Nationwide

[SA ATCO]

I hear there was a news report on SABC TV this morning that Nationwide may be going into liquidation. Is this true? Oh no, not another one! I hope that this was incorrect reporting as I have many friends in that airline.

[nugpot]

I also hope that isn't true. Except for my friends there, I also don't want the market flooded with 100 odd airline pilots.

Good luck guys! I hope Nationwide lives for a long time still.

[skyvan]

Vernon has been to the Competitions Board, complaining that SAA and SAX (for all intents and purposes, the same thing) have not increased fares, even though the fuel price has risen by about 50% this year. He claims to need relief (now possible, as the government will provide "bridging finance" while the claims are investigated) otherwise NW will not be able to survive beyond June 2001.
SAA's response is that they hedge when buying fuel (i.e. they buy fuel 4 or 5 months in advance, thereby effectively fixing the price for that period) and that Vernon's troubles are due to mismanagement.
Basically, what has happened is that Vernon is now paying the price for those old "cheap" aircraft that he bought when setting up. His fares are based on a low depreciation cost, and lots of fuel. SAA fares reflect a relatively high lease cost, but a correspondingly low fuel factor. Therefore, the price of fuel has less effect on the SAA fares. (But the Rate of Exchange is not helping either, and you can't hedge that!!)
Another point that Vernon is complaining about, is that SAA is employing ex-NW pilots, and he wants the competition board to put a stop to the "poaching". Maybe if he paid his pilots a decent salary they would not want to leave. How does he expect to keep his pilots, when an SAA boy pilot earns more than a NW B737 captain? I wonder what the various labour groups (CCMA, Dept of Labour etc) feel about restraint of trade in this manner!!
Whatever happens, I hope that NW does not go under. This country is desperate for a low cost carrier, and another failure will not help anyone. I heard that First National are NW's equity partner. Maybe they could inject some management people.
Good luck to all at Nationwide. But get your CVs out now. If Vernon stays true to form, you'll get to work one day to find out there is no work!!

[WildFrequency]

This should get interesting shortly according to the below link:-

<A HREF="http://www.news24.co.za/News24/Finance/Companies/0,1466,2-8-24_954254,00.html" TARGET="_blank">http://www.news24.co.za/News24/Finance/Companies/0,1466,2-8-24_954254,00.html</A>

Personally hope Nationwide does not crash,SA Aviation does not need another failed domestic airline.

[Silver Fox]

Hi there SA ATCO!

Sincerely hope this is not true, as I too know many in Nationwide, including family. Although, I saw it coming a long time ago, it is never a pleasant thing. I should know, "been there done that" more than once in SA. Spurred me on to leave for greener pastures far away.
By the way, all is well with the new job up North on 330, drop me a line M...

Off to the(sandy)beach.........
SF

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[Hi Lift]

This is from Flight International 21-27 November 2000:

"Virgin Atlantic is discussing the expansion of its presence in South Africa through a franchising agreement with local partner Nationwide Air.

The airliners entered codeshare agreements on routes between Johannesburg, Cape Town and Durban this month...

...According to Virgin's regional manager India & Africa, Mackenzie Grant, a franchise agreement could be the next step."

For the sake of everybody working there, I hope it works out for NW!

[putco]

Hey l've sent multiple CV's to NW over the last eight months and not one has been replied to. When I phoned to see where I was on the list I recieved a hostile response from one fleet Captain in Durban - not a good reflection on this airline.

Hopefully there's better to come.......?

[V1 Rotate]

I would love to see a comparison of the fuel prices paid by SAA-SAX-Airlink, Nationwide,Comair and private operators.

V1 Rotate

[The Guvnor]

Most airlines hedge their fuel prices these days - Comair, for example, has "saved millions of rand" through the use of this mechanism.

I have it on good authority that Nationwide was offered fuel hedging last year by the same company that handles MN's account, and Vernon responded that it "was not necessary" (= it costs money).

Nationwide's principal problems are management induced - Vernon prefers to keep his cash in the bank; and he has no idea of the basic tenet of low fare operations: {b}frequency[/b].

A low fare carrier is all about numbers - the more utilisation you get, the more seats you're producing that you can spread your costs across. The BAC1-11 was the wrong aircraft to select (being WAT limited in summer ex JNB, as well as being a fuel guzzler) but Vernon's philosophy has always been to be as cheap as possible - and those aircraft (especially the Cyprus Airways ones) were cheap!!!

If SAA was playing off uneven playing fields (as is its wont) then MN would be hurting as well. They aren't - they've posted good results.

------------------
:) Happiness is a warm L1011 :)

[Johnny Rocket]

Main trouble Vernon is having is that his wife is gatvol of his behaviour and wants her money back, apparently she put up a lot of the finance to launch NW.

[Hi Lift]

I think it’s very sad that the boss’ marriage dispute can cause so many problems for so many people, who have nothing to do with it.

[nutstrangler]

The way I heard it SAA only hedges or buys fuel fixed price in advance in Europe and that there is more of an issue over the bonus payments made to travel agents by SAA. Thus Nationwides real problem is not getting enough bums' in seats, all the while Intensive Air continues to cope with the operating elements prevailing.
One bad business decision can set the slide going, perhaps like Sun Airs infamous cock-up with their engine sell off and lease back Vernon has let his interest payment on the 737's weight the balace sheet too much.

