SAA to Close Cape Town – London in Network Restructuring

South African Airways (SAA) is to close its Cape Town – London Heathrow route as part of its revised business strategy to increase operational efficiency by utilising its fleet of aircraft more effectively and using capacity on the routes showing the most positive returns. The last service is expected to operate on August 16, 2012 after which time passengers will have to connect at OR Tambo International Airport in Johannesburg to fly between the two destinations.

Star Alliance member SAA launched flights on the Cape Town – London Heathrow route in November 1984 initially using its Boeing 747SPs on a weekly service. Although it suspended the route for the Northern Summer in 1987 it resumed year-round operations later that year, introducing a second weekly frequency in June 1989. In March 1991 the 747SPs were replaced by larger 747 variants significantly boosting capacity on the route and frequencies grew until a daily operation was launched in April 1999.

SAA was initially the only carrier offering non-stop flights from Cape Town to London but it now faces direct competition from British Airways (BA) and Virgin Atlantic Airways. BA entered the market in October 1992 and now offers at least a daily service which increases to double daily during the peak Northern Winter months. Meanwhile, Virgin Atlantic commenced flights on the route in December 1999, initially on a year-round basis, but since 2002 has just been offering a winter schedule. Between March and May 2000, African Star Airways also served the London market from Cape Town, albeit serving Gatwick Airport in the UK Capital.

In the table below we highlight the changing O&D demand on the Cape Town – London Heathrow route during the past five years. In 2011, around 350,000 O&D passengers travelled on the route, down 8.7 per cent on the previous year and down 17.8 per cent on 2006. The declining passenger demand is only balanced by increasing fares, although this is unlikely to be to the benefit of yields and more likely to simply cover increasing costs.

During the period highlighted in the table SAA has seen its own share of traffic on the route decline from 34 per cent in 2006 to 24 per cent in 2010 and 2011. The carrier’s average one-way air fares increased by 18.2 per cent during this timescale, although it is worth highlighting that they declined by around a fifth in 2009 when yields took a battering.

According to a senior SAA executive, declining passenger numbers and increasing taxes in the UK where among the reasons for cancelling the route. To cater for the additional traffic now expected to fly on the Johannesburg – London Heathrow route, SAA is to introduce larger aircraft boosting capacity by around 13 per cent on its two daily services.

"South Africa is among the top five fastest-declining visitor markets to the UK, statistics made available by VisitBritain indicate. With declining numbers of passengers using the Cape Town-London flight for onward connections in Europe or North America, the route does not serve any of SAA’s network objectives," Theunis Potgieter, General Manager Commercial, SAA, told local South African reporters. "A thorough analysis of the route made it clear that we could use our aircraft more profitably," he added.

The closure of the Cape Town – London Heathrow service will free up capacity to enable SAA to expand its schedules into some of its growing markets. Its flights to Accra, Ghana; Mumbai, India and Perth, Australia will all see more capacity, while a new link to Abidjan in Côte d'Ivoire is expected to be launched. SAA has already uploaded a sixth weekly frequency into its schedule on the route between Johannesburg and Accra from August 16, 2012; while a fifth and sixth weekly rotation on the Johannesburg – Mumbai link will be added on June 16, 2012 and August 16, 2012 respectively.