By John W. McCurry
South African Airways Cargo is upgrading its freighter fleet as it looks for ways to stay competitive in a mature South African cargo market. The carrier recently took delivery of a Boeing 737-400 and a Boeing 737-300 freighter. The aircraft replace the B737 freighters that SAA Cargo took out of service.
“The key advantages are firstly that the newer aircraft are operationally more reliable and thus enable us to offer customers more peace of mind due to enhanced reliability,” Tleli Makhetha, SAA Cargo’s general manager, tells Air Cargo World. “Secondly, the new aircraft offer a higher payload as well as longer flying time. This has helped us to increase our capacity into regional markets.”
Makhetha says SAA Cargo is focusing on the growth of value-added products such as courier, express and valuable cargo. The company is also continually enhancing its service offering in the movement of automotive components out of South Africa and perishables out of regional markets. He says the South African domestic cargo market is mature, and the company is not seeing any substantial growth, but the regional African market is on a growth trajectory and offers more opportunities.
“Most African markets remain predominantly import-driven, and this is likely to be the case for a long while,” Makhetha says. “We are, however, seeing an increase in agroindustry-driven exports. As some of the countries make concerted efforts to diversifying their economies, we expect to see more exports relating to petro, chemical and tourism-related industries. This growth has however prompted more competition with international operators increasing their African operations.”
SAA Cargo also operates a low-cost carrier called Mango Airlines. Mango aircraft carry cargo, and the airline has outsourced their cargo operations to SAA Cargo, Makhetha says. Due to the nature of its network, Mango’s cargo operations are entirely in the SAA domestic market and are driven by the same considerations that apply to SAA Cargo’s domestic operations, he says.
SAA Cargo’s biggest challenges are similar to other carriers: a slow economy and declining yields.
“Currently, the greatest challenge is the sluggishness of the global economic recovery,” Makhetha says. “The European economic crisis and the resultant slowdown of exports from the Far East, in particular, has left the air cargo carrier with massive overcapacity. The second greatest challenge is the continuing decline in yields. These continue to be on a long-term downward trajectory.”
The trend toward low-cost carriers adding cargo to their service mix is continuing, this time in Africa. Fastjet, owned by UK-based Fastjet PLC, signed an agreement with one of Africa’s largest cargo operators, BidAir, to carry cargo on its fleet of Airbus A319s. The results of a recent feasibility study concluded that Fastjet’s operation has sufficient capacity to accommodate the carrying of cargo on its Tanzanian routes. Management expect this to provide an additional revenue stream for the airline without compromising its core business.
“We’re cutting our teeth on dry goods, but we do expect to go beyond that,” Richard Bodin, Fastjet’s chief commercial officer, says. “We’re unlikely to move into dangerous goods at this stage because of added complications.”
Bodin says there is no timetable for expanding its cargo offering.
“Our colleagues at Bidair have indicated there is a strong demand for other products,” Bodin says. “What we are trying to do is balance it with our passenger requirements and take it relatively slowly.”
Bodin describes the deal with BidAir as the “classic” outsourcing arrangement.
“We’ve given them the list of products we are able and happy to carry,” Bodin says. “It’s very much a turnkey solution.”
Foodstuffs will likely be the first cargo expansion, Bodin says, adding that food and flower producers have approached Fastjet.
“When we started the Fastjet project, we were all from a Euro carrier background,” Bodin says. “Cargo was never anything we expected to bring on board, but the very hard rates in Africa and our ability to perform passenger services in an on-time manner has led us along this path earlier than expected perhaps.”