South Africa Airways: Taking the nation global

As South Africa embraces the concept of globalisation its dependency on air transportation increases evermore. The FIFA 2010 World Cup(TM) had a huge positive effect on tourism while so many businesses in the sub-Sahara region are now internationally-owned or run.

SAA1All of which puts an enormous onus on the nation’s leading airline operator South African Airways (SAA). As the South African national carrier, SAA is a State Owned Enterprise (SOE) reporting in to the Department of Public Enterprises (DPE). In addition to fulfilling the terms as stated in the South African Airways Act No 5 of 2007 (SAA Act), the airline is aligned, for the long-term, to the South African government’s broader objectives.

“We are headquartered at Airways Park in Johannesburg,” states Dileseng Koetle, Head: Communications for SAA; “we are a consolidated airline Group operating in a highly competitive global market, domestically, regionally and internationally. SAA’s core business is the provision of quality passenger airline and cargo transport services” she continues.

Africa’s most awarded airline, operates in three distinct markets for its core services, as Koetle explains; “SAA has the most extensive domestic schedule which is enhanced by its partners South African Express Airways and SA Airlink. Additionally SAA moves 60 per cent of all air cargo in South Africa.

“We are also one of the leading carriers in Africa offering 20 destinations across the continent and our international network creates links to all continents from South Africa through 10 direct routes and 19 code share agreements. SAA accounts for approximately 38 per cent of all international arrivals to South Africa and through our Star Alliance membership, offer 19,700 daily flights serving 1,077 airports in 157 countries.”

In total SAA has 11,658 employees globally and flies 8.5 million passengers per year to 6 continents. It operates 25 flights a day between Johannesburg and Cape Town, to 26 connecting countries. The SAA Group operates a dual-brand airline model (SAA as a premium carrier, and Mango as a low cost carrier), with its subsidiary business specifically focusing on: aircraft maintenance, repair and overhaul (SAA Technical); in flight catering (Air Chefs) and a South African network of franchised travel agencies (SA Travel Centre).

As SAA embraces the 21st Century and the current challenges of a turbulent global economy, it can proudly look back at a rich history; “Since its formation 78 years ago, we have grown to become one of Africa’s most trusted airlines, operating on par with the world’s finest,” Koetle comments.

In 1934 the South African Government acquired Union Airways and the fledgling airline was initially controlled by the South African Railways and Harbours Administration who oversaw 40 members of staff. The acquisition gave birth to the name South African Airways and the following February, 1935, with opportunity abounding in the aviation industry, the carrier acquired South West African Airways, which had since 1932 provided a weekly air-mail service between Windhoek and Kimberley.

It is true to say that the sky really was the limit for the South African aviation industry in the 1930s and by the end of the decade SAA had significantly expanded its fleet and services before all operations were suspended in 1940, due to the Second World War.

The return of Peacetime saw rapid expansion of SAA’s fleet and in November 1945, the airline introduced its first inter-continental service, the 3-day Springbok Service, operated by the Avro York, which was routed Palmietfontein–Nairobi–Khartoum–Cairo–Castel Benito–Hurn Bournemouth.

From 1946, a sharp increase in passengers and cargo carried were experienced, along with the size of SAA’s fleet, with the accompanying increase in staff including the first air hostesses in September 1946.

Palmietfontein Airport became SAA’s hub after taking over from Rand Airport in 1948 and four years later the jet age arrived in South Africa. With the stirrings of political change arriving in 1990, the following decade saw the airline rebuild and 1 June 1990 was an important day for SAA, as South African companies signed a domestic air travel deregulation act.

Flights to New York’s JFK International Airport resumed the following year and South African’s planes were able to fly for the first time over Egypt and Sudan, on 8 September. The ensuing twenty years has seen the airline increase both the number of routes it flies to and the size of its fleet as South Africa became a popular tourist destination.

In April 2006 the airline joined the world’s biggest airline alliance, Star Alliance, becoming the first African airline to do so. The following year an 18-month restructuring programme was launched to improve efficiency through streamlining and improved staff skills and morale levels.

February 2010 saw the arrival of Siza Mzimela as SAA’s first female CEO. Her appointment came after fulfilling a similar role at South African Express.

SAA2Along the way there have been any notable milestones for SA Airways, as Koetle describes: “The launch of the SAA Flight Academy is an initiative, which we believe will not only play a significant role in transforming the airline but also highlights SAA’s commitment to strengthening the aviation industry in South Africa and the rest of the continent.

“Our objective with the Flight Academy is to build a secure and sustainable talent pipeline of appropriately trained pilots while enhancing the best transformation interests of the country. In preparation for the training school for young people, mainly from disadvantaged backgrounds, we have embarked on a global search for a qualified and internationally recognised partner to run the SAA Flight Academy.”

With such a vast global workforce comes the challenge of maintaining uniform high standards of customer service across the business. It is an area that Koetle says the group has struggled with in the past but that the focus has banished such concerns today: “South African Airways strives to offer an outstanding customer experience that highlights our commitment to our customers. We have implemented various customer service initiatives to improve the consistency of a good service offering and believe that our reinforced emphasis on this will ultimately ensure consistency and efficiency in offering service in an unsurpassed, personalised and professional manner.

