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One of 10 new SA carriers still in air

Dec 14 2012 09:24 James-Brent Styan

Budget airline 1time is no longer in the air. (Pic: www.southafrica.to)

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Cape Town - The number of new airlines starting out has dropped from about 140 to 20 new airlines per year.

The International Air Transport Association (Iata) said this is a positive trend since there has been an over-capacity in the industry that has kept operator margins at unsustainable levels.

In 1995 around 120 new airlines were being launched annually.

This increased to levels of about 140 startups globally per year between 1996 and 2006. About 10 new airlines started flying in South Africa during this period; only one is still in the air.

Iata head economist Brian Pearce said current global economic conditions have had a massive impact on startups.

“One of the positive outcomes of the 2008 financial crisis is that startups have not been able to get funding. The usual high level of new entrant airlines has fallen sharply in the past two to three years,” Pearce told journalists at an industry briefing on Thursday.

He said in the past new airlines were funded mainly by debt, but banks are no longer offering this type of finance.

In South Africa two new airline launches are mooted for 2013. This includes the Fastjet entity in talks with 1time’s liquidators and the new planned airline, Skywise, that is to be started up by the defunct 1time's founders.

For now, neither of these have made any formal announcements.

Fin24 previously reported that the Fastjet plans are probably stillborn, given the legal requirements surrounding airline ownership in South Africa. (In brief, locally operated airlines have to be at least 75% locally owned.)

At present, Skywise planners are still waiting for an air operator's licence.

The SA National Taxi Council's (Santaco's) much-mooted plan to start up its own airline has also not gained any real traction after the fanfare it started off with. It remains to be seen if Santaco Airlines will ever take off officially.

Iata currently represents 243 airlines from around the world.

 - Fin24

Follow James-Brent Styan on Twitter at @jamesstyan.

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1time  |  iata  |  startups  |  airlines



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