[SA ATCO]

I hear that they lost their case against SAA at the Competition Board. SABC news reported that Nationwide is expected to be liquidated within the next six months. for the sake of the crew I hope the rumours of a Virgin buy in are true or else we will have another Sunair on our hands!

[tired]

I very much doubt whether Virgin will put any money into Nationwide - not Sir Dickie's style, besides which half the profits now go to Singapore.

I really hope it all gets sorted out - would hate to see another airline go bust with pilots on the street again.

[The Guvnor]

<font face="Verdana, Arial, Helvetica" size="2">22/12/2000 20:20 - (SA)

SAA has not won: experts

Pieter Bruwer

Johannesburg - Role-players in domestic passenger air services say SAA may still
lose its case against its smaller competitor Nationwide despite the Competition
Tribunal's refusal on Thursday to grant the latter's request for interim assistance.

Nationwide had accused SAA of deliberately keeping its air tariffs low in order to force the smaller airlines out of
the market. Especially with the sharp increase in jet fuel, this pushed Nationwide to the verge of bankruptcy, and
Nationwide requested that SAA should be forbidden from continuing with certain alleged restrictive practices.

Legal experts say the request was only for interim assistance and the ruling does not mean SAA has won. The
Competition Commission will now carry out a full investigation into Nationwide's charges against SAA. The
investigation may take up to six months or even longer.

But they say it is extremely difficult to prove that a participant in a market has been guilty of predatory pricing.
The term "predatory pricing" involves a player keeping its passenger fares artificially low in order to force a
competitor out of the market.

SAA said in its defence that by means of proactive management it was able to hedge the higher fuel costs. But jet
fuel will nevertheless cost SAA an additional R700m in the current financial year.

Nationwide said this week's ruling is part of a process, and the actual objection against SAA, namely predatory
pricing, must still be investigated by the Competition Commission. It is the second time a charge of this nature has
been made against SAA, and Nationwide says it is fully confident the objection will be successful.</font>

[skyvan]

The sad thing is, by the time the commision has done it's research, and published it's findings, Nationwide will probably be just a memory.
I wish somebody would buy it, and bring VN's aviation dream (and his employees nightmare) to an end. Maybe then Nationwide will be able to excell at serving their target market, and provide the workers with a good working standard.
Unfortunately, an airline will never last with an autocratic leadership style. The environment is too fluid for rigidity.
Good luck to all at NW.

[The Guvnor]

Competition Tribunal's Ruling Appropriate

22 December 2000

Further to the Competition Tribunal’s verdict of yesterday, 21 December, 2000, -- Nationwide’s claims against SAA -- South African
Airways wishes to make a formal statement with regards to the outcome of the case.

South African Airways is pleased to inform the public that after Nationwide’s spurious and ridiculous protestations against South
African Airways, that the following decisions have been reached by the Competition Tribunal into the matter:

? Nationwide’s claim that South African Airways has been “selling goods or services below their marginal or average variable costs”
due to the constant rising cost of jet fuel has been rejected by the Competition Tribunal. Nationwide alleged that SAA failed to
increase its airfare due to fuel increases since August 2000, as well as its failure to adjust prices to offset the depreciation of the
Rand against the US Dollar, was tantamount to pricing below its marginal or variable costs on certain routes.

The Competition Tribunal stated in its report that “predatory pricing invariably, takes the form of a cut in prices by the alleged predator
not on omission.” It also stated that the Tribunal is “extremely reluctant to signal that ‘failure’ to pass on input price increases to final
consumers will be construed as anti-competitive.” They carried on by stating that “it is precisely an increase in the price of an input
that frequently triggers the search for pro-competitive strategies in downstream markets where competition prevents a simple
pass-through of the increase to consumers. We would want to reward those firms who, as a result of their efficiency, are able to
absorb price increases of their inputs without passing them onto their consumers.”

The Competitions Tribunal declared that Nationwide’s argument with regards to SAA’s fuel hedging strategy was “frankly,
incomprehensible.” It further stated in its report that: “Given the importance of fuel prices, and given the volatility of commodity
markets and of international currency markets, this strikes us as a commercially prudent and far-sighted strategy on the part of
SAA.”

SAA admitted that the cost of jet fuel had increased significantly over the past months compared to the same period last year. Jet
fuel is projected to cost SAA an additional R700 million this financial year. However, through forward looking and pro-active
management, SAA managed to counteract this impact through its proactive hedging programme. During the course of this year, SAA
has taken some price increases to offset the hedging costs.

This together with increased aircraft utilisation and the optimisation of its schedules for the winter and summer seasons and other
major cost cutting programmes, gave the airline flexibility with regards to potential future fare increases.

The main reasons for SAA’s successes in the domestic sector have been purely because of its outstanding On-Time-Performance
figures, new equipment (B737-800’s), enhanced flight schedules meeting passenger demands, cutting costs through fuel hedging
programmes and through successful business management.

