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Johannesburg - Never a dull moment in the airline industry - now Airlink is taking the fight to SA Express by flying their routes.
Airlink has loaded up flights from Johannesburg to Richards Bay and from Johannesburg to Kimberley on the GDS booking system.
Up to now SA Express has been enjoying a monopoly on these routes.
Passengers flying these previously quiet routes will be rejoicing, but this is sure to hurt SA Express financially.
They have up to now been enjoying monopoly profits on the routes and will from November have to compete with Airlink to win passengers over.
The skirmish started at the end of September, when SA Express announced they were launching flights on Airlink monopoly routes, namely from Cape Town to George, Johannesburg to Nelspruit and Johannesburg to Pietermaritzburg.
A little price war broke out, particularly on the Cape Town to George route, where prices have dropped below economically sustainable levels.
Airlink expressed their unhappiness with SA Express flying their routes.
“While Airlink welcomes competition on any of its routes on a fair and equal basis, we feel strongly about being taken on by a technically insolvent state owned airline using the taxpayer’s funds to compete with us unequally," Airlink said.
"Airlink is in its own right a taxpayer, contributing more than R400m in taxes (VAT, Paye and corporate tax) annually to the fiscus, and it is ironic that the state sees it fit to use taxpayer’s funds to compete with its bona fide taxpayers.”
SA Express reported an operating loss of R25m in the previous financial year, which they are hoping to turn around. These price wars won't help.
Airlink is one of two private airlines operating scheduled flights on the major commercial routes in South Africa (the other is Comair).
An interesting aside is that SAA is a minority shareholder (3%) of Airlink.
Where all this ends is anybody’s guess – somebody’s got to burn out at some stage.
* Rob Baker is co-owner of South Africa Travel Online. Follow him on twitter on @southafricaTO.
Airlink has loaded up flights from Johannesburg to Richards Bay and from Johannesburg to Kimberley on the GDS booking system.
Up to now SA Express has been enjoying a monopoly on these routes.
Passengers flying these previously quiet routes will be rejoicing, but this is sure to hurt SA Express financially.
They have up to now been enjoying monopoly profits on the routes and will from November have to compete with Airlink to win passengers over.
The skirmish started at the end of September, when SA Express announced they were launching flights on Airlink monopoly routes, namely from Cape Town to George, Johannesburg to Nelspruit and Johannesburg to Pietermaritzburg.
A little price war broke out, particularly on the Cape Town to George route, where prices have dropped below economically sustainable levels.
Airlink expressed their unhappiness with SA Express flying their routes.
“While Airlink welcomes competition on any of its routes on a fair and equal basis, we feel strongly about being taken on by a technically insolvent state owned airline using the taxpayer’s funds to compete with us unequally," Airlink said.
"Airlink is in its own right a taxpayer, contributing more than R400m in taxes (VAT, Paye and corporate tax) annually to the fiscus, and it is ironic that the state sees it fit to use taxpayer’s funds to compete with its bona fide taxpayers.”
SA Express reported an operating loss of R25m in the previous financial year, which they are hoping to turn around. These price wars won't help.
Airlink is one of two private airlines operating scheduled flights on the major commercial routes in South Africa (the other is Comair).
An interesting aside is that SAA is a minority shareholder (3%) of Airlink.
Where all this ends is anybody’s guess – somebody’s got to burn out at some stage.
* Rob Baker is co-owner of South Africa Travel Online. Follow him on twitter on @southafricaTO.
