[fluffyfan]

ATR................

I think we are talking the same language, totally agree with you about management but hey what can we do? the pilots union is fighting tooth and nail against these guys, the scary thing is there arrogance, they have no experience of running an airline, but they act with impunity, cut routes with aircraft full to capacity and such.

I was trying to find some Statistics on the CFM series versus the older technology engines, have seen the stats posted at work but no luck on the net, instead I did find an interesting document at http://www.boeing.com/news/techissues/pdf/statsum.pdf

The first/second generation aircraft accident rate curve is rising, now I suppose that could be third world operators or it could be that these aircraft are just old and failing more often. My point is that thank god (or the SA tax payer) that the new technology is here in SA flying the public around. You can argue that if SAA was out the picture the other operators would prosper get new equipment run more efficient operations but just look at there track records when it comes to how they treat there crew, what makes anyone think that would change if SAA was out the way.

New Technology is great but its also good to have crew that are not fatigued, undertrained, underpaid.........just building hours so they can get into Emirates or Cathay.

George Tower..............got to agree, wish we had more pretty hosties, whats wrong with that? I bet thats why many passengers prefer to fly Nationwide, 1Time etc, if you ask me its good business sense

[African Tech Rep]

The first / second generation accident rate is rising = true – but look at where they are falling out the sky.

A key point in many incidents is Maintenance rather than crews – think about what you do when something fails – in general you “get around it” you don’t fix it and the failure could have been caused by an overworked underpaid hanger guy forgetting to do something (although there’s also an overworked underpaid inspector in the loop).

Take a walk to the engine shop (what’s left of it) – there’s some there that can talk your ears off about JT’s and CFM 56-5 & 7’s – not sure they’re that up on -3’s but SAA don’t have many 733/4/5’s

Will the LCC’s change if no SAA competition = doubt it – will they get “worse” if SAA start undercutting them = probably in order to try and survive.
Will a SAA LCC allow a level playing field = no way.

Are the LCC crews underpaid and overworked ? or is that that SAA crews are overpaid and underworked ?
Have I ever meet an hour builder who has complained he’s flying too much = No
I will be fascinated by this survey – it’s findings and who the comparison is against.

I don’t think I’ve ever meet anyone who’s paid enough – but SAA’s crews I think will have difficulty justifying a rise especially when you consider the money will come in effect from the Government so some could argue the money could be spent on Nurses etc instead.
(OK we all know where it will actually go – but in theory it could get to Nurses etc)

What can you do ? – a step forward might be to stop the “we are pilots so better than others attitude” (not necessarily you – but some) – maybe a pilots / engineers (OK Reduced T, “technicians”) united front would help ?

FWIW – I used to work for freight outfit operating WW2 Daks (some had really seen service) and DC6’s (one had bullet holes repaired) as well as Electras and survey Cessnas etc – none of ours fell out the sky – everyone was part of a team – there was no “we are pilots / you are grease monkeys” and management listened because they were also pilots and grease monkeys – so it’s not so much a function of aircraft age more “corporate ideology” – pissed off pilots and engineers don’t make for safe flight – especially when they don’t understand each other.

[fluffyfan]

A key point in many incidents is Maintenance rather than crews

It may be a factor, but Crew error is till the number 1 factor in aircraft accidents, by a long way.

SAA crews are definitely not underworked, in fact most of the Captains on the 737-800 fleet are running short of hours and wont be able to fly in December, I think we are flying harder than most at the moment, hence all the rumours about 60/50/40 pilots short, yes and that is despite repeated warnings to management about the shortage, they dont seem to care, one cost centre sees a saving by having fewer pilots and see a big bonus for themselves but they dont talk to the other departments who have to pay EFP (extra flight pay) or the rostering department who will have no crew soon....same old story rotten management, and that can be blamed on BEE, they dont care that the workers are not qualified, they just care about Black faces in charge.......sorry but thats the truth.

Its not just SAA pilots that have issues with pay, take a look at the Emirates, Mauritus, Cathay, Quantas, BA, Virgin and many other threads, everyone is complaining, and do you blame them, any natural disaster or disease is used as a reason for cost cutting, the airlines ask there crews for pay/productivity concessions through difficult times, but when times are good the inverse is never true, same thing with the rising fuel price in SA (the world) the cost of everything goes up with the price of oil but hardley ever comes down when the oil price comes down, how do you expect people not to grumble when being asked for more productivity, less pay and in the mean time the boss is coming to work in a helicopter???

In CRM we are taught about the "Im OK, you'r OK" and "Im Not OK therfore you are not OK" the problem with the pay differences in SA is that the guys getting the bad deal are not shouting "give us more", they are shouting "give them less" (this seems to be a South African phenomenon) and despite what you think the crew are not paid the fortunes you seem to think, SAA is at present lower than most of the comparable airlines, in fact last information I saw was Kenya airways flight crew gets more than SAA flight crew. Was reading an article in the lastest Time or some business magazine the other day, the gap between management pay and employee pay (worldwide......in most businesses) is getting bigger at a frightening rate, the rich are getting richer and the poor getting poorer..........and that is a fact, I used to be anti -union but if it was not for unions what is to stop this frightening trend, if Nationwide cant get a descent union and stand up for there rights then thats there problem, all they have to do is stand togtether?

One last point


;)
I am sorry you think that pilots have this “we are pilots so better than others attitude” and its not the first time I have heard this, some guys (some of my mates at the other airlines even) think SAA pilots have this attitude the so called "Sky Gods". I dont know where this comes from, most of the guys are normal nice people there are some dick heads like in every organisation but they are a tiny minority, its unfortunate that people only remember the bad guys and not the good guys........its the old Goat :mad: er theory............... A man is sitting at a bar, drinking, and he says to no one in particular, "A man can spend his life building bridges. Do they call him John the Bridge Builder? No. A man can spend his life raising crops. Do they call him John the Farmer? No. But you **** one goat . . ."

[African Tech Rep]

Hi Fluffy

Crew error is the #1 factor = yes (ish) – quite a number of the crew errors seem to have happened when they are dealing with a problem – fairly often that problem can be a maintenance error which the crew then fail to handle sufficiently.
Take a 73 crash in the UK – crew error in diagnosing / noticing which engine had the problem – reason for crew error = engine problem caused by maintenance problem (haven’t read the report for ages so don’t want to say error).

IMHO pilots often are the “blame takers” and it’s not fully justified always.

I would point out that pilots hours are Regulated specifically for them – whereas the hanger guys are the same as a shop assistants and come under the BCE Act.
During my time as a FME it wasn’t that unusual for the pilots to have to have a day off whereas I went and fixed another plane and then flew with it.

I do feel that crews for a long time got used to not hitting the max they can do – and now they are their complaining a bit too much.
I also feel their workload has reduced – take the 738 it does most of it for you and you now don’t have to even move the eyes much due to HUD’s – this is said by someone who started on Daks and 6’s and progressed through various types taking part in many flights – I must admit that SAA 738’s crews lost some of my respect when they insisted HUD’s were deactivated until the entire fleet had them as it might be confusing to them if one had one and another not – two things 1 – to tell if you flying a HUD equipped one feel the bump on the Captains head (bumped head as getting into seat = HUD) and 2 – how do they cope with an Inop HUD – insist all are deactivated ??

CRM is wonderful but seems to be practised more on the flightdeck than carried over to the entire working environment.

I did try and make it clear I don’t tar all pilots with the same brush – but have noticed that National airlines seem to have more than their fair share of Skygods.
You have the ability to affect this – next time you see a fellow pilot act “Skygod’ish” jump on him – story - on a visit to an airline I used to work on I saw one coming in with someone who when I was there was a PPL in our cadet programme in the left hand seat – obviously I took the p**s – the FO actually said “you can’t talk to the Captain like that” whereupon the ex PPL now captain explained I could utilising words such as “pompous t**t” – I belive the FO underwent what could be called an “attitude readjustment”.

I’m glad to see your using Kenya as a comparison as I belive this is more correct than using BA / AF etc – I would like to see people like Brazil / Chile included as well (but not Varig as their situation would currently “skew” the result).

It is said sometimes that pilots earn their money maybe once in a lifetime – I have seen both from the flightdeck and the ground pilots really earn their money – but as planes get more reliable and as pax ops generally avoid real “money earning situations” it’ll become more and more difficult for pilots to justify large salaries.

I wish you luck in your endeavours – but would ask – would you prefer a 5% “supported rise” or a 10% rise that alienates many people.
I hope you’ll go back to work and start explaining to your colleagues they have to work on gaining “popular” support – currently I belive there is a lack of this – this belief supported by neighbours of mine where the underlying opinion on SAA pilots wanting a rise appears to be “greedy bastards”.

One point about the pilot / engineer relationship – last time I was there I watched as a team leader who had just worked many hours more than he should to get a plane ready try to explain to the pilot taking it what his team had done – I was not overly impressed by the pilots seemingly lack of interest – but was later impressed by his flying abilities.

Ask yourself how you treat the hanger guys (or even the Line guys) and when you last went to the hanger to see what they do.
We used to play a post D check game – during the subsequent test we’d show the pilot pictures of the plane during the check - those who could make sensible comments (ie – yes – how exactly did you sort out the problem with the repair down the back) gained far more respect than those who went “what the **** – hope you didn’t have bits left over”.

SAA is in quite a mess – starting a LCC won’t fix this – neither will pilots alienating other departments with pay demands.
Oh – and I know in theory Maintenance and Ops are different Companies.

[MysticFlyer]

Can I recommend a good publisher?

SAA thinks thats having a good airline (FSC) evolves around whether they have enough money....

Alliances worlwide are moving towards CRM where the pax can check in via Cellphone as he's driving up to the brand new E...Ekhuru....yes....stick to business in SA!

Every other ****** is trying to retire from the next tourist, we are as it is a long-haul dest. competing badly to what is on offer.

Hello

[African Tech Rep]

Mystic – that would be nice.

I’ve had thoughts about doing “the politics of aviation” and “how to treat your mech like a human” – but for some reason every publisher I’ve approached has said bad words when I suggested one of those up front payments like they give to people writing “my life as a CEO / Conman” type books.

[fluffyfan]

I also feel their workload has reduced – take the 738 it does most of it for you and you now don’t have to even move the eyes much due to HUD’s

You seem to feel alot, " I feel the workload has reduced" " I feel you are paid too much"................I have a few thousand hours on the 737-200, and about 1000 on the 800 right now, and let me tell you there is not much difference when it comes to flying, your time is taken up with different things, the 800 is however far safer becauses you have a bigger picture of your situation but its more information. I was under the impression that a technical man like yourself ATR was different to the lay person that thinks pilots just sit there drinking coffee and get to press the big red LAND button when the time comes. I dont make wild comments about other peoples jobs that I dont understand fully, would appreciate if you did the same

I have not learned anything from your post regarding Engineer/pilot relations, not because what you said was no good but thats how I treat these people anyway, maybe you should take a page from your own book and not treat pilots with such contempt......you seem to have a few issues regarding how pilots treat the ground crew

[African Tech Rep]

Having been on flight decks of DC3 DC6 Electra 732’s 733/4/5’s 738’s and scare buses as “operating crew” and “owners representative” I don’t think you’ll ever persuade me that the workload is not decreasing.
It may be true you have more hours on type – but how many full production test flights have you done ? – I count well into double figures – how many ferry’s ? – for me too many to count.

It’s strange you can accuse me of treating pilots with contempt – only the other day I was accused of being a “pilot lover”.

I’m glad you treat the ground guys well – not all pilots do.

I “feel” a lot because these are opinions held by myself and I belive others (some aviation related some not) – if you wish to disregard these opinions feel free – but I’m not sure it says much for your CRM and it sure doesn’t bode well in any effort SAA pilots are going to make in gaining support for a possible pay rise – unless you don’t care about the division within the airline this will cause.

If you can’t persuade me a “technical man” with an understanding of what you do (no matter how limited you’ve decided this understanding is) that you are overworked and deserve more money / less time – how on earth do you think your going to persuade the lay person ?

I have spent LOTS of time in the atrium buying coffee and drinking it in that little area outside where you could smoke – admittedly not since 1st Q this year – and heard lots of moaning but seen few truly underpaid / overworked crews.
But the coffee sure has improved since the days SAA had A320’s.

Edited to say
Oh – I should say I’ve seen underpaid overworked crew – just not SAA ones

[Deskjocky]

Reading threads like this and others about SAA it seems there is a common feeling that if SAA would just dissapear then the other carriers would just make such a great sucess of themselves we would be just such a happy country.

A question, who would fill the void? Domestically maybe things would be ok but do you think Comair/Nationwide/1Time will be able stand up to the likes of Virgin/BA/Lufhansa/Emirates etc etc-on the international stage? forget it! they would be slaughtered. I know this will offend all sorts of sensibilities but they just dont have the know how to pull it off. Im not referring to the operation itself- its all the little things that that bite you. By the time these guys have paid all their school fees they would be long out of business.

SAA's role is a strategic one- its mere presence keeps other carriers serving a route remain competitive and thereby the prices passengers pay should reflect that. Would that Virgin ticket to London be that cheap if they dint compete with SAA?

So the point to all this- dont wish SAA away- wish that it could be privatised and in so doing enable itself to shake off the eneficiencies that come from being a state owned enterprize. BA was in exactly the same position and the look how it has performed since it was privatised.

[Stayinalive]

AND...now for something completely different........yaaaaaaannnnn....eich...gotta sleep!

[boyracer]

The new CEO has already turned SAA ito a low cost airline.... all he's got to do now is bring the ticket prices down:hmm:

[Shrike200]

SAA is already a low cost airline in terms of regional ticket prices....go check the websites, do a bit of comparitive shopping.

[Blah Blah Fishpaste]

Everybody seems to believe that SAX will become the SAA LCC, but not to sure if they know that SAX is buying more turbo props! Well trying to anyway.

The CEO is hell bent that that is the future. ( do they come in steam driven as an option?)

The leasing in of the DC9's and 732's is only temporary until the NEW Turbo props arrive! That will go down well with the public!

You guys are worried about the public choosing between new and old jets...well how about Old jet vs new prop job.(70 seaters nog al)

The flying public are actually quite nieve when it comes to these things, especially the people wanting to travel LCC, so they dont actually care as long as it is a jet.
:ugh:

And they want to use them on routes that fly near capasity with the very same DC9's and 732's. Very clever marketing that! Putting on a smaller slower aerie,the public luv that! I wonder if Rynair and easy jet and co know that?....must be why they are struggeling so much. We should send them these managers to teach them how to do business! *eish*

So i think grab what ever time on type you can and get out of here, cause these "previously disadvantaged now overly advantaged and not quite sure what to do" folk will manage us all into the ground! No matter who you fly for!
:uhoh:

Good grief i need a drink!...

[Gunship]

From the horse's mouth !ohannesburg - SAA, Africa's biggest airline, was considering establishing a low-cost division to compete with new entrants that have taken a quarter of the country's domestic market, chief executive Khaya Ngqula said yesterday.

"We would like to take on board our board, shareholder and workers'' before proceeding with setting up the low-fare brand, Ngqula said. "It's a dynamic industry. We know we have to do something.''

Local carriers including Comair's kulula.com have taken market share from Johannesburg-based SAA in recent years. British Airways, Europe's third-largest airline, owns about 18 percent of Comair, South Africa's only listed airline.

SAA and two unions reached a wage agreement on July 28, ending a six-day strike that grounded 75 percent of the carrier's flights. It agreed to increase wages by 6 percent, 1 percent more than its previous offer.

Under the settlement, the carrier would spend an additional R105 million over three years improving "deplorable'' working conditions, Ngqula said. The agreement would ensure that "this airline is going to be stable and viable".

The carrier will raise meal allowances, increase rest periods for cabin crews on long haul flights and introduce more flexible working hours.

The airline also agreed to raise wages of technical employees by 5.4 percent, Ngqula said yesterday. The unit employed about 3 000 people out of the airline's 11 000 workers, said Viwe Mlenzana, the newly appointed general manager responsible for human resources.

Ngqula said the deal "reinforces the confidence we have in the ability of our people". He said the past months had been tough for the airline. But with it posting a profit this year, it had been decided that staff should benefit.

"We are going to have happier employees [and] the competitive edge about this business is service delivery," he said. "If we make profits, everybody benefits."

Ngqula also introduced executive members who have recently been appointed. They are Mlenzana, the general manager of human resources; Collin Jordan, now the general manager of flight operations and the former negotiator for the pilots unions; Molebatsi Mogai, the general manager of sales and marketing; Patrick Dlamini, the general manager of cargo; and Jan Blake, the acting chief executive of SAA Technical.

