AILING national airline, Air Zimbabwe (AirZim) is feeling the heat from competition, including from low cost operators whose pricing model has resonated well with customers.
Passengers are migrating to low cost airlines with modern aircraft as more budget carriers give AirZim a run for its money.
One of the budget airlines to enter Zimbabwe’s domestic routes with a bang was fastjet Zimbabwe, which recently upped the stakes on the lucrative Harare to Johannesburg route on which three other airlines are plying.
The other airlines are South African Airways (SAA), British Airways (BA), and another low-cost operator, flyafrica.com.
SAA, which is surviving on government bailouts, is currently enjoying the lions’ share of that route, controlling nearly 30 percent of the market, according to the Civil Aviation Authority of Zimbabwe (CAAZ).
AirZim acting chief executive, Edmund Makona, conceded this week that the entry of low-cost operators had broken the monopoly which the national carrier had enjoyed for years.
“The discernible impact for us has been on the passenger numbers, as Air Zimbabwe was operating as a monopoly for years. What it means is that the low-cost operators are also getting a share of the market and are competing with the traditional operators such as SAA, BA and ourselves who have been on these routes,” Makona told the Financial Gazette.
“So we now have many other players eating into the same market. The Harare to Johannesburg route is the cash cow for most airlines and that is why the competitors are always trying to increase flight frequencies on that route,” he added.
Increased competition has seen fares of flights on the Harare to Johannesburg route steadily fall, as airlines attempt to outflank each other.
Currently, AirZim is running a promotion in which it offers a return flight from Harare to Johannesburg for US$240 from the standard fare of US$449.
BA is offering US$398 for the same flight.
Makona said despite the entry of low-cost operators such as fastjet Zimbabwe, the national carrier remained unshaken as it continues to draw its strength from the experience it has gained in the field as well as its safety record.
“The aviation industry, the world over, is not driven by short-term gains, but by sustainability.
Aviation is all about consistency, how long can they be sustainable on a low cost model? They (fastjet) may make an entry into the market, but for how long can they stay in there?” Makona rhetorically asked.
After its debut Harare-Johannesburg flight fastjet chief commercial officer, Richard Bodin, said: “The fact is that competition is good for consumers. It brings choice and brings air fares down. Our objective is to make air travel between Zimbabwe and South Africa more accessible than ever before.”
Introductory fares on the Harare to Johannesburg route were US$80, excluding taxes (US$50 departing from Zimbabwe or US$35 departing from South Africa).
The success of the low-cost model in Zimbabwe came under scrutiny last year, after low-cost airline, flyafrica.com’s operations briefly seemed to lose steam last November.
Boardroom squabbles between its local and foreign shareholders led to CAAZ suspending its operating licence. The resultant flight cancellations also tarnished its standing in the court of public opinion.
But AirZim’s own woes have been ongoing for much longer as it battles with debts of nearly US$300 million, a bloated workforce and obsolete planes.
Government last year took up AirZim’s debt, but its intervention has, however, not been enough to turnaround the fortunes of the loss-making parastatal.
Government has continually resisted pressure to privatise the airline, on the grounds that it was “a strategic national asset” and therefore should never be handed over to private players.
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