No airline can provide a service and stay in business with the current travel restrictions applicable in South Africa, says transport economist Joachim Vermooten.
Elmar Conradie, chief executive of FlySafair, agrees. This airline’s operations are currently only around 20% of what they were before the Covid-19 coronavirus outbreak in March. Flights between Johannesburg, Cape Town and Durban resumed last month, but with strict restrictions.
Under the new rules, people may only travel for business purposes and must have supporting documents. These rules are scaring passengers off, said Vermooten.
According to Conradie, FlySafair started off with two flights per day in each direction between Cape Town and OR Tambo Airport in Johannesburg but had to halve this because of weak demand.
The number of passengers on these flights still varies, but they are now at least closer to 80% full and FlySafair is in a position to start additional flights.
The other flights, between Johannesburg’s Lanseria Airport and Cape Town, Lanseria and Durban and Durban and Cape Town are still only half-full.
“At least the trend is upwards,” said Conradie. “It’s difficult because you can’t increase the availability [of seats] incrementally. If you add a flight, then the average occupancy drops,” said Conradie.
FlySafair is “still a long way from making money”, according to Conradie. At least the overall flights were now covering the costs, he said.
Another tough decision FlySafair had to make was whether to start flying again straight away, knowing that it would cost the company a lot of money.
“We decided to resume flights so that we could pay our employees and because aircraft can’t just remain on the ground.”
Currently, the airline’s staff have had their salaries cut in accordance with the contraction of flight operations. These will be increased as things normalise.
Conradie said aircraft also can’t be left on the ground indefinitely. This could lead to various maintenance complications, he said.
In order to overcome the situation, FlySafair took out loans and received payment breaks in respect of aircraft leases, “but it is an undeniable fact that the debt burden is getting bigger”, he said.
Initially, the company estimated there was enough cash to survive for two months without any additional income. Thanks to the relaxation of the lockdown restrictions, money has started trickling in again. “We’ll be okay for some time, but the hole is getting bigger. There will have to be a turning point, so that we begin closing the hole.”
In the meantime, more domestic airports have been allowed to open, among them the Bram Fischer Airport in Bloemfontein, the Kruger-Mpumalanga Airport and the airports in Pietermaritzburg, Port Elizabeth, Richard’s Bay, Skukuza and Upington.
From next week, FlySafair will operate 22 flights per day, compared with 84 before Covid-19 hit.
Tash Webb, the head of Flight Centre’s aviation division, said they were doing what they could to reassure prospective passengers about the sanitising of airliners. In addition to concerns about the virus, pressure on company finances was also constraining the demand for flight bookings.
Vermooten said an airline had to do business freely in order to survive. It was of critical importance that they are able to increase or decrease flights on short notice, in order to adjust to market conditions, something that was not possible under the current circumstances. Holiday and pleasure flights, which are still not permitted at present, are indispensable for the industry’s survival.
Vermooten said it was generally accepted that an aircraft needed to be in the air for eight hours per day in order to be profitable. In addition, the norm was that a flight needs to be at least 80% full. A further challenge was that aircraft with about 180 seats, which domestic airlines previously used on the main routes, are too large for the current demand.
As a result airlines with smaller aircraft, such as Airlink and Cemair, have started flying on these routes and probably do so more effectively in the current market.
Vermooten said that in China, government carried the costs of low occupancy for flights, because it realised that “you have to restore the service before passengers return”. In South Africa, however, government had not given any assistance to the airline industry, he said.