SAA communications general manager Onkgopotse JJ Tabane is leaving the company to join the Adcorp group as the chief executive of one of its communication subsidiaries, Graphicor. Link (http://www.busrep.co.za/index.php?fArticleId=2988267)

[Solid Rust Twotter]

Using taxpayers' money to shaft the taxpayer in the long run again. Nothing new there...:( :rolleyes: :*

[George Tower]

Low Cost Carrier....my @rse!

Just been on BA's website and priced a one way to LHR next week - cost R4800 +/-

Been on flysaa.com and its a whopping R15,000. Both of those Y class seats.

Anyone taking bets on who isn't getting my business.

[SortieIII]

GRJ TWR I have just been on SAA's website, and I found the following:-

Web Only, Non-Voyager, Upgradeable, JNB-LHR ZAR4530.00



:confused:

[African Tech Rep]

Oh tall one

Think the LCC idea is for internal and regional only.

Now if they wanted to carry the model onto the Long Haul it might get a bit more support.

BTW – Virgin reckon they can take you next Tuesday for R4528
Know who I’d chose.

[tic]

Gulf Air, based in Bahrain, has an all economy subsidiary called Gulf Traveller, operating a fully fledged economy only service. They operate 5x 767/300's, mainly to the Sub-continent. (Pilot's are paid the same). It works well, and generates a lot of revenue for the airline. Thousands of pax cannot afford to fly, and many are quite happy, with a cheaper way to fly. With so many youngsters, and older people who don't need or want high prices, when they travel, Gulf Air, and to a lesser extent, Air Arabia, out of Sharjah, have shown it can and does work. Put these people in aeroplanes and keep them out of buses and trains. SAA, could well do the same. More pilot jobs, definately. As pilots, don't we want that?
Together, with the "sky-nannies", looking after young kids on the Western and Australian routes, and the "sky-chefs" as well, the airline has catered for both ends of the market, and is profiting from that. Easy Jet, Ryan Air etc have done it. Gulf Air as an airline are doing it. Take note SAA, it works.
tic

[Parrot]

IMHO SAA getting involved in a low cost airline is offsides. Every time they make a loss the tax payer picks up the tab. And please dont tell me they made a profit last year ...In the real world they would still be paying off their huge forex loss.

[Blah Blah Fishpaste]

Why would you edit out other peoples posts?

[Deanw]

SAA to start low-cost airline
April 10, 2006
SAA would start a low-cost airline, which would be under separate management, using some of its existing fleet, chief executive Khaya Ngqula said on Friday.
The date had yet to be decided. He said the fact that low-cost airlines now had a 25 percent share of the domestic airline market, and that the market had grown by 50 percent, showed that they were "what a lot of people want".

www.busrep.co.za

[Deanw]

11 April 2006:

SAA’s low-cost plans hit turbulence from rivals
Khulu Phasiwe

Kulula, 1time take dim view of Ngqula’s bid for low-end share

NATIONAL carrier South African Airways’ (SAA’s) move to launch a low-cost airline — announced yesterday — has met a turbulent reception from the domestic aviation industry, which says SA cannot afford a third government-owned airline.

Government, through its wholly owned transport and logistics company Transnet, already owns 95% of SAA and 100% of regional carrier SA Express.

SAA CEO Khaya Ngqula said yesterday the parastatal was “definitely going to launch its low-cost carrier before the end of this year”.

Speaking at the formal acceptance of SAA as the 18th member of the global airline group, Star Alliance, Ngqula said the planned airline would have its own management team and would operate at “arm’s length” from SAA.

The planned new entrant would compete with no-frills operators kulula.com and 1time for the growing low-end domestic flight market.

Ngqula said the domestic market had grown about 30% since the first low-cost carrier took off five years ago.

He said SAA had managed to capture only 5% of that market and this had prompted his executive team to change its business strategy.

But not everybody welcomed SAA’s plan.

Kulula.com said government needed to focus on deregulating the domestic aviation market, and leave the operation of airlines to the private sector.

Executive director Gidon Novick said governments in other parts of the world were relinquishing their ownership in the airline industry and SA should consider that option.

“I would be surprised if the South African taxpayers have an appetite to subsidise a third state-owned airline,” he said.

Novick said the cost base of kulula was half that of SAA’s and SAA’s proposed new low-cost airline would have to match that to compete.

Marketing and operations director at 1time Rodney James said the airline welcomed competition as long as it was based on the principle of fairness.

“Unfortunately, when competition comes from SAA, it won’t be fair because the taxpayers will be paying for it,” he said.

SAA had previously said that it had no intentions to launch a low-cost, no-frills airline.

It had said its customers were mostly discerning business people who valued flight frequency, convenience, punctuality and reliability.

In 2004 the national flag-carrier’s CEO said SAA would compete with SA’s low-cost carriers by reducing its prices from time to time. He said at the time that the airline would offer “all the frills at no-frill prices”.

But SAA admitted in its 2004-05 financial report that direct competition with budget airlines had negatively affected its bottom line.

The parastatal said it had lost 1,8% of its average yields due to its attempt to match the air- fares offered by the budget airlines.

Analysts said these losses and the cannibalisation of its market share by low-cost carriers had forced SAA to revise its strategy.

Business Day

[PAXboy]

This is a standard response from an 'old' carrier. They have all tried it - right across the world. If they DO get the venture off the ground, it's chances of success are few. The reasons for that are self evident but let's start with the fact that they are starting from the wrong end of the idea.

But, to an outsider, SAA have made the first big mistake in thinking that there is a segment of the market that they can take/retake! There are, probably, already TOO MANY carriers in ZA (old or new) and the next move will be consolidation, not expansion. So, I suggest that this idea will not get off the ground but will absorb lots of lovely time, resources and money before it is laid to rest under mutual congratulations of a project well researched. :rolleyes:

[JG1]

“I would be surprised if the South African taxpayers have an appetite to subsidise a third state-owned airline,” he said.
Since when do taxpayers in SA get a choice in what happens in SA anymore?
“Unfortunately, when competition comes from SAA, it won’t be fair because the taxpayers will be paying for it,” he said.
Fair went out of the window a long time ago. The present government is not beholden to its taxpayer base. It does not care what you think as a taxpayer because you don't vote for them anyway.
Novick said the cost base of kulula was half that of SAA’s and SAA’s proposed new low-cost airline would have to match that to compete.
Nope.... all SAA has to do is offer 15 Captains each from kalula and 1Time a job, whilst simultaneously undercutting their fares and these low-cost carriers will kark it.
QED

[FlingWingKing]

I have a funny feeling we are going to see Afriaviation's gripes and moans manifest in reality. Wonder if that is how SAA is planning to accelerate their previously "dis"advantaged group.........

[Deskjocky]

Somehow I dont think so- this project has some seriously experienced people working on it, think old Afri is going to be a tad dissapointed in the way flight deck recruitment will be handled:suspect:

[ZERO3L]

So now we are going to start a low fares airline. What a joke- they are already competing against the "real" low fares companies -just go to the SAA website.
I cannot believe that this can be allowed given the track record of this money losing institution.
Just remember the money hedging billionsthat were lost, Colemen's handout, losses on the Tanzanian experiment, Sun Air..................................the list is endless.

The fickle public are also to blame as they have short memories as to what they used to pay before Kulula and 1time came onto the scene.

Not to mention the ridiculous salaries that we, the taxpayers, subsidize to a largely under utilized and poorly run airline.
Let me go and work..........at least I don't have a conscience about where my salary comes from.....................

[Deskjocky]

So ZERO3L, you have some strong views, what would happen if you were offered a position in the National Carrier flying nice shiney new airbuses, would you turn it down because your conscience wouldnt be able to handle it?

[Bart Simson]

This is not about a new low cost carrier getting back market share that SAA has lost. Check out the Australian section and see what is going on between Jetstar and Qantas. Its about management getting a lower cost base and using it as leverage to reduce conditions of mainline.


SAA Pilots

BEWARE

[Deskjocky]

As much as Im sure top management at SAA would like to blame the pilots for their current predicament, the facts are that the airlines business model is the problem- you cant sell seats for R1000 return to CPT if your costs ensure you wont breakeven- even on a 100% load factor. What needs to be done is align the offering with what is charged- thats the objective. SAA's top corporates are currently paying 50% less for the same service and getting all the benefits.

SAA pilots are protected by numerous collective agreements that are as close to bullet proof as an agreement can get- the mere mention of a pilot strike last year immediately caused a 40% drop in forward bookings for the period the strike was supposed to happen over- an experience management will not want to repeat soon.

Its important to remember that the biggest cost SAA faces is poor utilization of the fleet- the new business model will address this- irrespective of whatever schedule the "new" carrier undertakes SAA will maintain, at least, its current schedule commitments. This will mean that more pilots will be needed- either at SAA or at the new company depending on what is finally negotiated with the pilots.

[George Tower]

I think the crux of the debate focuses on the morality as to whether a state run enterprise should be allowed to what is being proposed.

I recall that British Airways faced a very lengthy legal battle when it launched its own LCC in the late 90's GO which ironically was sold off to easyJet, as Rod Edington didn't think an LCC suited BA's business model.

I personally believe that SAA and SAX should be privatised immediately, and any form of state subsidy should end, and then they should be free to set up whatever brand they wish. I believe that way would be the best future for SAA but the problem would be that politically the cost would be unacceptable because short-term pain of job losses and restructuring would not be traded for long term gain.

I'd also be inclined to rebuild the SAA brand.....just what on earth are we to think of an airline who's main tv advert shows two blokes groping for a glass of water

On the face of it SAA has the perfect kit for an LCC - nice new a/c either 738 or the 319 which I bet offer far lower seak km costs than an old DC-9 for instance. With oil prices of 70$ per barrel the DC9s are surely going to start drinking away the profits.

Any how I wouldn't be surprised to see SAA taken to court over this, given previous rulings about anti-competitive behaviour.

[PAXboy]

I recall that British Airways faced a very lengthy legal battle when it launched its own LCC in the late 90's GO which ironically was sold off to easyJet, as Rod Edington didn't think an LCC suited BA's business model.

Just a slight correction and is is only for accuracy and not criticism of George Tower.

BA started 'GO' and it did very well, competing with easyJet and RyanAir. After some changes at Mainline, they decided to sell it off. GO was bought by an investment company led by '3i'. The airline prospered to the point that '3i' decided to realise their investment in a purely financial manner. That is to say that they were financial people and were not interested in the airline business as such. 3i sold to easyJet which irritated a few people.

So we had some old fashioned market consolidation in the uK, which is why I said earlier in the thread, that I expect something similar will happen in ZA in due course. If SAA think that they can find a way to a cheaper cost base by using an LCC, then the experience of carriers across the globe is that it is an extremely difficult trick to pull off. Most do not succeed.

The best way to reduce your cost base is the Swiss and Sabena method.

[Deskjocky]

What we must remember here is that SAA is an instrument of the state- they pull the strings and therefore pay the bill when the people they appointed cant shape up. In terms of privatising SAA who would honestly want to buy it? Not because there isn’t potential to make money, because there really is, but simply because the aviation sector is too volatile. The only companies who value stakes in other carriers are other airlines- that’s been tried before (Swiss) and found to be totally unworkable.

The Sabena option is also very risky for the economy of South Africa- SAA is vital to the transport infrastructure of the country- look what happened during the strike last year- imagine that going on for weeks on end. SAA transports over 50% of the passengers who fly domestically. The other carriers simply do not have the capacity fill that void initially (everyone's load factors- including SAA's are quite good at the moment)- they could in time move into the space but it would take time for them to meet the demand- expansion is capital intensive and some of the domestic operators pockets are just not that deep. Some have problems raising capital and have to borrow at near loan shark rates- rapid expansion in this environment would probably cause more pain than good. The only clear winner of this type of situation would be Comair, who have the cash and the know how to make it work- only they tend to be very conservative and I don’t see them adding 20 new aircraft to their fleet in one shot- which is really the only way you are going to fill the void. CE will not be able to cope with this type of dramatic market swing- the way the company is run will preclude this.

So its a case of careful what you wish for- the reality may not be what you anticipated. Prices are at an all time low- things could not be better for the travelling public- if any one of the players depart the market, prices will go up. History shows this has happened every time an airline has gone bust in this country.

[Solid Rust Twotter]

What we must remember here is that SAA is an instrument of the state- they pull the strings and therefore pay the bill when the people they appointed cant shape up.

Correction. The taxpayer foots the bill.

[Deskjocky]

Yes, I would have thought that was entirely obvious- where else does the state gets its money from?

[Solid Rust Twotter]

Correct.

Unfortunately, the general perception among the populace of SA is that the state has lots of money. The fact that it has to come from somewhere is not apparent.

Another taxpayer funded cock up is not going to make things better for the already beleaguered bloke who has to bail them out every time.

My objection is to their opposition having to budget carefully and make a profit while SAA has free rein to squander the money their opposition have to pay as tax.

[Deskjocky]

No one disputes the "unfairness" of the state subsidising a company in competition with other smaller private companies. Clearly the state feels its justified in doing so. Here is some food for thought:

Companies like SAA, Telkom, the SABC all state owned and with the exception of Telkom (until recently) have had their industries deregulated to allow private sector competition. These private companies now use the infrastructure that was paid for by the state- to support the state owned enterprise, to support their current operations.

A good example of this is how SAA sold (for literally a song) Comair its first 3 B737's ZS-SBN/SBR/SBO SAA even provided the pilots for the first year- the deal included full maintenance (which still continues for some of their fleet today) for the fleet- without this help things would have been much more expensive for Comair to get into the market in the first place- Comair benefited form the infrastructure paid for by the tax payer. Comair used this SAA connection to gain credibility among the travelling public when all it had were a few F27's and an old DC3. The deal also included use of SAA's sims- which Nationwide also still use to this day, why, because it’s cheaper than going elsewhere as well as being convenient.

These are just small examples of how private industry has benefited from state investment. Even 1Time benefit form taxpayers money- they are handled by Equity aviation- 50% owned by the state, why do they offer such cheap handling prices to 1Time? Because SAA (by definition the taxpayer) has over the years paid for all of the ground handling equipment they use today (Equity- Previously called Apron Services was part of SAA for decades until it was unbundled form the Airline in the 90’s) Equity even check-in 1Time in some outstations – again offering cheap prices because the staff and ground handling equipment are at that station to service SAA in any even event. This allows 1Time to open up shop in a city for no infrastructural costs at all- effectively at the taxpayers’ expense. Kulula also make use of Equity at some stations that CHS do not operate from.

This issue is not as cut and dried as you may think

[Africannut]

This is not about a new low cost carrier getting back market share that SAA has lost. Check out the Australian section and see what is going on between Jetstar and Qantas. Its about management getting a lower cost base and using it as leverage to reduce conditions of mainline.
SAA Pilots
BEWARE
Good one Bart

[Africannut]

Correct.

Unfortunately, the general perception among the populace of SA is that the state has lots of money. The fact that it has to come from somewhere is not apparent.

Another taxpayer funded cock up is not going to make things better for the already beleaguered bloke who has to bail them out every time.

My objection is to their opposition having to budget carefully and make a profit while SAA has free rein to squander the money their opposition have to pay as tax.
"Absolute power corrupts Absolutely"

[Africannut]

No one disputes the "unfairness" of the state subsidising a company in competition with other smaller private companies. Clearly the state feels its justified in doing so. Here is some food for thought:
Companies like SAA, Telkom, the SABC all state owned and with the exception of Telkom (until recently) have had their industries deregulated to allow private sector competition. These private companies now use the infrastructure that was paid for by the state- to support the state owned enterprise, to support their current operations.
A good example of this is how SAA sold (for literally a song) Comair its first 3 B737's ZS-SBN/SBR/SBO SAA even provided the pilots for the first year- the deal included full maintenance (which still continues for some of their fleet today) for the fleet- without this help things would have been much more expensive for Comair to get into the market in the first place- Comair benefited form the infrastructure paid for by the tax payer. Comair used this SAA connection to gain credibility among the travelling public when all it had were a few F27's and an old DC3. The deal also included use of SAA's sims- which Nationwide also still use to this day, why, because it’s cheaper than going elsewhere as well as being convenient.
These are just small examples of how private industry has benefited from state investment. Even 1Time benefit form taxpayers money- they are handled by Equity aviation- 50% owned by the state, why do they offer such cheap handling prices to 1Time? Because SAA (by definition the taxpayer) has over the years paid for all of the ground handling equipment they use today (Equity- Previously called Apron Services was part of SAA for decades until it was unbundled form the Airline in the 90’s) Equity even check-in 1Time in some outstations – again offering cheap prices because the staff and ground handling equipment are at that station to service SAA in any even event. This allows 1Time to open up shop in a city for no infrastructural costs at all- effectively at the taxpayers’ expense. Kulula also make use of Equity at some stations that CHS do not operate from.
This issue is not as cut and dried as you may think
Think back to the start of this, with no assistance! Trek Airways/Flitestar/Air Cape!

