Those who think 2014 is going to be a quiet year are sorely mistaken - it is going to be far more interesting than 2013; and that's not to say that last year had no action: we had court battles between Comair and flySafair, Mango and Kulula filling up the gap left by 1time on the PE and East London routes, and SA Airlink and SA Express slugging it out on the secondary routes.
Looking into my shadowy chrystal ball, I see a number of things happening in 2014 in South Africa for flights, cruises and car hire.
Let's start with some good news: flight price inflation in South Africa will be lower than what was experienced in 2012 (34%) and 2013 (20%). This is tied up to my prediction that there'll be 2 new airlines in South Africa in 2014. If new airlines start up the increased competition will place downward pressure on airline prices. The sooner the new airlines get into the system, the higher the likelihood that flight price inflation will be low.
The bad news for those with sea legs, is that cruise prices are going to be far higher, and there'll be a severe reduction in capacity in the cruise industry. With MSC Cruises only sending one ship in the 2014/2015 cruise season (the MSC Opera), the reduction in capacity is likely to cause cruise fares to spike.
Car rental prices are also going to increase, and by more than the overall rate of consumer price inflation. Sorry! This is tied to the expected rise in new car prices as a result of the depreciation of the rand. Because the cost base of car rental companies is going up, the car rental companies will want to protect their margins, so it's likely that car hire prices increase as well.
PREDICTION : By the end of 2014 we'll have 2 new airlines in our skies. This is most likely to be Skywise Airline and FlySafair. Comair will again try to prevent FlySafair from flying, but this time they'll lose the court battle (FlySafair have restructured and their house is in order now). There is the possibility of Pak Africa Aviation resuscitating 1time, or fastjet starting operations (they want in, but are struggling to get around our anti-competitive legislation which requires 75% South African ownership to operate in SA). VERDICT : Mostly right - Phakalane Airways launched on the 22nd February 2014, Fly Cemair has launched flights from Johannesburg to Plettenberg Bay as well as Cape Town to Plettenberg Bay, Blu Crane has launched flights from Port Elizabeth to George, and Fly 88 has launched flights from Lanseria to the Kruger (I say mostly right, as strictly speaking Fly Cemair, Fly 88 and Blu Crane are not new airliens, rather airliens making the step in the major league). FlySafair were regranted their licence by the Air Services Licencing Council in April 2014.
Within 24 months of the 2 new airlines being up and running, one airline will go into liquidation. We've seen before that we don't have a market for 4 low cost carriers in South Africa, and we'll see it again. Please folks, pay for flights with your credit cards to avoid being a victim of this.
International tourism, in the form of those flying to South Africa, will continue to grow. The depreciation of the Rand is making it dirt cheap to travel to South Africa, and foreigners are slowly cottoning on to this, and travelling to SA. Travellers from Europe this summer have been amazed at the cheapness of beer, food and all the other good stuff, and will tell their friends when they get back. International arrivals at OR Tambo International Airport were 5% up in November 2013 against November 2012, and I expect there to also be an increase over the next year.
PREDICTION : Comair, who run the Kulula and British Airways brands in South Africa, is going to report large profits for its financial year ending 30 June 2014. This will also be a watershed year for Comair, after which profits will be hit by the new airlines. The timing of the arrival of Comair's 4 new B737s in 2015 may be unfortunate (for the airline, will be great for consumers!), if it coincides with a period of heightened competition. VERDICT : Half-way there, as Comair have indicated a large increase in earnings over the 6 months to 31 December 2013 (compared to 6 months to 31 Dec 2012).
Mango Airlines will start a new flight route in 2014, probably a regional route into an African country outside of South Africa. I'm guessing perha
Kulula Airlines wont start a new flight route in 2014, unless it's the Cape Town to East London flight route, which is the least served of the major flight routes in South Africa (the busiest route which only has one airline flying it, SA Express). They'll have to reduce capacity on another route, if they want to start a new route, as their new planes are only due for delivery in 2015.
Kulula will be involved in a controversial advertising campaign.
PREDICTION : There will be an air crash somewhere in the world. Sorry, but the statistics say that on average this will happen :( I don't want to jinx it, but let's just hope it's not South Africa's turn. VERDICT : True. On 3 Feb 2014 a light aircraft crashed at Lanseria Airport, with all 3 souls on boards dying. On 8 March 2014 Malaysia Airlines flight MH370 went missing.
There will also be an accident involving a coach bus in South Africa.
PREDICTION: A politician will be involved in a a travel-related scandal. VERDICT: True. On 14 January Bathabile Dlamini, Social Development Minister, was found to have spent R15k on a day's car rental with an Audi Q3.
PREDICTION: The state-owned carriers, South African Airways and SA Express are going to report losses again (however, SAA will report an increase in passenger volumes). SA Express and SA Airlink will both suffer financially from the price war they started towards the end of 2013 (e.g. on Cape Town to George and Johannesburg to Bloemfontein flight routes). VERDICT: Half true so far. SAA have reported a R990m loss in its financial year from 1 April 2012 to 31 March 2013.
SAA will continue racking up codeshare agreements.
South African Airways will win an award for being the best airline in Africa. [Update: This predition has surprised a lot of people, so I'll back it up. In 2013 SAA was voted inter alia (1) Best Airline in Africa for the 10th year in a row by "Premier Traveler Magazine", "Business Traveler Magazine" and "Global Traveler Magazine", & (2) Skytrax's "Best Airline in Africa" award.
The option introduced in December to allow SAA Voyager miles to pay for Mango Airlines flights, will be popular & successful.
SA Express/ SA Airlink will stop flying some of their loss-making routes.
Somebody will give birth on a plane somewhere in the world. I'll stick my neck out, and bet that it will be a female too!
In social media; airlines and travel organisations which have previously been fixated on Facebook, will give increased attention to establishing a presence on Google/+.
In the period from the 25th December 2014 to the 1st January 2015 we'll run out of minivan vehicles for hire. OK, it doesn't take a genius to predict this one, but I thought I'd let you know anyway so that you hire yours well in advance! There's huge demand for Toyota Quantums, VW Kombi's and Hyundai H1's in this period; particularly in the coastal cities. Car rental companies don't want to increase their fleets for demand that only lasts 6 days. Maybe it's time that we started taking seriously online schemes for individuals to rent out their vehicles, so that this period is properly covered.
Mango & Kulula are going to enter a codeshare agreement, and Kulula will change their colours from green to orange. Ok, I'm kidding, that's never going to happen! (told you there were only 22 predictions!)
That's my 2c and of course I'd love to hear your perspective too - email to firstname.lastname@example.org
Author : Rob Baker
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