SAA deal not unfair - Airlink CEO

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Cape Town - The business model of Airlink as a franchisee of SAA is a clone of many other successful regional feeder franchise relationships around the world, the private airline's CEO Rodger Foster told Fin24 on Sunday.

SAA has a stake of less than 3% in Airlink. The two airlines have a long standing franchise agreement.

He responded to allegations by Tabassum Qadir, former co-chair of grounded low-cost airline Skywise, that the franchise agreement of Airlink and SAA is "absolutely the reason" for the "failure" of state-owned airline SA Express "as well as other airlines".
 
Qadir accuses private airlines like Airlink of "capturing" the SA aviation industry. In her view, these private airlines are conspiring against national airline SAA to take over routes. In her view, this is the reason why new private airlines trying to enter the market, "collapse".
 
Foster, on the other hand, said Airlink's model is not unique. SA Express also operates as an SAA franchisee.

"There is science and rationale behind our model. Airlink is a small component of a large composite airline network system. It has a propensity for interline connectivity with SAA flights and those of other IATA (International Air Transport Association) carriers," said Foster.

"This enables single ticket multi-carrier, multi-sector travel itineraries from anywhere in the world to Airlink’s network of destinations and vice versa. Airlink is not a low-cost carrier."

Foster added that the airline sector is highly competitive.

"New entrants need to have a clear business model and the market needs to be well understood. Ultimately new entrants need to be adequately capitalised as investing in the establishment and development of a successful and sustainable airline business requires significant capital," he explained.

"It is true that there have been multiple airline business failures of late and throughout the history of the airline sector in SA since liberalisation. One such failure was Skywise and interestingly Skywise never competed against Airlink."

Foster said it is unfair to apportion blame on two private carriers Comair and Airlink when the local industry as a whole is unsustainable.

City Press reported on Sunday that Airlink is taking over a number of routes that SAA has dropped and is interested in another route currently allocated to SA Express. The agreement allows Airlink to share SAA’s flight booking platform.

An Airlink competitor, who spoke to City Press on condition of anonymity, claimed SAA is helping Airlink "build a monopoly because they get preferential treatment".

Foster told Fin24 "wild allegations and inaccuracies" are being made regarding Airlink.

"The airline markets intra Africa are in the main an open sky. Most countries have bilateral air services agreements in place that fully support liberalisation as per the Yamoussoukro Decision of 1999, which follows the Yamoussoukro Declaration of 1988," said Foster.

"In almost every case, there are abundant traffic rights and designations available in support of an open sky. As such any airline can apply for traffic rights and designation, but in doing so must meet the criteria for eligibility as set down in the International Air Services Act, in particular the applicant must be fit and able in all operational aspects, as well as financially."   

Foster said Airlink is not taking over routes from SAA as alleged.

"SAA has announced publicly that it is discontinuing certain services which do not make sense for SAA to continue serving as the routes are unsustainably unviable for SAA most probably because traffic is thin on these markets," he said.

"Airlink sees certain of these routes as appropriate for the Airlink business given that we operate smaller regional aircraft more suited to thinner markets."

According to Foster, Airlink has applied to the International Air Services Council for traffic rights on certain markets, and should the applications be successful Airlink will commence operating on these markets, some of which were previously operated by SAA.

"None of the traffic rights that Airlink has applied for are exclusive - any other South African domiciled carrier with the appropriate Class 1 A1 International Air Services License can also apply," he said.

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