[AfricanSkies]

If SAA starts an LCC would they cut their normal SAA domestic services dramatically?

Would they create a whole new airline or would they hand over the 319's to SAX and make SAX the LCC?

[GreenOnGo]

How could an outfit like SAA with such expensive cost structures even dream of getting into the low cost arena? What a joke!

[Deskjocky]

Think back to the start of this, with no assistance! Trek Airways/Flitestar/Air Cape!
Yes and where are these airlines today?

[Q4NVS]

I agree with Deskjocky, things are not always as simple as they seem..

Firstly, with all the benefits gained via the SAA infrastructure, does one really believe that you would get a discount on your PAYE once SAA is privatised.?

Think not - Is there any individual who would say outright that he would be a proud South African, when the likes of the National Carrier no longer exists and as an example, BA is known as the franchised South African National carrier?

Think not again - Similar embarresment as when one needs to watch the Springboks arrive on a BA flight.... :yuk:

This whole discssion is somewhat twisted, wrt how SAA only benefits while at the end they actually provide employment for some 800 aircrew, sure, some have probably over stayed their welcome now..

With the demise of SAA, do you really believe that your chances of employment would improve because the crew will be wiped with SAA?

Think not again x2.

What I am trying to say is, sure, we should all be vouching to get SAA profitable and its icon status restored (if you are truly South African), so that things could improve for all!

:ok:

[Solid Rust Twotter]

The costs of Equity and other former parastatals would have been carried by the taxpayer to begin with as is everything government related. I very much doubt any of the non SAA carriers are getting discounted rates. If it's not a fair price for the service I'm pretty sure plan B would have been put in place by those affected and alternatives found. To this end I believe paying market rates, whether originally set up by the taxpayer or not is the point and not the fact that it used to be govt owned.

No one is talking about shutting SAA down but it must be made profitable and not remain as a parasite surviving on tax paid by those airlines who have no government backing (as well as the rest of us). This attempt to penetrate a sector of the market occupied by profitable companies is nothing new. Undercutting prices with the help of the taxpayer in an attempt to shut down opposition is an old trick they've used before. Supposing they manage to shut down Kulula, CE and 1Time, how long do you think it'll be before prices once again skyrocket to contain the expenses generated by a building full of managers and secretaries at Airways Park?

BA/Comair as the national carrier? I have no objection as long as I don't have to support them with taxes. ERJ, you speak only for yourself. Do not presume everyone feels the way you do about the Boks not flying on SAA. As for jobs with SAA, many of us are already excluded as a result of government policies, so no real difference to me.

[FlingWingKing]

U raised a VERY good point, and I totally aggree with you. I think we as pilots get a bit emotional sometimes about things and dont always think things through because of those emotions.

Seeing the Springboks arrive by BA colours should be an embarresment for the National carrier and I think they should work hard at getting the Boks back on board.

COMAIR chaps....PLEASE, no harm intended. You guys should be saluted for seizing the oppurtunity when SAA was snoozing.

Having a national carrier is like having a national team.........your not quite a Springbok until you play for them, regardless of whether you win games or not. To say that things are at an alltime low at SAA is a gross understatement. Management are seemingly clueless (not just the current one) and has been for a while. There are constant friction between them and the pilot group, passenger service is non-existing, etc, etc. Nevertheless, they are the national carrier, and I for one would certainly like to be a Springbok.

[George Tower]

Pax Boy,

Having read Barbara Cassani's account of GO I should have stated my facts correctly - Sorry. Easyjet probably acquired it at about half of what it was worth.

Getting back to the matter in hand I would have to say that it is again fundemantally about idelogies. The success of legacy carriers at going LCC is not good.

Deskjocky, I very much respect your opinions and knowledge of the industry. I do disagree with the fact that South Africa as a nation would cease to function without SAA. Again I probably have more faith in what the invisible hand of market forces can do given the chance.

With regard to privatisation of state industries, I'm pretty sure that most profits came as a result de-regulation and privatisation not before.

[PAXboy]

Not at all GT. I admired the whole GO operation under Ms C. I would have used them a lot, save that their main base was Stansted which was the most awkward and distant of the four London airports from where I was then living.

I understand that 3i made an absolute killing on the sale thus proving that Mainline had a good idea - by giving the job to someone to start a brand new operation on a separate field - but then made the wrong decision about when to sell.

If SAA are allowed to start an LCC it will be a very bad day. Any short term gains of (apparent) jobs and low fares will vaporise within three years.

[divinehover]

It's easy for non-SAA drivers to give us flak. What they don't see and know is that when the cockpit door closes we do our utmost to run a super efficient and safe operation. We use the highest standards availible worldwide as our benchmark. We were recently audited by Boeing. Afterwards we were told that our operation was one of the top five in the world. A democratically elected Goverment (I didn't say a good one) dictates our policies. From pilot selection to running ineffient routes. From sub-standard ground handling to the leasing of our A340-300. Politics runs SAA.

As level minded proffesionals we know that SAA could make a lot of money. We should have cornered the majority of the sub Saharan market long ago with the head start we had.

Look A Emirates. An airline run on aggressive business principles. SAA is run on aggresive politicle principle. Our last COO lasted 6 months. Our CFO resigned this week after 16 months. Our CEO can't spell airline. Through all of this we manage to still run a fantastic flight operation.

We, as a pilot group are and will continue to be the standard of flight safety and professionalism in South Africa. LONG LIVE SAA.

[Solid Rust Twotter]

No one is gunning the pilots. SAA management has come to rely on the taxpayer (including their opposition) to bail them out after yet another disastrous foray into the real world and that is what burns my @rse.

[Africannut]

I agree with Deskjocky, things are not always as simple as they seem..
Firstly, with all the benefits gained via the SAA infrastructure, does one really believe that you would get a discount on your PAYE once SAA is privatised.?
Think not - Is there any individual who would say outright that he would be a proud South African, when the likes of the National Carrier no longer exists and as an example, BA is known as the franchised South African National carrier?
Think not again - Similar embarresment as when one needs to watch the Springboks arrive on a BA flight.... :yuk:
This whole discssion is somewhat twisted, wrt how SAA only benefits while at the end they actually provide employment for some 800 aircrew, sure, some have probably over stayed their welcome now..
With the demise of SAA, do you really believe that your chances of employment would improve because the crew will be wiped with SAA?
Think not again x2.
What I am trying to say is, sure, we should all be vouching to get SAA profitable and its icon status restored (if you are truly South African), so that things could improve for all!
:ok:Do you only have 800 crew?

[Solid Rust Twotter]

What I am trying to say is, sure, we should all be vouching to get SAA profitable and its icon status restored (if you are truly South African), so that things could improve for all!


The old ploy of questioning a person's patriotism to quell opposition, eh ERJ? Your masters teach you well....:rolleyes: :hmm:

[Q4NVS]

Sorry to say, but this will be my last post on this topic.

I understand that there is a lot of bad publicity wrt SAA. The thing that bothers me is that according to some, SAA is making it their business to make mistakes - I unfortunately do not believe this.

In life, not even a serial killer does his business, without him/her believing that this is the best thing to do, given info/gen available at the time.

Sure, with experience one could always do better...

In my opinion, SAA starting a LCC is yet another step for them to try and return to profitability, not to waste money, yet. If this works, would all not support it, rather than keep on slagging them down..?

The same sentiments were shared when 1Time started, its all about trying to protect your turf.

SRT, with regard to your comment on policies etc keeping you out of SAA:
It has never been easy and never will be, same as not all at NASA will become astronauts. But, the moment you give up the race, is the FIRST time that you have actually come close to loosing it...

Food for thought: In the last 3 months I have met 4 people who are on the SAA Shortlist, here's the thing - They are ALL pale males and 35+

Start some positive thinking and NEVER give up (It worked for me...)

:ok:

[Solid Rust Twotter]

One can only hope, boet...;)

Not holding my breath, though.

[Africannut]

Yes and where are these airlines today?
Perhaps snuffed out by hard earned taxpayer's money?

[Africannut]

It's easy for non-SAA drivers to give us flak. What they don't see and know is that when the cockpit door closes we do our utmost to run a super efficient and safe operation. We use the highest standards availible worldwide as our benchmark. We were recently audited by Boeing. Afterwards we were told that our operation was one of the top five in the world. A democratically elected Goverment (I didn't say a good one) dictates our policies. From pilot selection to running ineffient routes. From sub-standard ground handling to the leasing of our A340-300. Politics runs SAA.

As level minded proffesionals we know that SAA could make a lot of money. We should have cornered the majority of the sub Saharan market long ago with the head start we had.

Look A Emirates. An airline run on aggressive business principles. SAA is run on aggresive politicle principle. Our last COO lasted 6 months. Our CFO resigned this week after 16 months. Our CEO can't spell airline. Through all of this we manage to still run a fantastic flight operation.

We, as a pilot group are and will continue to be the standard of flight safety and professionalism in South Africa. LONG LIVE SAA.
Could not agree more! However what does this do for the minority fare paying/taxpayer. Perhaps flying horozontal is more efficient!

[PAXboy]

In my opinion, SAA starting a LCC is yet another step for them to try and return to profitability, not to waste money, yet. If this works, would all not support it, rather than keep on slagging them down..?

The same sentiments were shared when 1Time started, its all about trying to protect your turf.

The point being made is that 1Time was a new start up (as I understand it) and SAA is a legacy carrier. Around the world, legacy carriers that have started LCCs have struggled and, often, decided to sell it off (for better or for worse).

A simple example from an unrelated area: In the UK in 1985, two companies started up cellular radio telephone service. A company called 'Cellnet' was 50% owned by British Telecom who were only just emerging as a stand alone company and were not yet listed on the stock market. They had run mobile radiophone service (VHF) for many years and already had customers and knew about running mobiles (they thought) and they were highly confident that they could run this new technology.

The other company was a start up called Vodafone.

The licenses became active at 00:01 on 1st January and Vodafone connected their first call at that time, Cellnet followed 17 days later and have (in my opinion) never caught up. Certainly, Vodafone is now a global company of massive influence and clout. The Cellnet brand? Eventually it was sold off to other parties and rebranded as 'O2' and still runs many millions of customers but has always been the Number Two in this country and, by some measures, is the Number Three.

Moral of the story: Legacy companies think that they know how to be agile and new. Mostly, they cannot. This is NOT about slagging SAA operational staff, whom I respect and would pax with any day of the year. Also, it makes no never mind if SAA is run politically or commercially - they still would not know how to be a new and nimble company. The rest of the world has already tried this in many areas and the results can be read in the stockmarket and financial papers.

[TooBadSoSad]

Our CEO can't spell airline Maybe you should check your own spelling: availible, ineffient, proffesionals,aggresive, politicle.

[TooBadSoSad]

Attend an IFALPA conference these days and this is THE dominant term doing the rounds. Definition: "To cause to move or alternate rapidly in contrasting directions". By establishing a LCC as a seperate business unit associated with SAA but operating at arm's length, SAA management is cleverly allowing itself to bypass the SAA pilot's collective agreements and if it so chooses, hire new pilots or transfer SAA pilots across to the new operation on a contractual basis and with new conditions of employment. They can then gain concessions from the SAA pilot's union by threatening (whipsaw) to shift the entire domestic and some regional routes across to the LCC. Entrenched bilateral route agreements will prevent SAA from shifting most regional and international routes to the LCC as this new entity would not own the bilateral rights and SAA could lose them if it tried to operate on them under a new AOC. If the SAA pilots have a decent scope clause, they may be able to circumvent some of these management aspirations, but unfortunately most scope clauses were established long before the LCC threat developed and are deficient in the protection they offer the very unions who will now so heavily rely upon them!! The SAA pilots need to watch their backs as it appears that someone in their management has cleverly figured out a way to erode the rights their hard earned collective agreements were originally formulated to protect!!!

[reptile]

TooBadSoSad......bullseye!

This has been coming for a number of years. LCC and change of shareholding is the perfect avenue to sidestep Recognition Agreements. I expect the LCC launch to coincide with SAA's move from Transnet to DTI.

[Africannut]

Maybe you should check your own spelling: availible, ineffient, proffesionals,aggresive, politicle.
Anyone can make typo errors, especially if it is not your first language! Some mistakes are more forgivable than others. ("we didn't invent it, we perfected it"). What of the SAA A340 landing short of the threshold in Perth. From what I have heard not too much information has come from your Safety Department.

[mikemal]

Anyone can make typo errors, especially if it is not your first language! Some mistakes are more forgivable than others. ("we didn't invent it, we perfected it"). What of the SAA A340 landing short of the threshold in Perth. From what I have heard not too much information has come from your Safety Department.

Are you on their mailing list? If not, then you should probably not comment on something you know zip about. If you wish to know more about this situation, please PM mail and I will be happy to fill you in.

[vagabond 47]

Attend an IFALPA conference these days and this is THE dominant term doing the rounds. Definition: "To cause to move or alternate rapidly in contrasting directions". By establishing a LCC as a seperate business unit associated with SAA but operating at arm's length, SAA management is cleverly allowing itself to bypass the SAA pilot's collective agreements and if it so chooses, hire new pilots or transfer SAA pilots across to the new operation on a contractual basis and with new conditions of employment. They can then gain concessions from the SAA pilot's union by threatening (whipsaw) to shift the entire domestic and some regional routes across to the LCC. Entrenched bilateral route agreements will prevent SAA from shifting most regional and international routes to the LCC as this new entity would not own the bilateral rights and SAA could lose them if it tried to operate on them under a new AOC. If the SAA pilots have a decent scope clause, they may be able to circumvent some of these management aspirations, but unfortunately most scope clauses were established long before the LCC threat developed and are deficient in the protection they offer the very unions who will now so heavily rely upon them!! The SAA pilots need to watch their backs as it appears that someone in their management has cleverly figured out a way to erode the rights their hard earned collective agreements were originally formulated to protect!!!

Quite agree......check out whats happening with QF and its LCC Jetstar.

[The Claw]

Perhaps snuffed out by hard earned taxpayer's money?

The main reason behind Comairs cheap B737's.......:E

[Africannut]

Anyone can make typo errors, especially if it is not your first language! Some mistakes are more forgivable than others. ("we didn't invent it, we perfected it"). What of the SAA A340 landing short of the threshold in Perth. From what I have heard not too much information has come from your Safety Department.
Are you on their mailing list? If not, then you should probably not comment on something you know zip about. If you wish to know more about this situation, please PM mail and I will be happy to fill you in.
http://www.atsb.gov.au/publications/investigation_reports/2004/AAIR/aair200403956.aspx

[beechbum]

"http://www.atsb.gov.au/publications/investigation_reports/2004/AAIR/aair200403956.aspx"???????????

Nuts, can't see what a C182 has to do with An SAA 340. Please enlighten us all here, as the link you posted doesn't shed any light unless I'm losing it totally. And can those lads at the Aviation bureau produce the documents with smaller print please!!!!...........Yikes!!!!!\
And are we not straying off the topic here? Typically(no names mentioned) someone has a dig about spelling or something trivial and we retaliate with a jab to the jugular.
Some peoples children!!!!!! Not worth it! Now where were we................:ok:

[Africannut]

"http://www.atsb.gov.au/publications/investigation_reports/2004/AAIR/aair200403956.aspx"???????????
Nuts, can't see what a C182 has to do with An SAA 340. Please enlighten us all here, as the link you posted doesn't shed any light unless I'm losing it totally. And can those lads at the Aviation bureau produce the documents with smaller print please!!!!...........Yikes!!!!!\
And are we not straying off the topic here? Typically(no names mentioned) someone has a dig about spelling or something trivial and we retaliate with a jab to the jugular.
Some peoples children!!!!!! Not worth it! Now where were we................:ok:
Maybe here.
http://www.atsb.gov.au/publications/investigation_reports/2005/AAIR/aair200501819.aspx

[countingteeth]

At the recent launch of Virgin Mobile SA, the CEO for Virgin SA, Sajeed Sacranie, stated Virgin's intent to enter the LCC market in SA, as it has done elsewhere in the world. (see http://www.mybroadband.co.za/nephp/?m=show&id=2444)

If anything, I think this has rattled SAA management into re-looking at the low cost options. The question is whether Virgin will acquire into the market, or start from scratch...

[PAXboy]

counting teethThe question is whether Virgin will acquire into the market, or start from scratch... The established process is for Virgin to start from scratch, as they did in Australia and are currently doing in the USA. If you start up one new airline at a time - you can reuse the same core managment team and benefit from the lessons learnt on each turn of the wheel.