“We are increasing our focus on customer service in line with our strategy to materially improve service delivery across all touch points, to identify and highlight specific goals and measurable objectives to ensure that SAA’s service requirements are holistically and fully considered.

“Our initiatives include enhancing our service offering at OR Tambo International airport in Johannesburg as a preferred connection hub. As we continue to present and emphasise SAA as the network airline for Africa, it becomes equally important for us to ensure that we are building an excellent service offering for all our connecting passengers.

“Over the coming weeks, every employee of South African Airways, excluding our subsidiaries, will be invited to attend customer service training as part of a customer service training initiative, known as Be the One!, which is the first phase of the airline’s extensive customer service training.”

Environmental concerns have also been met head-on by the group and Koetle says SAA operates a number of green issues: “As we would like to become one of the world’s greenest airlines, we are implementing various voluntary and mandatory energy-saving measures. From April 2012 all non-critical electrical geysers will be permanently switched off at our headquarters, Airways Park, SAA Technical and SAA Cargo buildings. “Operating times of all hot-water urns and hydro-boilers will be limited to office hours in non-24-hour facilities, resulting in substantial reductions of our carbon emissions and will generate significant cost-compression.

“Another green initiative is the introduction of energy-efficient lighting at the majority of SAA’s buildings around ORTIA, including hangars, workshops, SAAT offices, and other offices, boardrooms and common areas in Airways Park, AirChefs and SAA Cargo,” she adds.

The onset of globalization and challenging markets has undoubtedly had a big impact on the airline industry. The issues have not gone unnoticed at SAA, as Koetle points out: “The major trends are the liberalisation of markets (which is accelerating merger and acquisition activity and making it easier to start airlines), principally in and between the EU, US and Asia-Pacific; material shifts in global air traffic, primarily due to the growth of the Middle Eastern airlines; and the commoditisation of short-haul travel (under 4 hours), fuelled by LCC growth and their price stimulation effect. The other major change in recent years has been the high cost of fuel, which has dramatically reduced the historically thin margins for airlines.

“The global airline industry is currently under massive pressure, which has lead to the recent collapse of a few major global airlines; drops in airline’s year-end profits as well as job cuts in some airlines. The current pressure on the industry arises from, amongst others: rising airline fuel prices; inefficiencies within the business; increasing airport and industry taxes; escalating costs such as catering; over-capacity and inefficient aircraft.

“African airlines are facing their own unique challenges: the majority of our revenue is generated in weak currencies while a significant portion of costs are billed in US Dollars and Euros; a premium on fuel prices is charged in many African countries; and the restrictive access to highly-regulated markets. SAA is affected by these challenges but is looking at innovative strategies to overcome these,” Koetle suggests.

And those strategies are paramount to an economy that is feeling the pinch financially but continues to develop South Africa’s economy, with air transportation an important aspect in their efforts, as Koetle acknowledges; “Airlines have a major role in providing national infrastructure, for both passengers and cargo. As a wholly State Owned Company, a major strategic objective for SAA is to support South African developmental state policy objectives and this includes providing infrastructure to facilitate trade and economic efficiency and growth.”

Despite uncertain times within the aerospace industry, Koetle says that SAA is very much focusing its training efforts and investment on the future: “We have a long and proud history of recruiting and training within various specialized skills. The airline is creating a common portal for all training within SAA, focusing on training designated groups, e.g. learnerships, graduate programmes and cadet pilot training schemes and ensuring alignment with the spend target of 3% of total payroll spend. The airline will continue to strengthen its training programmes over the long-term.

“The SAA Technical Apprenticeship Programme already has 105 apprentices in training and we offer apprenticeships in a range of specialised aircraft engineering disciplines, including: mechanical engineers, electronics engineers, in-flight entertainment specialists, electroplating, composites and aircraft spray painters” she says.

The SAA Technical apprentice programme is increasingly focusing on supporting SAA’s employment equity objectives to add diversity and skills in particular for previously disadvantaged individuals. This initiative and the organisation’s Cadet Pilot Training scheme play a huge role in transformation and SAA’s B-BBEE status is now at Level 5.

SAA recently took delivery of its first two A320 aircraft and a further twenty planes are due to arrive in the next five years as the group replaces its ageing B737-800 aircraft with more fuel-efficient craft.

The upgrade fits well with SAA’s future and Koetle sees a busy few years ahead: “Growth and development is one of the key pillars of our strategy. We continue to focus on regional market growth, either through organic growth and increased capacity, or by entering new markets, which is in line with our African Expansion Programme.

“Expanding into new destinations and more frequency throughout Africa is a keystone of our growth programme. This allows us to conveniently connect more of the world to more of Africa through our state-of-the-art hub in Johannesburg.

“Recently we added destinations within the region to Bujumbura (Burundi) and onwards to Kigali (Rwanda); Ndola (Zambia) and Ponte Noire (Congo) which was extended to Cotonou (Benin) from 17 May. Our new 3 weekly services to Beijing (launched in February this year, 2012) have also proved to be very successful.”

All of which will stand both the airline and the nation in good stead as the economy continues to develop.