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Cape Town - Low cost airline Mango on Tuesday posted its best December holiday season since inception.
The airline, now in its seventh year, operated a record number of flights and achieved average load factors of between 85% and 90%.
The liquidation of 1time in November last year could be a significant contributor to the success Mango enjoyed over the December holiday season.
While Mango over achieved against its initial anticipated increase of 7% in volume over the December period, chief executive Nico Bezuidenhout said that it is not a reflection of a robust market but rather the consequence of travellers opting for the airline’s value proposition, migrating from competing brands, as well as a slight impact felt due to the exit of a competitor (1time).
Mango last year also introduced, among others, two new routes from Port Elizabeth to Johannesburg and Cape Town.
Bezuidenhout said Mango exceeded all expectations after a year where performance continued to be impacted by negative market sentiment and global and domestic economic woes.
Mango was off to a flying start for 2013, with January revenues already up by almost 30%, according to Bezuidenhout.
However, overall growth forecasts are tempered by global uncertainty. In its first look at 2013, international industry trade group IATA predicted that global industry profits would rise to $7.5bn given current economic forecasts of marginally better growth in 2013.
The trade group that represents over 230 airlines worldwide said that margins will improve to just over 1% in the 2013 calendar fiscal. In October 2012 the IMF forecast South African economic growth for 2013 at 3.4%, down from 4% in 2011.
Bezuidenhout said he believes that local aviation growth will still trail slightly behind global forecasts, with growth in the sector anticipated to be a percentile lower than domestic GDP growth, as opposed to leading the curve.
Bezuidenhout cautioned that the possible entry of two new domestic carriers this year will potentially dilute and contract the market. “There will be a return to a situation where capacity will well exceed demand again, as in early 2012, and something’s going to have to give.”
He believes that real growth for South African airlines, in particular low cost carriers, lies in seizing the Continental Opportunity.
Mango is presently pursuing several new routes, with a particular focus on the east-African seaboard.
Bezuidenhout expects Mango’s competitors to also seek out the Continental Opportunity with hub development further north, too. “It would make sense for South African airline brands to expand and grow hubs to service destinations both east, west and further north. As we remain at the furthest tip of the continent, it will become essential to establish base-footprints in other territories.”
Referring to ticket prizes, Bezuidenhout said fares will remain stable and linked to inflation during 2013.
"Competition will remain fierce between airlines and consequently yields will remain under pressure with consumers deriving pricing benefit,” he said.
Bezuidenhout expects overall domestic passenger volumes to rise by 2% to 3% in 2013.