Branson did buy and convert to establish Virgin Express in Europe (a quote from their web site: "In April 1996 Richard Branson's Virgin Group acquired 90% of EBA Express and transformed the unknown Belgian airline into one of Europe's leading low-cost brands.") but he later said that this was a mistake. Turning a company around and getting a new culture into it is an enormous uphill job that takes significant amounts of management time and money. Ultimately, it is much faster and cheaper to start from scratch and begin as you mean to go on.

Once again, that is why legacy companies that think they can do 'start up' things are wrong. The reason, in my view, why GO succeeded in the UK, is because Cassani was given a totally free hand and allowed to behave like a start up. I cannot see SAA doing that!

[cigar]

counting teeth
Branson did buy and convert to establish Virgin Express in Europe (a quote from their web site: "In April 1996 Richard Branson's Virgin Group acquired 90% of EBA Express and transformed the unknown Belgian airline into one of Europe's leading low-cost brands.") but he later said that this was a mistake. Turning a company around and getting a new culture into it is an enormous uphill job that takes significant amounts of management time and money. Ultimately, it is much faster and cheaper to start from scratch and begin as you mean to go on.

Which explains why they have merged with SN Brussels Airlines and will be re-branded Brussels Airlines in the not too distant future.

'Virgin South Africa' does have a nice ring to it though :D :D :D . Fingers crossed.

[PAXboy]

Yes, it is an interesting development. My guess (and I am an outsider) is that merging with SN was not really part of their plan but the reformed SN was competing with them and presented VEX with a problem that had not been present when they formed. At that time, Sabena was still cranking along in the old style.

As to whether Virgin could start up in ZA - I think it doubtful as there is MUCH competition and Branson's established process is to open up new markets. He does not often enter a busy market that is working well. The problem, of course, for VS is that they want the onward connections for their well established long haul. Nationwide were fine until they became (almost) competitors with their EGKK rotation. I understand that Branson is very chommie with Rodger Foster but Link cannot provide all of the internal connections that VS pax will require. For the record, I am outside of the business and just making observations. I have no rumours to spread!

[George Tower]

I would have thought that for the type of routes that would be attractive to a VS start up are very heavily traded and even the VS brand might not be able to break through. A casualty or two might just change that however

[ZERO3L]

This article from the Financial Mail puts into perspective how the national debt is viewed in business circles.........................they clearly run on tax payers money alone and are getting ready to waste some more by the looks of things.......
FLYING IN CRISIS MODE
By Shareen Singh
The national airline is set for further losses, prompting calls for a management shake-up
SA Airways (SAA) executives were in high spirits this week as they celebrated the airline's membership of Star Alliance, a global network that makes it easier for carriers to expand their wings without using their own aircraft. But behind the back-slapping and popping of corks, SAA is in trouble.
Star Alliance will undoubtedly bring some benefits to SAA, but it will not sort out its entrenched financial and management problems. Sources say early indications, based on "unaudited results", show that the airline is set to report a large loss for its 2005/2006 financial year, which ended in March.
This comes after a R250m interim loss for the six months to September. The full-year results could be slightly worse than the interim loss , though a senior SAA official says "that is an exaggeration". SAA will make a "small loss or a small profit", the official states.
Clearly, though, SAA's cost structure remains too high for long-term sustainability and its earnings have been volatile. CE Khaya Ngqula's cost-cutting plans have not delivered the expected results. Some of the problems, though not of Ngqula's making - like the onerous Boeing leases he inherited - have swallowed up more than R1bn cash.
Analysts say that a loss in the interim period could be attributed to the high oil price, which rose above US$60/barrel last year, and the impact of a week-long strike by cabin crew and ground staff.
However, it is worrying if SAA has made a loss in the second half, because that points to operational problems. SAA is keeping mum. So, too, is parent company Transnet, which wanted SAA off its balance sheet this year as it sheds noncore businesses to create a focused rail freight, pipeline and ports company.
Gaynor Kast, spokesman for public enterprises minister Alec Erwin, says SAA has not yet technically been divorced from Transnet . Once SAA leaves Transnet, though, it will be saddled with a big debt and possible losses.
To add to its financial woes, management issues continue to plague SAA. Highly qualified managers have been shafted, or resigned, after clashes with Ngqula. The latest to go is CFO Tryphosa Ramano, whose resignation was announced last week.
Pilots and other staff alike paint a gloomy picture of an airline operating in crisis mode. In a revealing letter addressed to the SAA Pilots Association (Saapa) last month, SAA GM for flight operations Colin Jordaan shed light on the sorry state SAA is in.
Among the string of issues he highlighted were: SAA's cost base, "which is increasing by an additional R1,1bn this coming financial year, due to ballooning payments negotiated by previous CEO Coleman Andrews on the Boeing B737-800 leases"; lack of discipline across the airline; low cabin crew morale due to staff shortages; and the battle to generate more revenue, "when yields are generally declining".
In the letter, drafted as a plea to Saapa, which is flexing its muscle ahead of a possible dispute with SAA, Jordaan did not mince his words. "I have no hesitation in saying that the airline is fighting for its survival. Traditional business processes have to be critically examined and radically revised if we are to come out in one piece," he wrote.
Tensions between Saapa and SAA seem to be on boil far too often, and several disputes are pending. Saapa's Piet Taljaard says pilots have no faith in the current management.
But Saapa itself is too quickly on the offensive, its colleagues in the industry say. It seems to have a stranglehold over the airline, which it acquired thanks to concessions made by previous management. Andrews gave the pilots a cushy agreement, with shares in SAA and a stronger bargaining position.
Ngqula has not managed to unwind the agreement, which is arguably untenable in the current context of an ailing airline and global competition.
While some of the pilots' complaints relating to training and safety issues may be legitimate, it appears that the relationship with management has soured to such an extent that loyalty to the airline and respect for the top leadership have been severely dented. Ngqula's extravagances last year did not help.
There is rising sentiment across government and business that keeping SAA in state hands is not worth it, though that remains Erwin's official stance. Many government officials who once opposed its privatisation are having second thoughts. "The experiment has not worked," one director-general says.
Successive leaders over more than a decade have not managed to sort out SAA. Ngqula, too, has stumbled, and his management style has served to alienate staff even further.
Every so often rumours surface that Ngqula is on his way out, which his staff then speedily deny. Erwin has unequivocally backed Ngqula, whom he personally recruited. The official line from his office is: "The board of SAA is happy with management and the progress being made in meeting the deadlines and targets of the turnaround strategy."
In government corridors, though, ministers and officials, most of whom are regular SAA travellers, say they are disappointed with Ngqula's leadership and the declining service standards on the airline. For the sake of political expediency they will not speak on the record.
In these circles, the lingering question is whether Erwin will consider bringing in a strategic equity partner - perhaps a local one. Kast says SAA will remain a state-owned airline "for the medium term". At a later stage government will consider various options that include a partnership and a public offering.
Speculation has surfaced, though, that services group Bidvest has been eyeing SAA. Investor relations head David Cleasby will neither deny nor confirm it. "We won't comment," he says.
Bidvest itself has added fuel to the speculation. In a recent Business Report article CEO Brian Joffe said: "In the past there seemed to be the view that foreigners were needed in private public deals such as SAA, the Airports Company and Telkom, but things have changed and there's a realisation that local companies understand things better and are more committed." Bidvest recently partnered the Airports Company for the US$1,5bn tender to develop and operate India's Mumbai Airport.
One of the big stumbling blocks in efforts to privatise SAA will be significant trade union resistance. The powerful SA Transport & Allied Workers Union (Satawu) has to date set the agenda in Transnet's restructuring drive.
After Satawu protests, Erwin delayed the transfer of Metro Rail out of Transnet and the sale of noncore operations. He made these concessions despite Transnet's insistence that they go ahead.
Randall Howard, Satawu's general secretary, says the union is happy that SAA will remain a national carrier, which suggests that Erwin has given some kind of commitment to this effect.
Even if Erwin believed that SAA would be better off with a private partner and under new management, he could not risk further disruptions at a time when union militancy appears to be on the rise.
SA Airways - Profitability fails to take off as significant cost reductions remain elusive

[reptile]

Interesting development:


Thursday 13/04/2006 - SAX formally requested by SAA/Transnet to operate 5x B738's as a LCC on the golden triangle. Target date for first flight - 3/07/2006.

Tuesday 18/04/2006 - SAX informs SAA/Transnet that starting date is not realistic. Company is already busy with expansion and cannot supply the required crew numbers by July.

Wednesday 19/04/2006 - Starting date moved to November to pick up on holiday traffic. Plan still to utilise SAX as cost structure is MUCH lower than SAA.


- Watch this space! :ok:

[Q4NVS]

This has almost always been inevitable...

Especially considering that SAAPA are apparently pushing for another 34% Salary hike in order to keep parity with other International Carriers.

Sometimes one has to wonder "who" will have a great part to play in the real demise of SAA..?

:*

[Deskjocky]

Fair comment ERJ, but if the drivers don’t earn a globally competitive salary eventually they will be lured away by foreign operators, then again ask for too much and the company goes further down the loo- salaries are a two edged sword. It costs more to recruit and train new pilots than it does to keep the existing ones. I guess they know they hold the cards.

Only thing is the "parity of earnings model" will eventually start to show the effects of salary concessions other pilot bodies have made to their own carriers. Perhaps SAAPA should look to amend the current agreement to ensure that there will be no back tracking in the future- because it will come one day- in favour of perhaps some concessions elsewhere…

In any event I don’t think the SAX route will be the one followed, there is a specific scope limitation clause in one of the collective agreements dealing with this. In effect if SAA were to do this then they would have to pay all the SAX pilots- current and new ones- the same as the equivalent pilot, in terms of seniority, at SAA. Furthermore a move like this would invalidate the autonomy the new carrier seeks.

[saywhat]

Going back to "Virgin South Africa". does that mean that it will only have a 50% chance of being HIV positive!!!!!!!!!!!!!!!!!!!!!!:p :p :p

[reptile]

... there is a specific scope limitation clause in one of the collective agreements dealing with this. In effect if SAA were to do this then they would have to pay all the SAX pilots- current and new ones- the same as the equivalent pilot, in terms of seniority, at SAA. Furthermore a move like this would invalidate the autonomy the new carrier seeks.

Correct - except if the LCC operates under a new AOC (much like Link did when they introduced the 145's)

[Deskjocky]

Correct - except if the LCC operates under a new AOC (much like Link did when they introduced the 145's)

OK, see your point- thanks for that!

[The Actuator]

ERJ135 - I'm trying to figure out what your angle is with your last comment -
"Sometimes one has to wonder "who" will have a great part to play in the real demise of SAA..?" Correct me if I'm wrong but you seem to be suggesting that if the pilot's at SAA were pushing for a pay rise this would cripple the airline further. If that is indeed what you mean allow me to clarify a few things.

Firstly - You get paid what you can negotiate - PERIOD. No more no less. The company will try to pay you the minimum they can to keep you in a position of relative comfort and the pilots will try to better that.
Secondly - The onus is on management to negotiate and understand the agreements they sign and the long term implications thereof. If they fail to do this it does not become the pilot's perogative to bail them out.
Thirdly - if as you claim the pilots are PUSHING for a 34% pay hike then that is what they have negotiated in terms of their agreements. Of course if the company is unable to pony up, perhaps management would be willing to repay the bonuses that they have recieved in the time period it has taken them to comply with the pilot's agreements - I ain't holding my breath.

What surprises me is that you seem to be having a go at the salaries at SAA in comparisom to the rest of the market. It seems to me that the pilots at SAA have proven (with arbitration) that they are underpaid in terms of the international market. That should be good news for all pilots in our country because it should surely follow that it would be a cinch to prove you are underpaid if you are paid less than what SAA pilots are paid - get thee to the negotiating table I say.

[Q4NVS]

To clarify, I say one gets paid what one is worth (in context).

Sure, if all 737 drivers as an example, were worth R1.3 mil or whatever per crew, where does that leave the guys at CE for instance?

I understand that they did not negotiate for better and therefore have to take what they get, but hey, I'm willling to bet my last $ that if they were given the option, they would probably have those jobs than nothing at all..

My opinion (mayb it sounds a bit socialistic, but I assure you that is not my inclination): If one is worth so much more and is feeling hard done by it, why not go where one can get what one deserves. If you have to go overseas, then go.

Secondly (and this is what I am trying to say), if the company (whatever it may be, not necessarily only SAA), is making millions or billions, then surely one can get compensated through a proper Profit Share system. A proper system such as this, can easily double or triple one's annual income (I've been there..).

But, when things are going bad as they are, one sometimes has to keep the bigger picture in mind in order to maintain sustainability not only for oneselve but also for those to follow.

Wrt to the training aspect, it is expensive yes, but cannot be close to the Total Cost to Company, as affected trough huge salary packages.

All I say, as it is not really my business anyway, is that I would hate to see SAA go through a scenario where the company is simply shutdown and a month or two later reopened under another similar name, in order to rid itself of all these agreements etc. (aka Swiss Air versus Swiss).

NOTHING is impossible and NOBODY invincible, ask the guys at ENRON...

:ok:

[Deskjocky]

ERJ135 - I'm trying to figure out what your angle is with your last comment -
"Sometimes one has to wonder "who" will have a great part to play in the real demise of SAA..?" Correct me if I'm wrong but you seem to be suggesting that if the pilot's at SAA were pushing for a pay rise this would cripple the airline further. If that is indeed what you mean allow me to clarify a few things.
Firstly - You get paid what you can negotiate - PERIOD. No more no less. The company will try to pay you the minimum they can to keep you in a position of relative comfort and the pilots will try to better that.
Secondly - The onus is on management to negotiate and understand the agreements they sign and the long term implications thereof. If they fail to do this it does not become the pilot's perogative to bail them out.
Thirdly - if as you claim the pilots are PUSHING for a 34% pay hike then that is what they have negotiated in terms of their agreements. Of course if the company is unable to pony up, perhaps management would be willing to repay the bonuses that they have recieved in the time period it has taken them to comply with the pilot's agreements - I ain't holding my breath.


The Actuator- this is very emotive issue, you are right -you get what you negotiate- but you should apply your argument both ways- if top management come on board with a contract that says he gets a bonus and the company agrees, then he must get his bonus! Why should he pay it back? Do I agree with it when the top dog gets his cash- of course not, but he has it in black and white…

[reptile]

..... That should be good news for all pilots in our country because it should surely follow that it would be a cinch to prove you are underpaid if you are paid less than what SAA pilots are paid - get thee to the negotiating table I say.

This is a very important point, with SAA being the highest benchmark in the South African market, an increase there would certainly have a ripple effect.

...where does that leave the guys at CE for instance?

CE (and for that matter a number of smaller operators) cannot be used as an example - pilots are not organised in a strong union and therefore unably to negotiate fair wages.

[The Actuator]

ERJ135 you say
"To clarify, I say one gets paid what one is worth (in context)."
You and I would have to disagree. Nobody gets paid what they are worth because that would involve subjective opinions. If it was the case our teachers and non corrupt policeman would get top dollar and politicians would get the least - no? You get paid what you negotiate - that's it.
Then you say
"If one is worth so much more and is feeling hard done by it, why not go where one can get what one deserves. If you have to go overseas, then go."
Nobody feels hard done by, I don't want to go overseas and no, again you won't get what you deserve. If profit share was what we agreed to then yes one would have to take ones medicine but this is not what was NEGOTIATED!
We are very much aware of the state of the company and the point I was making to you was that it is not the pilot's fault and so we ought to be compensated in the manner that our agreements say we should. None of these agreements are as onerous as the company would have the public believe and NONE of them were agreed to in isolation. For example if we have a free ticket available to us then it was negotiated in lieu of cash that was due, if we may use the business class lounge then it was negotiated in lieu of some or other benefit that was due etc etc.
If you scrap every agreement you have to revert to what was due (impossible to calculate but I would bet far more onerous).
Management must take responsibility for their actions - that is why they get the big cash when things go right but if your managerial skills are such that you cause a huge loss should you still be entitled to your bonus?
- If that's what you negotiated then yes . You cannot then come and cry that it is the pilot's salaries that are killing the company.
Deskjockey that is precisely my argument... if you have it in black and white... as we do. Now they blame us and our agreements for the state of the company, when what is required is leadership and management. The point about them paying back - we have been negotiating for 3 years now and have only taken minimal increases, whilst negotiating they have taken the normal bonuses (sp) and now cannot afford to pay what is due. Don't forget this is a company that "announced" an unheard of profit and turnaround last year, one year on and we are up the creek....smoke and mirrors me thinks
Thanks for the back up reptile.

[GreenOnGo]

Well said bro! :ok:

It is far too easy for an airline in trouble to point fingers at "excessive" pilot wages.

[T Hairy Henry]

I think you'll find that it's not the pay that is going to be the issue. The main thing for SAA to get a grip of for its new LCC will be the productivity of the pilots.
easyJet and Ryanair pilots fly around 850 hours each year. Do you think you boys down south would be up for that?

