LETTER: Transit route gives Ethiopian Airlines advantage
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There appears to be one major error in John Fairwell’s letter on SAA (SAA plays into Ethiopian Airlines’ hands (, September 6). He says Ethiopian Airlines “operates in a regulated market in the absence of any competition, similar to the SA market before 1991".
In fact, Ethiopian Airlines only operates to a small extent in a regulated market, mainly within Ethiopia. Its principal business is transit passengers, similar to the likes of Emirates and Turkish Airlines, and it has built a business model similar to that of these airlines. It helps, of course, that large organisations such as the AU Commission and the UN Economic Commission for Africa are headquartered in Addis Ababa.
Rather than operating in a regulated market, it is location that made Ethiopian Airlines prosper. SA, on the other hand, will never serve as a major international transit hub — why would anyone travel all the way to Johannesburg and then backtrack to their actual destination?
When Ethiopian Airlines introduced flights between Addis Ababa and Johannesburg the route was shared between it and SAA, but SAA soon dropped that route (even before the end of the half-yearly time schedule). Ethiopian originally had four weekly flights on single-aisle planes, then daily flights, and in recent years three daily flights, one using a large-plan Boeing 787 or Airbus 350. And those flights were full, with 80%-90% being transit passengers.
Another reason for the demise of SAA, which hardly anyone talks about, perhaps out of misdirected nationalism, was its appalling service. It was the only airline with five business class seats in a row on single-aisle aeroplanes, including on longer flights into Africa.
I agree that the department of public enterprises appears hell-bent on keeping SAA going, no matter the costs. Why on earth would an investor want to pay retrenchment packages, cover ticket refunds, and so on? Many airlines were in similar situations and they either disappeared or were taken over by other airlines — but only after bankruptcies and without taking over debt, and at most paying for assets such as landing rights.
Richard Kousek, Via e-mail
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In fact, Ethiopian Airlines only operates to a small extent in a regulated market, mainly within Ethiopia. Its principal business is transit passengers, similar to the likes of Emirates and Turkish Airlines, and it has built a business model similar to that of these airlines. It helps, of course, that large organisations such as the AU Commission and the UN Economic Commission for Africa are headquartered in Addis Ababa.
Rather than operating in a regulated market, it is location that made Ethiopian Airlines prosper. SA, on the other hand, will never serve as a major international transit hub — why would anyone travel all the way to Johannesburg and then backtrack to their actual destination?
When Ethiopian Airlines introduced flights between Addis Ababa and Johannesburg the route was shared between it and SAA, but SAA soon dropped that route (even before the end of the half-yearly time schedule). Ethiopian originally had four weekly flights on single-aisle planes, then daily flights, and in recent years three daily flights, one using a large-plan Boeing 787 or Airbus 350. And those flights were full, with 80%-90% being transit passengers.
Another reason for the demise of SAA, which hardly anyone talks about, perhaps out of misdirected nationalism, was its appalling service. It was the only airline with five business class seats in a row on single-aisle aeroplanes, including on longer flights into Africa.
I agree that the department of public enterprises appears hell-bent on keeping SAA going, no matter the costs. Why on earth would an investor want to pay retrenchment packages, cover ticket refunds, and so on? Many airlines were in similar situations and they either disappeared or were taken over by other airlines — but only after bankruptcies and without taking over debt, and at most paying for assets such as landing rights.
Richard Kousek, Via e-mail
JOIN THE DISCUSSION: Send us an e-mail with your comments. Letters of more than 300 words will be edited for length. Send your letter by e-mail to letters@businesslive.co.za (mailto:letters@businesslive.co.za). Anonymous correspondence will not be published. Writers should include a daytime telephone number.