Taxi industry wants tyres, fuel . . . planes

2011-07-02 12:43

The South African National Taxi Association Council’s (Santaco) plan to launch a low-cost airline is just the start of the industry’s intention to reinvent itself and tap into the huge economic potential of the air travel industry, says Santaco chief executive Bongani Msimang.

The taxi-operator group also plans to diversify into more sectors of the economy as part of its drive to reposition the taxi industry and increase its participation in the national economy.

Msimang said the taxi industry was exploring ways to negotiate equity transfer deals with companies in sectors that benefit directly from the taxi industry.

“Santaco was formed in 2001 to reposition and professionalise the taxi industry by eradicating violence and bringing stability to public transport,” said Msimang.

“We have achieved these objectives and we are now aiming to bring economic emancipation to our members.”

Msimang’s comments came after the council this week announced plans to launch a low-cost airline, Santaco Express, on September 16. About 95% of taxi firms are members of the council and the industry contributes an estimated R35 billion to the GDP.

Msimang said the taxi industry would be eyeing the petrochemical sector as on average Santaco spent R80 million daily on petrol.

“And we spend a lot of money on automobile spares, we buy four sets of tyres for each vehicle a year,” he said. “Our members will reap huge benefits if the sectors that directly benefit from our industry give us equity.”

He said Santaco did not have plans to take over those industries – taxi owners merely wanted to be shareholders.

The council also plans to roll out a taxi bank that will receive deposits and provide loans.

Santaco Express customers will be ferried from the taxi rank to the airport and then from the airport to a taxi rank at their destination.

“The airline company will start operating between Eastern Cape’s Bhisho Airport and Cape Town International Airport. We will target 200 people a day on single trips,” he said.

Depending on consumer demand, the council will consider gradually extending the same service to other regional airports, which include Gauteng’s Lanseria Airport, Polokwane Airport and airports in KwaZulu-Natal and Mpumalanga.

Santaco has decided to operate at regional airports to sidestep high airport tariffs charged by Airports Company SA at international airports.

Tickets will be sold from kiosks at taxi ranks, at branches of Shoprite, Checkers and Pick n Pay. A one-way ticket will cost between R500 and R600.

Santaco Travel, formed after a merger with travel agency Standby Limited, will handle online bookings.

Msimang said their medium-term goal was to target 5% of the 14 000 commuters who make long-distance journeys by taxi. He said they expected the airline company to start generating profit after three years.

“We will minimise our risk by aiming for commuters who have not flown before.” he said.

He said AirQuarius would provide aeroplanes and run Santaco Express and transfer skills to the staff of the parent council. He said the aim was to hand the company back to the council within two years.

Msimang said the airline would list on the JSE and shares would be sold to taxi owners and commuters.

“Our biggest challenge is to deal with the perception that the taxi industry cannot pull this off,” he said.

“Though those perceptions are real in some instances, we are taking serious steps to improve our customer service and ensure that the taxi industry is regulated better.”

Santaco will also launch an academy within two months, where taxi drivers will be able to receive lessons in customer care and taxi bosses can go through business management courses.

Travel and Tourism economist Dr Nicola Theron said the airline industry profit forecasts were significantly down and fuel would pose a major challenge when Santaco had to determine ticket prices.

“When low-cost carriers 1time Airline and Mango Airlines entered the market there was a price war, but the fares were not sustainable because of the
high fuel prices, which is the highest cost component,” said Theron.

Economist Mike Schussler said the introduction of more competition in the airline industry would benefit consumers by lowering air-ticket prices.
He said in the long run travelling by plane would become more common.

“Worldwide it is becoming a trend that the lower middle class are using airlines to travel to holiday destinations,” said Schussler.

“Countries like China and India have benefited from the lower middle class’s air-travel demand and the industry in both countries has grown a lot.”

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