[GreenOnGo]

Productivity is going to be a big issue in any airline these days. The days when a senior pilot could earn USD300000 pa and only fly one or two trips a month are fast passing. For the big bucks, companies are now increasingly expecting the big hours.

The market is competitive, for sure, so we all need to do our bit. However, when faced with management stuff ups and strategic messes, it is hard to feel enamoured when these same management boys stroll off with big bonuses.

For example, I'm sure many pilots would be happy to fly more hours than they are at the moment, but are less inclined to spend that extra time deadheading around unproductively because management can't get its ducks in a row and put the pilots rated on a particular aircraft in the correct base for that aircraft.

[T Hairy Henry]

If the new carrier only has one aircraft type, as per the traditional low cost model, AND the airline recruits the relevant type rated pilots on new contracts, then this should no longer be a problem!

[reptile]

That seems to be the plan.

New AOC -> means new regulating agreements -> means much higher productivity.

[GreenOnGo]

Very true T Hairy. That was just one example though.

A true and "traditional" LCC that wants to be successful had better be based on the very lowest costs throughout the company. You will have to have the minimum staff, lowest cost per aircraft and VERY high utilization. Can this be achieved when leasing aircraft that are already over-priced? It doesn't neccesarily mean low pay for the pilots though, and I only mention them because this is PPruNe.

The boys in this job will graft for their bucks. They will, or should, be doing max duty every day with min turns, whilst doing the fuelling, W&B and helping out with the cleaning. They will be working 1000 hours a year. In return, and for this, they should get an equitable pay. It is a hard game, and will make you old fast. Will the SAA boys wanna part of this?

We seem to have diverted off the discussion that was being held and back onto the topic.........:ok:

[Q4NVS]

I understand (from my point of view) that at the moment, as in any company in trouble, there are more questions and frustrations, than answers...

But hey, for now all we can do is ask them and who knows, someone might just end up asking the right one at the right time :sad:

"In this world there is no security, only opportunities"
John C. Maxwell

Reptile
You seem to know most about this SAA LCC.
How do you see them putting this to work wrt crew etc.

Is it true that SAAPA is rumoured to approach the SAX union asking them not to accept these conditions or aircraft..?

[reptile]

I believe that the new AOC will come into effect once SAA and SAX is moved to DTI. By creating the LCC as a seperate entity, and thus "ring fencing" the pilots who will fly those aircraft, new regulating agreements will come into effect. To achieve maximum productivity, you need to; a) fly more, or b) get paid less, or for the best result, c) fly more and get paid less. Option c would be what they are aiming for.

No need for SAAPA to approach SAXPA. The quality of life for SAX drivers will be as adversely affected as those at SAA. I still believe that the powers that be will get it right though. SAA scope clause states that only SAA pilots may drive SAA aircraft, however, the 738's are leased, and that means once thay are utilised by the LCC, they are strictly no longer SAA aircraft. Secondly, there are many (young) drivers at SAX who would jump at the opportunity to get their hands on the 738, even if it means more work and less pay. Thirdly, there are a good number of SAA SFO's who are realising that SAA's fast tracking of certain demographic groups will mean a much longer wait in the right hand seat - and there you have your source of captains.

The willingness of many pilots to work their asses of for peanuts in order to get a good rating is going to play nicely into the hands of the bean counters - to the long term detriment of every single pilot in the market. This has unfortunate been happening for a number of years (Nationwide, Interair, etc, etc).

Pilots need backbone and a united front now more than ever, or our quality of life will slowly be eroded - worldwide!

[Solid Rust Twotter]

Pilots need backbone and a united front now more than ever, or our quality of life will slowly be eroded - worldwide!

The number of unemployed pilots out there is going to make this a very difficult proposition.:( Asking someone on the bones of his arse to stand firm and not accept that job to further the agenda of those already employed has little chance of success. The longer term implications are not really at the forefront when the rent is due yesterday.:ugh:

[reptile]

SRT - you are 100% correct. That is exactly why the bean counters will succeed in marginalising pilots to second rate citizens in their own industry.:yuk:

[GreenOnGo]

You only have to look at the discussion on the D&G forum regarding Qantas and Jetstar to see a similar situation and a dark warning for the future.

[Q4NVS]

Could the crew also be an ex SAA SFO (as PIC) + SAA Cadet with limited time at Airlink or SAX?

Just thinking in terms of the cost structure then.. Even cheaper still...
:ugh:

[Shrike200]

Or how about this? Just grab the pilot/cabin crew at CE? For that you would, in one fell swoop get:

a) Pilots/crew who are accustomed to working 1000 hrs in 11 months.
b)...for less than EVERYONE else in the local airline market (so just offer them slighly more, with better perks, not difficult at all)
c) who are basically type rated (if one were to use B73X's), or would require only differences courses (for B733/4/5/)
d) the chance to demolish one of your competitors on local routes in one go.
e) Pilots/crew who are accustomed to working in a LCC environment.
f) Pilots who are accustomed to working sans union, who just get their heads down and do the job.

Shew, I could become a businessman yet! :} :}

(Tongue firmly in cheek there.... :ok: )

[Deskjocky]

I have a question, if you hold a B732 type rating, to convert onto a B738 do you only need to do a differences course or do you need a whole new rating?
Or how about this? Just grab the pilot/cabin crew at CE? For that you would, in one fell swoop
This actually happened in the late 90's SAA went on a major recruiting drive amonst Comair and Nationwide cabin crew- caused major disruptions to both carriers operations at the time I remember

[fluffyfan]

I have a question, if you hold a B732 type rating, to convert onto a B738 do you only need to do a differences course or do you need a whole new rating?

737-800 vs 737-200 totally different aircraft, crew at SAA have to do a 8 sim session differences course.

Dont know who is going to train these pilots, they say they want this low cost running by July....sounds impossible, the 800 sim at SAA and instructors are very busy at the moment.

[George Tower]

Shew, I could become a businessman yet!

A good summing up of the potential dangers this poses to other carriers Shrike.

Uncle Vernon's wallet might have to open:eek:

the 800 sim at SAA and instructors are very busy at the moment

I have a friend in blighty that flies for one of the big charter boys - he's been in the sim in the wee small hours of the morning. Wonder if SAA's utilisation is that high.:zzz:

[fluffyfan]

I have a friend in blighty that flies for one of the big charter boys - he's been in the sim in the wee small hours of the morning. Wonder if SAA's utilisation is that high

Its pretty high, Kenya Airways also use the sim, I suppose the early morning slots could be used however, thats not going to be enough for 48 new pilots and more importantly with the Instructors at the limit of there flight and Duty there is nobody to do the training anyway.

Unless they are using foreign crew on a contract I doubt they will start operations when they say they will.

[Africannut]

Fair comment ERJ, but if the drivers don’t earn a globally competitive salary eventually they will be lured away by foreign operators, then again ask for too much and the company goes further down the loo- salaries are a two edged sword. It costs more to recruit and train new pilots than it does to keep the existing ones. I guess they know they hold the cards.
Only thing is the "parity of earnings model" will eventually start to show the effects of salary concessions other pilot bodies have made to their own carriers. Perhaps SAAPA should look to amend the current agreement to ensure that there will be no back tracking in the future- because it will come one day- in favour of perhaps some concessions elsewhere…
In any event I don’t think the SAX route will be the one followed, there is a specific scope limitation clause in one of the collective agreements dealing with this. In effect if SAA were to do this then they would have to pay all the SAX pilots- current and new ones- the same as the equivalent pilot, in terms of seniority, at SAA. Furthermore a move like this would invalidate the autonomy the new carrier seeks.
How much does a hamburger and a beer in SA cost in real terms US$?

[Africannut]

ERJ135 - I'm trying to figure out what your angle is with your last comment -
"Sometimes one has to wonder "who" will have a great part to play in the real demise of SAA..?" Correct me if I'm wrong but you seem to be suggesting that if the pilot's at SAA were pushing for a pay rise this would cripple the airline further. If that is indeed what you mean allow me to clarify a few things.
Firstly - You get paid what you can negotiate - PERIOD. No more no less. The company will try to pay you the minimum they can to keep you in a position of relative comfort and the pilots will try to better that.
Secondly - The onus is on management to negotiate and understand the agreements they sign and the long term implications thereof. If they fail to do this it does not become the pilot's perogative to bail them out.
Thirdly - if as you claim the pilots are PUSHING for a 34% pay hike then that is what they have negotiated in terms of their agreements. Of course if the company is unable to pony up, perhaps management would be willing to repay the bonuses that they have recieved in the time period it has taken them to comply with the pilot's agreements - I ain't holding my breath.
What surprises me is that you seem to be having a go at the salaries at SAA in comparisom to the rest of the market. It seems to me that the pilots at SAA have proven (with arbitration) that they are underpaid in terms of the international market. That should be good news for all pilots in our country because it should surely follow that it would be a cinch to prove you are underpaid if you are paid less than what SAA pilots are paid - get thee to the negotiating table I say.
It seems to me, pay-up or else?

[Africannut]

To clarify, I say one gets paid what one is worth (in context).
Sure, if all 737 drivers as an example, were worth R1.3 mil or whatever per crew, where does that leave the guys at CE for instance?
I understand that they did not negotiate for better and therefore have to take what they get, but hey, I'm willling to bet my last $ that if they were given the option, they would probably have those jobs than nothing at all..
My opinion (mayb it sounds a bit socialistic, but I assure you that is not my inclination): If one is worth so much more and is feeling hard done by it, why not go where one can get what one deserves. If you have to go overseas, then go.
Secondly (and this is what I am trying to say), if the company (whatever it may be, not necessarily only SAA), is making millions or billions, then surely one can get compensated through a proper Profit Share system. A proper system such as this, can easily double or triple one's annual income (I've been there..).
But, when things are going bad as they are, one sometimes has to keep the bigger picture in mind in order to maintain sustainability not only for oneselve but also for those to follow.
Wrt to the training aspect, it is expensive yes, but cannot be close to the Total Cost to Company, as affected trough huge salary packages.
All I say, as it is not really my business anyway, is that I would hate to see SAA go through a scenario where the company is simply shutdown and a month or two later reopened under another similar name, in order to rid itself of all these agreements etc. (aka Swiss Air versus Swiss).
NOTHING is impossible and NOBODY invincible, ask the guys at ENRON...
:ok:
I seem to remember that your last post was the finale! However very good comment!

[Africannut]

ERJ135 you say
"To clarify, I say one gets paid what one is worth (in context)."
You and I would have to disagree. Nobody gets paid what they are worth because that would involve subjective opinions. If it was the case our teachers and non corrupt policeman would get top dollar and politicians would get the least - no? You get paid what you negotiate - that's it.
Then you say
"If one is worth so much more and is feeling hard done by it, why not go where one can get what one deserves. If you have to go overseas, then go."
Nobody feels hard done by, I don't want to go overseas and no, again you won't get what you deserve. If profit share was what we agreed to then yes one would have to take ones medicine but this is not what was NEGOTIATED!
We are very much aware of the state of the company and the point I was making to you was that it is not the pilot's fault and so we ought to be compensated in the manner that our agreements say we should. None of these agreements are as onerous as the company would have the public believe and NONE of them were agreed to in isolation. For example if we have a free ticket available to us then it was negotiated in lieu of cash that was due, if we may use the business class lounge then it was negotiated in lieu of some or other benefit that was due etc etc.
If you scrap every agreement you have to revert to what was due (impossible to calculate but I would bet far more onerous).
Management must take responsibility for their actions - that is why they get the big cash when things go right but if your managerial skills are such that you cause a huge loss should you still be entitled to your bonus?
- If that's what you negotiated then yes . You cannot then come and cry that it is the pilot's salaries that are killing the company.
Deskjockey that is precisely my argument... if you have it in black and white... as we do. Now they blame us and our agreements for the state of the company, when what is required is leadership and management. The point about them paying back - we have been negotiating for 3 years now and have only taken minimal increases, whilst negotiating they have taken the normal bonuses (sp) and now cannot afford to pay what is due. Don't forget this is a company that "announced" an unheard of profit and turnaround last year, one year on and we are up the creek....smoke and mirrors me thinks
Thanks for the back up reptile.
Please enlighten us as to the profit! This as far as I am aware has never happened in the history of SAA. The tax-payer has always coughed. Please no creative accounting!

[Africannut]

I think you'll find that it's not the pay that is going to be the issue. The main thing for SAA to get a grip of for its new LCC will be the productivity of the pilots.
easyJet and Ryanair pilots fly around 850 hours each year. Do you think you boys down south would be up for that?
Somehow doubt it!

[Africannut]

Productivity is going to be a big issue in any airline these days. The days when a senior pilot could earn USD300000 pa and only fly one or two trips a month are fast passing. For the big bucks, companies are now increasingly expecting the big hours.

The market is competitive, for sure, so we all need to do our bit. However, when faced with management stuff ups and strategic messes, it is hard to feel enamoured when these same management boys stroll off with big bonuses.

For example, I'm sure many pilots would be happy to fly more hours than they are at the moment, but are less inclined to spend that extra time deadheading around unproductively because management can't get its ducks in a row and put the pilots rated on a particular aircraft in the correct base for that aircraft.
You have hit the financial nail on the head. Dispatch unproductive old wood and promote able and willing efficient new growth.

[Africannut]

That seems to be the plan.
New AOC -> means new regulating agreements -> means much higher productivity.
Does this threaten or worry you?

[reptile]

Quick update:

1) SAX will not be a part of the LCC

2) 35 crews will be used to launch

3) LCC will definately operate under a new AOC

4) New AOC not issued yet, but crews from Comair have already beeen contacted to as part of a recruitment drive.

CE might be in a lot of trouble here - pilots are low paid and have 737 experience. If not enough can be attracted from Comair during the next few weeks, the new company will turn to CE for crew.

[Shrike200]

I for one, would laugh very, very hard if CE's low pay policy bit them hard in the ass. I love watching short sighted non-pilot management types scramble for crew due to problems of their own making. Oh well, one can but hope... ;)

[Solid Rust Twotter]

Jobs for aircrew? Never a bad thing...:ok:

[reptile]

Jobs for aircrew?

About 70 positions

[T Hairy Henry]

What about management & admin?

[kingpost]

Quote:
CE might be in a lot of trouble here - pilots are low paid and have 737 experience. If not enough can be attracted from Comair during the next few weeks, the new company will turn to CE for crew.

Its wake-up time guys : I just want to advise you that there are over 50-100 pilots (with lots of expeience) around the world (Middle East, UK, etc) that will be coming home to fly for the LCC. Nationwide will not be affected. The SAA guys, due to their cost will be the losers here. Take a look at what's happening in Australia, where infact there is more union regulation than SA, in order to compete Qantas have started Jet* and are now looking for 330 crews to expand their regional/long haul routes - it's a changing market !!

[vagabond 47]

Anybody got the application details "for a friend of mine"....are they looking for NG TREs or inhouse?

[beechbum]

Reptile....
As far as I know Comair has not been approached by SAA for crew in connection with the LCC so don't know where you get the info but enlighten us if you will.
They can't afford to lose crew at this stage as there are many walking out the door towards sandy pastures at the moment!!!!

[reptile]

Reptile....
As far as I know Comair has not been approached by SAA for crew...

They have not approached Comair (the company). They are phoning individual drivers at Comair....and have been doing so for the last 5 days.

[REAL ORCA]

They have not approached Comair (the company). They are phoning individual drivers at Comair....and have been doing so for the last 5 days.
It does make sense that they should approach the Comair pilots because if the new LLC does not make it, we can paint them 800 green and stamp Kulula on them!:ok:

[AfricanSkies]

Rumours are

They need 40 crews.

SAA 738 F/O's will be offered a 3 year contract to move across as Captains, whilst remaining in SAA's employ.:ouch:

F/O pay in the region of 10K/month :{ (is LCC after all).

Start Dec 1st.

But you all know aviation, all the rumours we have to date may be wrong:ok:

[Shrike200]

10K? Wow, even CE pay more, though of course they still won't have any problem finding potential FO's of course.

[beechbum]

I'm sure all the Comair F/O's are dashing to fill the seats for R10k a month......ha...what a joke!!!!!!!

[Solid Rust Twotter]

Any contact details for a *ahem* friend's CV....:\ :O

[Q4NVS]

Reading all this, one quickly gets reminded that this is only a rumour network...

R10k per month - I believe that Instructors flying C172/P28A's at certain schools are earning more than this.

Sure, to fly a 738 - but it has to get off the ground first. With the whole idea of a new AOC etc I do have serious reservations about this though. I'd say, don't get your hopes up too early though (unfortunately).