In the World Economic Forum Global Competitiveness Report of 1999, it was stated that the Republic of South Africa has the most
competitive pricing of domestic fares in the world. South Africa was ranked first out of 64 countries.

? Nationwide also made claims that SAA has been poaching their staff, notably its Boeing Captains, to leave its employee in
preference for employment with the South African Airways on command positions on which they had not been trained. South African
Airways defended its case by informing the Competitions Tribunal that all new relief pilots initially, fly as relief pilots before flying
independently. Also, due to increasing demands, it advertised in the market place from time to time which draws the attention of
highly qualified pilots from all spheres. It also stated that Nationwide’s pilots have never been specifically targeted and that it only
employees the best possible candidates that apply for these positions.

? It was also alleged by Nationwide that SAA is using commissions, incentives or other inducements to sell its flights, to the
detriment of Nationwide. South African Airways argued that this statement is totally untrue. SAA pays its travel agents a standard
commission and in accordance with world best practices, pays its preferred suppliers an over-ride commission which is in line with
both domestic and international carriers current trends. These agreements have been in place for a considerable period. Nationwide,
BA/Comair and other domestic operators have similar programmes.

South African Airways is pleased to announce that the Competitions Tribunal ruled in its favour on all aspects mentioned and stated
that Nationwide would be liable for the respondents legal costs.

[The Unteleported Man]

In other words: "Bend over, this won't hurt a bit..."

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The basic tool for the manipulation of reality is the manipulation of words. If you can control the meaning of words, you can control the people who must use the words.

[The Guvnor]

I think this article from today's (SA) Sunday Times says more about why Nationwide is having problems than any claims by old Vermin about SAA! :) :)

<font face="Verdana, Arial, Helvetica" size="2">The Wild, Wild West

'Any self-respecting airline would have gone out of its way to ensure that a
passenger reached his destination'

"IT does not work that way, sir. There is nothing we can do. This is
how it is done," she said.

The Nationwide Airlines flight from Cape Town to Johannesburg had
been rescheduled. Instead of leaving at 10.30am, it had taken to the
air at 8.30am. Since noone had bothered to tell this passenger, an
entire day of waiting at the airport loomed.

There were some empty seats on the 3pm flight, but these were in
business class. Because it was not my fault that the departure time
had been brought forward, and because there were some empty
seats on the flight, why not put me in business class so that I could
reach my destination and conclude my business, I asked.

"No, sir. You see, the problem is that if we put you in business
class then you will have to pay extra. We cannot put you in there
just because your flight left early. The rules don't allow it," said the
Nationwide Airlines representative.

The last time I flew business class was because I had been
upgraded by an airline cabin attendant who thought I looked tired
and ought to get some sleep on the flight. Except for a glass of flat
champagne, I did not think it was that amazing an experience. So I
was not angling to fly on Nationwide Airlines simply to be in its
expensive seats. I just wanted to get home.

When the representative tired of my badgering, she called her
supervisor, who arrived in 10 minutes and told me that the
business-class seats had been taken. In the space of 10 minutes,
there had been a sudden surge in demand for Nationwide Airlines'
business-class seats.

Because the airline was so obsessed with rules and would rather
have seen its plane take off with empty seats in business class than
put one passenger on, I had no option but to take a flight nine hours
later.

The point of this tale - it must be one of thousands of similar
incidents - is that this country is going nowhere as long as customer
satisfaction remains so low on business's list of priorities.

By showing that it did not care whether one of its passengers
reached his destination, Nationwide Airlines has joined a list of
airlines which includes Kenyan Airlines, Ethiopian Airlines and
others that offer poor service. Any self-respecting airline would have
gone out of its way to ensure that a passenger got to his
destination. That he did so in business class would have been
irrelevant. Or does Nationwide believe that we get on its planes for
the food and the dulcet tones of its staff?

SA business has generally behaved in a manner that mirrors the
business practices of the apartheid governments, characterised by
arrogance and disdain for the satisfaction of people. Stepping into
the lobby of an SA company or a government department used to be
an ordeal for many of us.

When opportunities were opened up for other airlines to compete
with SA Airways and the like, many of us believed that service would
improve, or at least be more imaginative. Clearly, we were wrong.

The government's Batho Pele (People First) initiative is an indication
that at least it was implementing what former President Nelson
Mandela referred to in his first speech to Parliament as a need to
build a people-centred democracy. So many years since that
glorious day in 1994, it is sad to see that many in business either
have not been listening or believe that it is still business as usual.

If there is anything SA consumers are learning fast, though, it is that
they have a choice, that they can vote with their wallets. That is
certainly what I will be doing.
</font>

[jumbo Mouse]

Just a quickie

JALways ( Hawaiin base for JAL pilots ) is looking for DC10 crew, no rated needed.3000 hrs total, 300 jet over 60 pax.

Live in Hawaii, innitially 3 year contract which always gets renewed!

Phone IASCO of Californai Tel - (650) 259 8400

Let me know on this site if you have joy, I could possible help you further.

Regards
JMouse

[This message has been edited by jumbo Mouse (edited 08 January 2001).]