With the amount of SAA Cadets hanging around at Solenta/Link/SAX and who knows where else, I do not understand why they would even consider getting a whole lot of FO's either. Might only put Solenta/Link/SAX under pressure to replace their Cadets... Dunno, but just get the idea that there is a lot of business/financial implications that need to be ironed out first.

If it flies, its good for all - but buy a ticket for the first flight once the gate is closed..:8

[TooBadSoSad]

I don't know where Reptile has been getting his info from, but it has never been SAA's intention to use SAX or their pilots to crew this operation.

For all those being approached by SAA as potential Captains for this operation, think very carefully before you give notice to your current employer. Remember, you will not be getting a job with SAA but with a fully independent subsidiary of SAA. You will have no union representation, very few benefits and you will most likely be baby-sitting SAA cadets who will occupy the right hand seats. You are looking at a total pay package in the region of R600,000.

Additionally, with the current and recently former SAA management's ability to run an airline, what chance does this carrier have for long-term survival? They botched up their $20 million partnership with Air Tanzania and have had to bail out of that venture, they were rejected as a partner for a national Nigerian carrier, and they are rapidly destroying SAA through poor management oversight and practises.

As an example, if they are so experienced, how could they, around the middle of April, initially give a start-up date for this LCC of the beginning of June, when they did not have an AOC for this company, a management structure in place or any crews trained?? As an autonomous company they will need to hire an entire new management for this airline, yet they can't even find decent management for the parent airline. Rumour has it that the new flight operations boss, a senior captain with a lot of union managment experience but limited airline management experience, is literally the only executive manager with any airline experience and the entire SAA executive is literally looking to him to salvage SAA and to set up this low cost carrier. How experienced is he if he thought he could set up an entire new airline in just over two months?

What is the point of all of this? With SAA's current management track record and shoot-from-the-hip style of management and decision making, do you really want to give up your position and seniority at your current airline to work for a jumped up version of SA Airlink that could be shut down in six months or less if it lands up being another lame duck for SAA? Remember, it is very easy for SAA to simply transfer the B737-800's that are being sub-leased to this carrier back into the parent company. Passengers with bookings can simply be accommodated on SAA flights and there you will have another failed SAA venture!!

[reptile]

You will have no union representation....

Why not? Nothing prevents the pilots from forming an ALPA branch.

[TooBadSoSad]

True! But you will then be starting off from scratch with establishing collective agreements and will be getting royally screwed in the interim. I would not be surprised to see pilots being hired on three year contracts as opposed to permanent positions!!

[reptile]

That comes with the territory in a startup. Your statement that pilots will get royally screwed in the interim sounds like a SAAPA statement. Either you accept conditions for employment when you sign up or you don’t sign up.

This is a great opportunity for 70 odd pilots to get 738 ratings and/or upgrades to the left seat . As for 3 year contracts - that is pure speculation.

Just because SAAPA and the rest of the SAA drivers see this development as a threat, does not mean it's a bad idea. More work for pilots - GREAT!

[TooBadSoSad]

Either you accept conditions for employment when you sign up or you don’t sign up.

That is the reason for the warning. Know what you are letting yourself in for and you can only blame yourself if it all falls apart.

Just because SAAPA and the rest of the SAA drivers see this development as a threat, does not mean it's a bad idea. More work for pilots - GREAT!

This is not more work for pilots!! If SAA's LCC succeeds then it will be at the expense of other carriers profitability and expansion capability (possibly even their survival), and the jobs of the pilots at those carriers. This is not a case of more work but simply a transitional period between those that have jobs today and those that will have jobs tomorrow. SAA is playing all the pilots against each other, and with your attitude they may just succeed. it is called "whipsawing"!!!

[reptile]

This is not more work for pilots!!

I'd like to put this into perspective.........SAA is understaffed by approx. 40 pilots (according to the SAAPA President). Routes and flights are being cancelled because of staff shortages. Granted the shortage is to be blamed on SAA's staffing policies. SAA simply cannot apply the same policy to the LCC - if they did there won't be crew to fly aircraft. This means that 5 aircraft that would otherwise be standing will now be fully utilised.

World-wide experience has shown that LCC's attrack customers who previously used another mode of transport. Although introducing another LCC might not be great news for existing carriers, the theory is that more people will fly. It is therefore not guaranteed that any carrier in SA will go under as a result of SAA starting a LCC. The biggest danger to other carriers (read CE) would be an exodis of pilots. I believe AfricanSkies is way off with his claim that pilots at the new LCC will be payed 10k.

SAAPA is crying crocodile tears about the new LCC, and rightfully too - but their drivers are simply too expensive. No airline in this market market can survive with the level of pilot labour cost SAA is carying. If anyone is going to feel the pain of the new LCC, then it is SAAPA. Once SAA makes a profit with the LCC, they will apply HUGE pressure on SAAPA to reduce labour costs. Enjoy the MoP agreement - it might soon be a thing of the past.

[Gymnogene]

I have been following this story with interest. Has anybody stopped to wonder why Kulula and 1Time dont use B738's for their operations. Perhaps its because it is impossible to make a PROFIT in South Africa with this type of equipment that has lease costs of some $375 000 PER MONTH while ticket prices are R800 return to CPT!!!

[Solid Rust Twotter]

Shouldn't be a problem if they're seconded from SAA. The cost will be subsidised, I'm sure.

[samueldethierry]

South African airways having experienced the excitment of the new low-cost full service strategy on the Joburg - Cape Town popular route are now bored of the 4 other airlines competing with them. While SAA continue to be the leading airline for the route, they are getting tired of some of the other airlines on their backs with flight times ridicoulously similar to themselves. So as SAA next great idea to start up a new low-cost airline, they have a few aims in mind:
-To brush away airlines like Nationwide who sturggle anyway on the route
- To attempt to cut down British Airways who's average pax numbers are quite low and who are just holding in their
- To competitivley compete with Kulula and (1Time if they hold in)
- Reducing their fares to a minimal rate which will attract customers all around.
- To support a national reputiation for efficency, inexpense, reliablility and service

As South African Airways continues to propell forwards worldwide, especially with the new joining of Star Alliance, It plans to partner with this airline through flysaa.com so the airline will attract international connecting as well as domestic passengers.

[REAL ORCA]

I think somebody is fishing again!:E

[The Actuator]

Reptile,

You need to get over this sentiment that SAA pilot’s are overpaid. As I stated in a previous post they have actually proven they are underpaid. It is statements like this

“SAAPA is crying crocodile tears about the new LCC, and rightfully too - but their drivers are simply too expensive. No airline in this market market can survive with the level of pilot labour cost SAA is carrying”

that will perpetuate the situation that pilots at other South African carriers have to endure. It is at best speculation, at worst a management lie to state that no airline can survive with the level of pilot labour cost at SAA.

Last year there were examples of pilots who had flown their 800 hours by October, that capacity in December was reduced due to insufficient crew on the 73 fleet and that the company pays millions of rands in extra flight pay (which kicks in at, on average about 75hrs per month). The crew at SAA are not under utilised, inefficiently used, certainly, but under utilised and over paid – no way.

An attempt by the present SAA management to set up, without government help, a LCC should not have SAAPA or anyone else shaking in their boots (or “crying crocodile tears”), they have proven themselves that they are unable to run SAA with all the intervention and help they can get. This management believes people are not flying SAA because the price is wrong. I ask you now with tears in MY eyes show me one complaint wrt to price and I will show you a thousand complaining about service. LCC’s have never been about service – they are about price. Until SAA management realise their biggest problem is service and rectify this by hiring competent individuals with flair, passion and commitment this lack of service will be transferred to the LCC. Not only the lack of service will be transferred; expect the same kind of bungling, pathetic scheduling, mealy mouthed public relations and worst of all – inexperienced, under trained and very under paid crew. I don’t think 10k is too way off the mark for FO’s and from what I’ve heard about 26K for Captains. ($4300). Remember this will be prior to tax, medical, pension or any other benefits. (Rumour I know but remember this thread when it all becomes public knowledge).

Your statement “Once SAA makes a profit with the LCC, they will apply HUGE pressure on SAAPA to reduce labour costs. Enjoy the MoP agreement - it might soon be a thing of the past.”

Is exactly what we should all be working to avoid. This is in effect what TooBadSoSad has called whipsawing and it bodes ill for all pilots not just SAA. The MOP is an agreement (you know, the kind that takes two to tango) not a demand so get off your high horse of glee and try and negotiate one yourself.

You assume that SAAPA and the rest of the drivers at SAA see this as a threat, I don’t. SAA are basing their plans on what airlines like Lufthansa, Qantas and United amongst others have done – mostly with limited success. I think it will be a huge waste of money and a failure simply because you cannot run an airline with incompetent management. :hmm:

[ZERO3L]

Samueldethiery-I see your domicile is London so maybe you don't understand the frustrations in South African aviation circles regarding SAA.

Take your head out of the sand please.SAA is a loss making airline. All the rest HAVE to make money without the assistance of the reserve bank or elae they will close down. SAA should get their house in order, stick to their operations that do make them money on and accept that they can't have it all.

By reducing their fares any further, they will merely lose more money.

You have a very weird idea about how things work and are strangely biased towards SAA. Long live the rest of the real airlines that are a success story in real terms in that THEY MAKE MONEY. Thats why they pay less than SAA and fly older aircraft.:*

[AfricanSkies]

Why is it that RyanAir are paying their Captains GBP100K and their F/O's GBP75K, ie. a very good salary, when other LCC's are trying to cut costs on salaries, too?

Maybe RyanAir have seen the light and know that if they pay peanuts they get monkeys and monkeys can't run the operation. With an LCC, the Captain takes responsibility for a wider scope of operation?

[Rotates Lowly]

[QUOTE=samueldethierry]. While SAA continue to be the leading airline for the route.
I don't quite agree. I believe that Comair has been the dominant player on this route for some time now (kulula + BA), and will be on the entire domestic market within a year (by Khaya's own admission, I'm told...)

[Deskjocky]

[QUOTE=samueldethierry]. While SAA continue to be the leading airline for the route.
I don't quite agree. I believe that Comair has been the dominant player on this route for some time now (kulula + BA), and will be on the entire domestic market within a year (by Khaya's own admission, I'm told...)

Although it sounds interesting, factually incorrect- SAA still has over 50% market share in the JNB CPT sector, the rest is divided up over all the other carriers:ok:

I think its a long stretch to even imagine Comair being the dominant player in this market, going forward they are not going to be able to grow their low cost brand the way they have been doing- in fact they are probabaly going to loose ground due to increased competition.

[Q4NVS]

I agree that even though they would probably like to believe this, not even Comair comes close at the moment.

If this was the case they would have had to be on an impressive expansion drive at the moment. I do doubt this, as apparently guys are sitting around for 12+ months on a short list, before getting that favoured call..

These are also only due to replacements, not really expansion. Taking an aircraft off 1 route and publicly putting it onto another is also not really expansion.

There are other SA Airlines that are expanding at a rate faster than crew can be trained though.

I tend to agree that some of the LCC glory days are over and specifically Comair would have to do a bit of housekeeping and realignment of however many "brands" they seek to operate, to continue it's "successes"..?

[fluffyfan]

Would have to agree, the LCC are not going to have such an easy future, they have large obstacles to overcome, the main ones being the fuel price (ok so everyone suffers but for operators using old equipment it will hurt more)

They also have to think of replacing there aging fleets, old MD82's, DC9's and 737-200's will not comply with noise requiremnts in 2009, and cheap aircraft are not so easy to come by now as they were post 911.

[Solid Rust Twotter]

There are other SA Airlines that are expanding at a rate faster than crew can be trained though.

Details? Right now I'm prepared to fly a bucket of fried chicken if the wings can generate enough lift....:(

[vagabond 47]

Apparently the "Parsons Nose", just above the APU Exhaust, has been known to develop the most lift ...........got it off a Harrier Pilot I fly with?

[T Hairy Henry]

AfricanSkies:

It's not about paying peanuts and getting monkeys. All the pilots have to be up to the correct standard no matter what you pay them!!!

The likes of Ryanair and easyJet pay top dollar for their pilots in order to retain there services, while at the same time getting them to fly as much as possible. In other words, give up the easy life at BA and you'll earn more cash!!

[tamboekie]

It must be obvious who this magic low cost carrier is, has everybody forgotten the "independant SA Express" who have never made a cent profit in their own right, and being part of the SAA stable has never enhanced things???:hmm:

[Q4NVS]

I suggest you get your facts straight first..

At the moment it is believed that SAX is one of the few Airlines in SA that is actually turning a profit.:ok:

Also have a look at their expansion, believed to include 2 x Q400's as well as 2 or 3 CRJ200's.:O

[cigar]

Also have a look at their expansion, believed to include 2 x Q400's as well as 2 or 3 CRJ200's.:O

I heard from a SAX pilot a couple months back that the ultimate aim was to phase out the CRJs and bring in more Q400s. Have things changed since then?

[George Tower]

Must admit that I had also heard the crj200s were being withdrawn at some pont in the future. I mean if you are doing the FAJS-FAGG sector in a turbo prop what do you need the crj200 for......namibian sectors only??????

IMHO that would be the only reason not to have total fleet commonality......

At 20m USD these things ain't cheap but it appears the SA taxpayer just loves to see the public flying in the latest kit:rolleyes:

[Q4NVS]

Sorry to be the bearer of "bad" news....:=

But it was not the SA Taxpayer, unfortunately it was Rand Merchant Bank.:D

[George Tower]

Q4NVS

I'm not so naive as to assume that an aircraft would ever be financed directly from the treasury, however, may point is that SAA and SAX, have over the long run been a liability to the tax payer of SA and additionally taken part in trading practices which fall foul of national law. We have a court case that demonstrates that.

Although RMB no doubt have satisfied itself that the Q400 acquisition represents acceptable risk, I still feel this is an unfair advantage in what essentially supposed to be a free market.

[nugpot]

....... SAX, have over the long run been a liability to the tax payer of SA...

SAX has never been capitalised or re-capitalised like SAA. If you talk about the overdraft facility at Transnet, how does that qualify your statement above?

.... additionally taken part in trading practices which fall foul of national law. We have a court case that demonstrates that.

SAX has never done their own revenue accounting. They pay SAA to do it and was not involved in the fuel surcharge decision.

Although RMB no doubt have satisfied itself that the Q400 acquisition represents acceptable risk, I still feel this is an unfair advantage in what essentially supposed to be a free market.

How can RMB's decision to finance the Q400 possibly be an unfair advantage?

[George Tower]

Nugpot

My point all the long has been that state run airlines in free markets do not work and moreover are immoral. The only lesson from history is that even in spite of unfair advantages in the market place they still fail due to a variety of issues

Although it is easier to prove that SAA is to all intents and purposes a liability, given that SAX is a seperate entity albeit within Transnet it is easy to make a few statements like I have done and then take them out of context.

The question I have is this for those of you getting shirty with me regarding SAX - if the SA government has a policy of privatisation which it says it does, then why, if SAX is as healthy as you all believe it is, is it not floated on the stock market?

[George Tower]

How can RMB's decision to finance the Q400 possibly be an unfair advantage?

The vast majority of airlines have very poor credit ratings - so either SAX is performing very well in which case, there is a strong argument in favour of privatising NOW, or is it because they're a state owned company, backed by Government operating on routes where in the main they're the only carrier.:ugh: hence a degree of security which wouldn't be open to a private company operating in the same environment.

[fluffyfan]

George Tower I have to say its getting really old hearing you champion the cause of the SA tax payer, you and Solid rust Twotter dont seem to add much to these posts except your incessant bitching about the poor old tax payer and the free market......ok we all get the point, please give it a rest.

[Solid Rust Twotter]

Truth getting a bit problematic there, Fluffy?

[reptile]

or is it because they're a state owned company, backed by Government operating on routes where in the main they're the only carrier, hence a degree of security which wouldn't be open to a private company operating in the same environment.

Your statement is in error......

If and when Transnet does not provide finance to either SAX or SAA, a letter of guarantee is issued by Transnet to the institution providing finance. This in essence states that should SAA/SAX not be able to service their debt to the bank, then Transnet will be responsible for the outstanding balance.

When the Q400's were purchased, Transnet was unable to give a letter of guarantee. They believed that with the imminent departure of SAX out of the Transnet stable, that they cannot be held liable for the long term debt of SAX. SAX was therefore forced to find finance based on only the strength of their own finance - exactly the way a privately held airline would do.

RMB provided the finance to SAX after a normal risk analysis. For you to insist that SAX is operating with a "degree of security" not available to privately held airlines is plain nonsense.

Your mission to be the champion for the poor SA taxpayer is to be applauded....but get your facts straight before you set off on a tangent again.

[reptile]

if SAX is as healthy as you all believe it is, is it not floated on the stock market?

SAX is in a perfect position to be privatised. Passenger growth on certain routes takes place faster than capacity can be increased. SAX is not operating a single loss making route. The company exceeded stringent budget targets during the last financial year and employees will almost cerainly be paid a performance bonus in July.

The governent and Transnet view SAX as an essential part of SAA's route coverage, and it provides a generous amount of passengers for onward connection on SAA. As we are well aware, SAA is no position to be privatised. DTI cannot risk privatising SAX and having it fall in the hands of one of SAA's competitors. Until SAA is ready for privitisation, SAX will always have the government as mayor shareholder.

[saywhat]

If all's fair in love, war and aviation, how is it possible that Comair and kulula operate with a common pool of pilots. This is surely not two indipendant airlines, and must, to some degree be construed as anti competitive. I'm not complaining, as my belief is that the more pilots employed in SA by however many airlines the better.

As for salaries, I believe that the problem in SAA lies not with pilot remuneration, but with the fact that there must be a very high ratio of management positions within the airline to aircraft operated.

[Deskjocky]

As for salaries, I believe that the problem in SAA lies not with pilot remuneration, but with the fact that there must be a very high ratio of management positions within the airline to aircraft operated.

Your outlook is too simplistic, there are a number of factors affecting SAA’s position right now, yes there are too many managers- the airline could cull off at least 150 and not feel the difference, but then again there also too many members of staff as well- in fact at least 3000 too many, SAA’s issues are productivity based- if the staff were more motivated to be more productive then the airline would need less of them or be able to grow the revenue base. The root cause of all of this is the union movement that has got the business by the balls- SAA pays its staff way above what the other airlines in the country are paying and its all driven my very militant unions.(before everyone goes off on a tangent about why this is the case, I clearly concede that its due to inept management of these same unions by top management over a long period of time) This is exactly the same situation the airline faces with the pilots- pilots earning high salaries while being for the most part underutilized.

On the point of salaries- I want to be clear : its not about pay- its about productivity. This applies to the CEO as it does to a pilot as it does to the reservation agent.

The funny thing is despite all of this SAA can be a very profitable business- even with the low cost carriers. The oil crisis has forced it into looking at its costs- finally! From what I have seen the savings are not stellar so far, in the region of 600 million this year, but are long term based and should bode well for the future.

[divinehover]

SAA is an unproductive airline at the moment. Have a look at these figures. They are from the the airlines own web sites so they should be correct.

QUANTAS- 179 people per a/c
SAA- 229
KLM- 193
AIR FRANCE- 189
CATHAY- 161

As for the pilots been unproductive. What a load of crap. Can every stop with that line of thinking. SAA rosters it's pilots. The pilots don't roster themselves. As a A319 F/O I get rostered for between 65 and 75 hrs a month. They are also welcome to roster me to the max legal limit.

There are far to many people sitting in dark corner offices playing Solitier who were employed for all the wrong reasons. Even our CEO admitted he had to employ 2 people for every one job that needed to be filled.

[George Tower]

Morning all,
I notice a few of you guys getting rather tetchy. Everything I have said has been argued consistently from a free market point of view. I didn't want to become embroiled in individual details.
In theory at any rate you would think that given the market dominance enjoyed by the national carrier they would have been a runaway success but they haven't.
The governent and Transnet view SAX as an essential part of SAA's route coverage, and it provides a generous amount of passengers for onward connection on SAA. As we are well aware, SAA is no position to be privatised. DTI cannot risk privatising SAX and having it fall in the hands of one of SAA's competitors. Until SAA is ready for privitisation, SAX will always have the government as mayor shareholder.
Sounds very free and fair.
There is a slight irony here because in the UK BA mainline consistently make profits but their regional ops are loss makers. In SA situation seems to be the opposite.

[saywhat]

The root cause of all of this is the union movement that has got the business by the balls- SAA pays its staff way above what the other airlines in the country are paying and its all driven my very militant unions.

Does SAA pay too much, or do the other airlines pay too little??

I believe that the latter is the case. We in South Africa are too keen to fly for free. I agree with you about the productivity, however, that is a function of management. Rostering could be a lot more productive, of that there is no doubt. At the end of the day, however, if I am to be employed as a professional, I expect to be paid as a professional. If the management of that company are incapable of rostering me to my full potential, they can take the pay cut, as that is THEIR job not mine. My job is to go to work with a smile on my face, do my work, and play golf when I can!!

[fluffyfan]

Well I believe a recent study, supported by SAA pilots Association and by SAA management showed that SAA pilots are paid 38% less than there counterparts in equivalent positions around the world.

You decide....."are SAA pilots being paid too much or the others too little"

SAA has some of the cheapest labour in the world, the problem does not lie with the salaries, the problem is too many salaries. It takes 10 people to do what 1 person does at Comair or Nationwide, and no matter what the performance of the management they will still get huge bonuses, and the government will still request flypasts and launch parties, the boss will still fly to work in a helicopter, however management will have you believe its the greedy pilots who are to blame, SAA management seems to have learned from its privatised conterparts around the world, blame someone else on the poor performance of your airlines, reduce the pilots salaries, claim bankruptcy get the pilots to hold any further pay increases but in the mean time still take home a bonus for cutting costs, lets think of some examples......911/SARS..........how many pilots recieved pay cuts or lost there jobs due to these reasons.

If ATNS paid there controllers more, maybe they would not all leave, maybe SA ATC would not be such a :mad: up with contractors from all over the world coming to help out while they frantically try to train more, there is a huge pilot shortage looming, China, the Middle East, Europe, all demanding experienced pilots (and ATC), if you dont pay salaries that compare with the rest of the world you are going to loose trained personel to people who do pay.

[Solid Rust Twotter]

Agreed. It's what I've been advocating all along. The relative handful of crews on the coalface have to generate enough revenue to support a horde of managers, secretaries and other hangers on, most of them irrelevant in the scheme of things while earning salaries for nothing more than turning up for work in the morning. This has already been admitted in that there are two people to service each job.

Add to this the propensity for helicopter flights, junketeering and impressive titles and associated salaries for minor officials and you have the recipe for a loss making enterprise.

I have no problem with the union negotiating and holding SAA to decent salaries for those who generate revenue, but I have a huge hangup with the uncontrolled spending and wastage of money by management in the fond belief and accompanying warm feeling in the trousers that the taxpayer will cough up the necessary filthy lucre to enable a top heavy management structure to continue their wasteful extravagance.:*

[saywhat]

Too many people advocate the demise of SAA in favour of privatisation. I stand firm in my belief that if SAA dies, we as South African pilots can say goodby to the possibility of flying big aeroplanes to overseas destinations. BA, KLM. AF, LUFTHANSA etc will dominate the market, not allowing any other operator to compete. If the government restricts access to other airlines in favour of SA operators, we are back to square one. (competition goes out the window)

If this does happen, then you can be assured that to fly from SA will be the same as flying from any other african destination. Financially unviable.

Be carefull of what you wish for, it might just happen!!!!

[DIVESAILFLY]

I suggest you get your facts straight first..

At the moment it is believed that SAX is one of the few Airlines in SA that is actually turning a profit.:ok:

Also have a look at their expansion, believed to include 2 x Q400's as well as 2 or 3 CRJ200's.:O

Strange this? The Thursday Business section painted a vastly different picture of SAX's profitability. Q4NVS/ZERO3L seems to have a problem with SAA pilots pay while blinding us with BS about SAX. Maybe They should consider the following: How much should you pay a Captain with 12 year service in SAX still only flying 50 pax at a time as compared to a 747 captain flying 6 times that many pax? Maybe he should only rightfully earn a 1/6? Or do you want to base it on years of service to the company? SAA captains generally have 12 - 13 years before becoming captains on 737's. Comair 3 - 4? So a 1/4 scale seems fair?

As for the LCC - the best business decision SAA can make is offer all the Comair/Kulula/Nationwide/1Time crews a well paid position, close down all these upstart companies and get on with monopolising airtravel in SA? After all a yearor two of tax payers money should be enough?:=

Fly safe - bitch less and life is great!!!
Especially at a great salary (+34% of course)

PS: To all the SAX/Comair/Kulula/Nationwide/1Time crews - only using you to illustrate a point, no bones to pick with you.

[Q4NVS]

Why be "Jealous" of something you already have..?:ugh:

With regards to Business Journalism, why read that hogwash when you have the facts?

Must be the same journalist who wrote the article about Comair wanting to buy SAX in order to get their hands on their lucrative routes.:}

:ok:

[George Tower]

Originally posted by saywhat

If this does happen, then you can be assured that to fly from SA will be the same as flying from any other african destination. Financially unviable.

Be carefull of what you wish for, it might just happen!!!!

I would not agree with you. If the African Union states would implement the Yamoussoukro Decision as they have all signed up to it, then you would see market forces meet the demands of travellers, and over the long term that means lower prices and more flights and economic growth......sorry I'm a stuck record I know but just couldn't let that one go.

[Dessert Aviator]

Has anyone any news on the soon to be launched SAA Low Cost, what type of A/C, salaries, where to appyl etc.

[ghostrider42]

From what i was told from someone senior.......

4 x 737-800's coming
seperate salary scale to SAA
Captains +-R600K
not sure FO's
Will prob be some retired captains coming out of retirement to fly

Also heard that SAA procuring upto 12 MD11's for the new SAA CARGO division
which means upto 80 crews needed so get those CV's rolling............... for the times may be a changing! All we need is a new CEO who see's the light!

[beechbum]

12 MD11's.....ummmm.......for SAA......ummm!!!
Now let me think for a minute......neh.... I don't think so!!!! :sad:

[ghostrider42]

Well they already have one on wet lease with a yank crew! more are on the way!

[Desperate Wannabe]

Yep
First MD11 already operating, and my mate in SAA technical, tells me the first 737 is ready to roll out the shop:D

[beechbum]

Yep I know the one is here operated by Gemini Air Cargo. But seeing the number 12 attached to MD11's seems to be a little too much. Oh well hope you're right!!! But will these extra 11 that are coming be wet leased or operated by SA crew?

[saywhat]

Not gonna happen. Don't get alol excited.

If SAA tech has a 737 freighter in their workshop at the moment being converted, it's not for SAA. They got approval a while ago to convert 737's to freighters.

The MD11 is on wet lease from the USA, another 12 - Yea right dream on....

SAA low cost. Not yet out of the stable, let alone in the starting blocks. My bet is that it will never happen. The whole concept must be approved by the competitions board. SAA is allready into the state coffer to the tune of hundreds of millions, I cant see the competitions board allowing the State to fund more.

The fact that there are allready ex captains employed by SAA to start the thing, is just the way things happen there. They have no clue. This is not a private money making institution, it's a civilian airforce. There is, never was , and most probably never will be an inclination to make a profit, irrespective of what is publically said.

If there was a need to make money, the SAA formation team would not exist (each time they fly millions are squandered for the egos of a few), non profit routes would be axed, pipe dreams like LCC's would be shelved. A CEO would stay for more than 3 years, and actually have a plan, I could go on for a long time...

[fluffyfan]

Apparently SAA cargo want SAA pilots to fly the MD11 freighter, for there own reasons, the current MD11 is on wet lease but will be crewed by SAA crew before Feb2008 or else scope clause is violated and bypass pay starts getting paid to SAA crew, but looks like the powers that be have agreed to the SAA pilots crewing the freighter so hopefully no problem.

As for low cost, saywhat you are probably right it will probably never happen, first of all how do you enter a saturated market (low cost) with the most expensive aircraft out there compared to your competitors, coupled with management that have never run a successfuly low cost anything before against competitors who are struggling to survive because its there jobs and lives not just some pipe dream, they have far more motivation to succeed than some fat cat on a pet project. Besides this low cost carrier will not be allowed to use anything of SAA's including staff, buildings, flight planning etc, or else the competition board will tear SAA another gaping hole.

Oh and one more thing..............please explain to the SAA share holders (government and various other individules ie some pilots and management) why in the name of good corporate governance, are you giving away market share to a competitor airline........I think the legal costs could be bigger than any so called profit they may make.

[beechbum]

Saywhat, thanks for the info. I thought 12 MD 11's was too good to be true. This is SAA not some Middle Eastern outfit who do have some sort of clue as to what they are doing. Well at least it got the hopes up for some. Back to the drawing board fellas................now where was that lease agreement for those A380's we wanted??? Must be around here somewhere???????:ok:

[saywhat]

Apparently SAA cargo want SAA pilots to fly the MD11 freighter, for there own reasons, the current MD11 is on wet lease but will be crewed by SAA crew before Feb2008 or else scope clause is violated and bypass pay starts getting paid to SAA crew, but looks like the powers that be have agreed to the SAA pilots crewing the freighter so hopefully no problem.


I do believe in fairies, I do , I do !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The scope clause says that SAA can crew that aircraft with foreign crew to establish the route. How long does it take to entablish a route? Let me bet that it's the period of the contract.

I'll bet that the contract is for a wet lease for 24 months.

The a/c is USA registered, SAA crew can't crew it !!!!!!!!!!!!!!!

SAAPA had their head so far up their own arse ensuring that the captains could stay untill 63, that this and many other things were allowed to be passed without too much resistance. I'll bet that in Feb 2007 there will be no change, besides for the new CEO............... Oh and the venue for the mass fly past of A340's 747-400's, 319's and 737-800's in formation.

[Deskjocky]

As for low cost, saywhat you are probably right it will probably never happen, first of all how do you enter a saturated market (low cost) with the most expensive aircraft out there compared to your competitors, coupled with management that have never run a successfuly low cost anything before against competitors who are struggling to survive because its there jobs and lives not just some pipe dream, they have far more motivation to succeed than some fat cat on a pet project. Besides this low cost carrier will not be allowed to use anything of SAA's including staff, buildings, flight planning etc, or else the competition board will tear SAA another gaping hole.
Oh and one more thing..............please explain to the SAA share holders (government and various other individules ie some pilots and management) why in the name of good corporate governance, are you giving away market share to a competitor airline........I think the legal costs could be bigger than any so called profit they may make.

LCC is definitely going to fly, SAA’s schedule has been amended to exclude the 4 738’s already. As far as corporate governance is concerned this deal has been cleared all the way from the SAA Board- where all stakeholders are represented to the highest levels of government.

The fact that the new carrier will not use any SAA facility is one of its advantages- the new company will get to create its own culture free from the BS that goes on at Airways Park.

Furthermore SAA’s market share will not be cannibalised- the whole point of this exercise is to segment the market according to what the customer is prepared to pay- if you want “cheap and cheerful” then the new LCC will speak to that need. If you want a full service premium brand with all the associated benefits then fly on SAA mainline. After all how can you justify charging a customer- like a corporate, a higher price for all the extras when the person sitting next to him paid 50% less on the internet and gets the same service. The LCC will protect SAA’s premium revenue stream. In effect all the cheap seats currently being sold on flysaa.com will be transferred to the LCC.

The effect on mainline will not be as bad as you would expect for the following reasons:
1. There will be a small reduction in short haul capacity, although there will be none on the prime routes.
2. International feed traffic (currently suffering under the high load factors) will be given further pricing incentives- this together with increased feed from the STAR partners will fill a nice gap- and the revenue is in hard currency. This will have the knock on effect of drawing in more long haul traffic.

The LCC is going to compliment SAA's current operations in a big way and make a good profit in the process.

[saywhat]

Furthermore SAA’s market share will not be cannibalised- the whole point of this exercise is to segment the market according to what the customer is prepared to pay- if you want “cheap and cheerful” then the new LCC will speak to that need. If you want a full service premium brand with all the associated benefits then fly on SAA mainline. After all how can you justify charging a customer- like a corporate, a higher price for all the extras when the person sitting next to him paid 50% less on the internet and gets the same service. The LCC will protect SAA’s premium revenue stream. In effect all the cheap seats currently being sold on flysaa.com will be transferred to the LCC.


This is the point why I say that the competitions board will probably tell SAA to can it. If the object is to "The LCC will protect SAA’s premium revenue stream", then there is no competition from the LCC which has to be started as a new seperate entity.

If the cheap tickets sold on flysaa.com will just be transfered, then there is collusion.

SAA already has to pay millions in fines for "unfair trading", will they ever learn????:ugh: :ugh: :ugh:

[fluffyfan]

LCC is definitely going to fly, SAA’s schedule has been amended to exclude the 4 738’s already. As far as corporate governance is concerned this deal has been cleared all the way from the SAA Board- where all stakeholders are represented to the highest levels of government.

It may fly, but for how long, please explain how a company using 40 million US$ aircraft on a balloon payment lease agreement can compete against a company that has a true interest in making a profit ie 1time and Kulula using aircraft that cost 1 million$, its all smoke and mirrors, chinese book keeping I think, let me guess SAA will keep paying the lease while the profit is refelected on the low cost balance sheet, how long before the competition board who already dislike SAA shut it down.

Many have tried this Low cost before and failed, what makes you think that the current SAA management with there dismal performance past and present are better than the others that have gone before them.

In true SAA style I believe the current R600 mil loss that was to be posted (just before salary negotiations) has turned into a small profit, due to a hedging fund law that changed how much cash you can keep in the hedging fund..............and true to form, what did management do, recapitalise? purchase new aircraft? no they gave themselves bonuses.

Good luck SAA low cost.

[saywhat]

Well said Fluffyfan. They ought to have an A340 formation flypast towing a banner to advertise, or better still, lease more of their 738's to other LCC's, as it is obviously a good deal !!!!!!!!!!!!!!!!!!!!!!!!!!

[Deskjocky]

[QUOTE=fluffyfan]It may fly, but for how long, please explain how a company using 40 million US$ aircraft on a balloon payment lease agreement can compete against a company that has a true interest in making a profit ie 1time and Kulula using aircraft that cost 1 million$, its all smoke and mirrors, chinese book keeping I think, let me guess SAA will keep paying the lease while the profit is refelected on the low cost balance sheet, how long before the competition board who already dislike SAA shut it down.


SAA will make money out of the LCC - it has to pay for all services rendered like technical and simulator hire at prevailing market rates there is not going to be any preferential treatment. That includes aircraft lease agreements.

The leases are not that onerous provided the aircraft have the right seating config and utilization and you have commonality across the fleet.

There seems to be this perception in South Africa that you cannot make money with new aircraft- what a load of BS! :ugh: :mad: Its all about choosing the right aircraft for the job- the 738 was invented for high capacity high density short haul market.

In terms of MN and 1T using aircraft worth 1 million- according to fluffy- they are slowly realizing that unless you make the investment you will not succeed.

Post 9/11 the market became awash with cheap metal as airlines offloaded old technology- some to reduce capacity and others in favour of new metal that was being offered at really attractive prices from the manufactures. This has made the barrier to entry into the market really low to any new entrant- go to the desert buy up a bunch of 60’s era aircraft and apply for a license. All good and well to start, take on the legacy carriers in the market and undercut them using this cost advantage- problem is this is all short-sighted because there is never enough money to invest in newer technology. (I truly wonder what the market capitalisation was of 1T was when it launched- I bet you it wasn’t more than 10 Million Rand) Herein lies the time bomb, cheap aircraft will only take you so far before they become a millstone around your neck. Ironically this will pose a greater risk to carriers like 1T and CE than SAA ever will, as you add capacity your costs rise but revenue does not increase by the same increment- the operation is dragged down by greater operational costs, its just a spiral from there.

I once worked out the break even (based on DOC assuming a nil capital cost) for a friend who flies for one of the private carriers- the aircraft is used sparingly because its old- even with a 100% load factor (using a higher weighted average fare than I know they earn in reality) every time the aircraft pushed back it lost the airline 10K. I’m still amazed when I see the aircraft on the ramp on a regular basis but they are in a trap- they have the fares to attract the pax but they cant make any return because the aircraft is a dog but they don’t want to not operate because the traffic will gravitate to one of its competitors- making them stronger. What kind of logic is that???? Its ok if this were an isolated case but have a look at the aircraft being operated- this is not a unique example.

[Q4NVS]

Well said DJ!

There is no such thing as an older aircraft being more economical than a new one, why do we think are the new one's being built..?

Case in Point:
Ryanair has ordered 143 x 738-800's, NOT old school Gas Guslers like MD's, DC9's or 732's..?

Short term investment is BIGGER, but hey, once they've got the metal, there's no catching them...

With the forecasted 2006 Fuel Bill occupying 26% of an airlines total expenses, versus 22% in 2005, the 1T's and even Kulula's better start making plans.

Here's the thing - Public perception always is that because these LCC's are always pretty full, they must be making money - NOT necessarily.

However, some later generation aircraft can operate with load factors sometimes as low as 35% to break even. Now those are the REAL LCC tools to collect, but hey, none of them are 60's 70's or even 80's models.

:=

[Q4NVS]

Where to apply?

Unfortunately DA, there are only a number of rumours at the moment, nothing seen in writing yet...

This is the latest one, that I am aware of atleast:

Will be run on a 3 year contract basis, with P1's being offered to current SAA SFO's with P2's probably coming from SAX. Upon completion of 3 year contract, you have the choice to renew for another 3 years, or return to your original Seniority Position within SAA/SAX respectively.

Dunno what the guys at SAX are saying, as they are believed to be expanding at such a rate at the moment, that there might not even be enough crew to dish out...

Don't shoot the messenger though :=

[reptile]

you have the choice to renew for another 3 years, or return to your original Seniority Position within SAA/SAX respectively.:=

Afraid that is a rumour (hint to Q4VNS - person who told you that is NOT a reliable source)........once you leave your seniority position at SAX (I cannot speak for SAA and SAAPA) you've lost your position. This is a FACT....you will NOT return to your previous seniority position. Make your career decision and live with it.

[nugpot]

......once you leave your seniority position at SAX (I cannot speak for SAA and SAAPA) you've lost your position.

Surely that depends on whether any of the SAXPA committee members are interested in going...... :E

[Q4NVS]

This is a Rumour network and I also received it as 2nd hand gen anyway.

My personal opinion (what I would stand or vote 4 :p ...) = Exactly what you say Reptile.

If the grass is greaner (or the metal Heavier), go sample it, but when you return, do so at your own expense :ugh: . Wouldn't be fair to put all those behind you on hold, would it.

Hey me, I just watch the "Show" :\

[fluffyfan]

Deskjocky, what you say does make sense, and I truly hope it succeeds, it can only be a good thing, however I am sceptical, just blame it on a legacy of the past where every management team has had there own agenda's and raped SAA to there own advantage.

You seem to be implying that this management team is different, only time will tell, unfortunatley no matter which way you swing it you cant tell me SAA is not shrinking, 3 800's on contract in Europe (ok this does happen every year) now 4 going to LCC, 3 band new A340-300 in India (coming back soon...we hope), now rumours that the 747-400's cant make money, with 2 already gone to Cathay to become freighters, this all happening in a time of unpresidented growth around the world in terms of airlines, there are no plans for new aircraft, no orders, no new routes, apparently the government (another rumour) has directed that SAA must expand at 10% for the next 4 years until 2010, how is this even possible when we are giving aircraft away (giving them away.....another rumour about the 400's being sold for $15 mil each and it cost $19 mil to zero the engines), SAA should be flying to Madrid, Amterdam, Bangkok, Sydney, Lisbon, Beijing, etc but its not, why, management has found a way to screw SAA time and time again, SAA is not in the business of making a profit, its a government tool, to wave the South African flag in obscure African countries, to employ thousands of people, to provide themselves and there extended families with free public transport and to provide a platform for them to test there BEE policies.

But then again, I am probably wrong, I hope I am and I hope SAA succeeds.

[Deskjocky]

Fluffy, much of what you bring up has some truth to it. SAA is run as an instrument of the state- this is a fact. The problem is the people who have oversight over SAA know nothing about aviation- therefore they place all sorts of demands on the table that are for the most part unrealistic and then expect the airline to turn a profit. I can go on all day with examples but the Washington debacle is a good one. All politics no profit. I always laugh when top management go to parliament- they get grilled for 2 hours about why there is not enough profit and then when everyone is finished and having coffee outside the self same members of parliament come up to them and demand to know why SAA is not flying to this or that African state and my personal favourite: why does East London not get as many flights as Cape Town does……….mmmmmmm….. wonder why….. Im not saying that management is blameless but they have a difficult enough job (given the fact that they themselves are all political appointees and therefore have zero aviation knowledge) without all the interference. This situation is exacerbated by the fact that they distrust the management level below them- for largely historical reasons that there is no point in going into now. So any fresh and innovative ideas that are based on sound market analysis are swatted flat as they lack the insight to appreciate the gravity of the situation the airline is now in. Route expansion scares the heck out of them as if it goes wrong then their cushy life of doing zip is over. Its far easier to make no decision than take a risk. That’s why all the emphasis on subleasing the fleet out- its nice and safe and you can put a number against that initiative in their fancy Mickinsey power point slide. They don’t understand that aircraft leases are only part of the fixed cost base. The only way to thrive is to expand- hopefully one day the managers who keep producing the goods will be heard!

Good news on the A343’s they all come back next year, the 738’s leased to Transavia return at the end of the northern summer. Its true, the 744 is an absolute dog at the moment to make money from- expect to see an increase in the pace of withdrawal from service. However this capacity will need to be replaced and there are some very interesting discussions on the go.

Proposals have also been submitted to the board for new routes to Northern and Southern Europe this is to primarily tie in with the STAR partner networks there- these will be dependant on the availability of suitable capacity. A revised North America strategy is also awaiting approval. All this is obviously dependant on what the political will will be!

[kralo]

I'm intrested in this job, can anybody give me any further details, info?

[fluffyfan]

the 744 is an absolute dog at the moment to make money from- expect to see an increase in the pace of withdrawal from service. However this capacity will need to be replaced and there are some very interesting discussions on the go.

Now I am smiling............lets hope..............I know we love Airbus, but the 787 looks like a beautiful machine.

I think the current World cup Soccer will have a big influence on us as well, the powers dont want to look bad in the eyes of the world in 4 years time and hey , they have the German example to follow...of all the people it could have been............... it the Germans....:) , lets just hope the right descisions are made and not panic buying

[saywhat]

Coming back to the LCC saga.

Its a total waste of money. Many other full service operators (including BA) have tried this already and failed dismally. All of a sudden SAA has a "new" idea that's never been tried before. When will they learn!!!!!!

I know, I know, its going to be a separate entity, blah, blah, blah. What a lot of rubbish! It will have to be financed by SAA using SAA's assets to secure that financing. No matter which way you look at it, if one company is solely owned by another company, doing the same thing, then they are one and the same company bull****ting each other that they are two separate entities. Much like Kulula and Comair trying to pretend that they are separate airlines. Same pilots, same aeroplanes, same everything, oops sorry different uniform, that makes it different!!!!!!!???? Yeah right!!!!!!!!!!!!

I am convinced that no good will come of this if it happens. It will not be good for the industry, as it will put it under more strain than it already is. It will not be good for SAA, as it relies on the fact that passengers have to leave other airlines (including SAA) to fly on this start up, thinning the loads.
It will not be good for the consumer, as the ticket price will not reduce much more than they already are, but somewhere in the future, someone will hold a ticket on another Sun Air, Phoenix, etc, etc.................:{ :{ :{

[beechbum]

Saywhat, just to add that at no time has Comair ever stated that Kulula is separated from the company Comair. Whether it be the BA brand or Kulula brand, it is always "proudly operated" by Comair.

[saywhat]

Yes you are right, I stand corrected.
I found this in the busisess report, makes some interesting reading.
SAA may be heading for turbulence in the low-cost skies
April 28, 2006
By Jabulani Sikhakhane, Tonny Mafu and Thabiso Mochiko
SAA's move into the low-cost market could backfire on the state-owned airline company. SAA, which is in the early stages of nursing its finances into a healthy position, said early last month that it would launch a low-cost airline before the end of the year.
But if the experience of traditional European airlines in venturing into the low-cost market is anything to go by, SAA could be flying into some turbulence.
SAA's launch of a low-cost airline operation is in response to the success of low-cost airlines in South Africa, which have reportedly gobbled up 25 percent of the domestic air travel market.
The European industry went through a similar phase in the mid-1990s after the success of low-cost carriers such as Ryanair and easyJet. Traditional airlines responded by launching their own low-cost operations. British Airways (BA) moved first, launching Go in 1998, followed by KLM, which launched Buzz in 2000.
BA bailed out of the low-cost market in 2001, selling Go to 3i, a private equity fund, which later sold Go to easyJet for almost three times what it paid BA. KLM sold Buzz to Ryanair in 2003.
The success of low-cost airlines stems from the fact that they stimulate and exploit pent-up demand for cheap travel, according to a report by consulting firm McKinsey. Their entry into a market brings out people who would otherwise travel by train or car, if at all. Surveys indicate that up to three-quarters of these carriers' passengers aren't customers of other airlines, though the release of this demand benefits the whole airline industry, McKinsey says.
A similar pattern has emerged in South Africa after the launch of kulula.com and 1time.
But the first entrants in the low-cost market reap most of these benefits, leaving very little for new entrants. The first entrants can use low prices to stimulate demand and build brand power. Later entrants, with the same costs and prices as the first entrants, have a harder time generating the traffic they need to fill their planes.
The same fate may await SAA. - Jabulani Sikhakhane

[nugpot]

Currently SAA operates very few domestic routes off the Golden Triangle. Just JNB-PLZ and a few JNB-ELS. The rest of the domestic routes are covered by SAX and Link.

Don't you guys think that this LCC might be a precursor to SAA withdrawing all full service domestic flying and concentrating on Regional and International routes?

If the rumour is true that they are looking at 733 and 734 freighters, they might be able to accommodate all their current crew as well.

BTW, I am just speculating. I have no inside info.

[Q4NVS]

:confused:

Just to clarify:

Were Comair (or BA/Comair whatever) not also a "Full Service" operator before they started Kulula?

:ugh:

[SortieIII]

the 744 is an absolute dog at the moment to make money from:hmm:

If you refinance any aircraft enough times it will become a 'dog'. You can then conveniently blame all your troubles on it!

Apart from that, agree with your post, DJ

[kingpost]

Saywhat, I don' think you know what you're talking about.

Why would SAA start a LCC? Its all about costs reduction, SAA mainline costs are huge compared to an LCC. A simple example would be the bloated salaries and the turn around times of a 737, cut the time down to 25min and your asset utilisation increases thus our return on investment increases as well.

Now management can't just reduce SAA salaries, the unions will flip their lids, so they start an LCC, same as Jet Star in Australia. Sooner or later they will weed into the network and make more money as their costs are so much lower - that's what the stakeholders want - PROFIT. For those at SAA, profit is the revenue after all COSTS and tax are taken away, something not attained by doing fly pasts in aircraft that should be earning revenue !!!

By the way BA did make money with GO, they sold it onto easyJet who still utilise the routes - it just did not fit in with BA's future plans..

[Q4NVS]

Cut down the overheads and you already have a LCC at SAA.

Or you could do the following:
1. Clever marketing
2. Paint your aircraft in funny schemes :cool:
3. Reduce your onboard service :oh:
4. Charge the same price, but lull the public into believing it is a profitable LCC

Proof is in the Price:

Jnb to George
Kulula = R 526 one way :sad:
Nationwide = R 519 one way :O
SAA/SAX = R 386 one way :ok:

Just funny that the two "Full Service" operators (where you do not need your own lunchbox), are also the cheaper one's...

It's a BIG marketing ploy, that's it!

[Goldfish Jack]

I dont know about all this chatter about LCC etc etc....

Judging by the amount of (ex) SAA crew flying at Nationwide it seems like SAA already has a LCC!!!!!!

You only have to listen to the amount of "springnationwides" on the airwaves nowadays, you would swear Nationwide is the LCC in disguise!!!!!!!!


Also heard that the CAA is after all those Yank registered MD11s for sum reason - apparantly they now welcome in the land yet..........anyone know more about that???

[saywhat]

Saywhat, I don' think you know what you're talking about.

Now management can't just reduce SAA salaries, the unions will flip their lids, so they start an LCC, same as Jet Star in Australia. Sooner or later they will weed into the network and make more money as their costs are so much lower - that's what the stakeholders want - PROFIT. For those at SAA, profit is the revenue after all COSTS and tax are taken away, something not attained by doing fly pasts in aircraft that should be earning revenue !!!


So this then makes perfect sence. Since we can't reduce the salaries lets start a new airline and pay the new guys less. We're stuck with the other multi-millionair pilots but hey, they can't live forever, surely they'll die, retire or resign sometime. In the meantime these pilots can sit around and do less.

With regards to the Kempton Park A340 formation team, I can't agree with you more. Now if SAA management had any business sence, they could save millions of $$ by adopting a more professional approach to running their existing bussiness, than trying to start up another operator that has the potential to run up more debt.

[Skaz]

whose is flying the MD11's? i have a yank atp, maybe theyll gimme job

[saywhat]

MD is wet leased from Gemini. Flown by foreigh crew.

[FUG]

Are Mango involved in the set up of the LCC? Anyone know?

[T Hairy Henry]

Mango are in Saudi setting one up!

[Q4NVS]

Who is Mango - The half brother of Chuck Norris? :cool:

[T Hairy Henry]

Former MANagers of GO.......MANGO!

[Q4NVS]

Wow, but this post has recently sped to a grinding halt..

Was just wondering if Deskjocky or those who always seem to be in the "know", had any new rumours to share. ;)

It surely makes for some "interesting" and sometimes "plausible" reading. :ok: