SAA crashes Cape tourism in cancelling direct Cape Town-London route!

The SAA announcement by its General Manager Theunis Potgieter on Tuesday that it plans to cancel the direct flights between Cape Town and London as of 16 August has been greeted with shock by the Cape tourism industry, and could not have come at a worse time, the industry suffering what could be another tourism crisis this winter. It appears that the tourism authorities did not receive any prior warning about SAA’s plan to cancel a route it introduced 20 years ago. At the SAA breakfast at Indaba last month the airline already announced that it ‘was hurting in the current global recession’, and that it had requested a R6 billion ‘government injection’!  The psychological damage of SAA’s decision probably is worse than its actual effect, in signalling that the country’s airline does not take Cape Town seriously as the country’s leading tourism destination.

Tourists and businesspersons travelling between Cape Town and London from 16 August will have to do so via Johannesburg, at no extra cost. Tickets already booked will be refunded, if required.  The change will allow SAA to expand its flights to and from Perth, Mumbai, Accra, and Abidjan, probably all flying to Johannesburg only. SAA has assured the industry that it will continue marketing Cape Town as a destination. The motivation for the cancellation of the service was said to be the reduced size by 24% of the demand for flights between South Africa and the UK in the past three years, largely caused by the increased airport departure tax and the £52 UK visa fee, reports Travelmole.  News24 added that air traffic control fees have also doubled. Of concern is SAA’s feedback that ‘South Africa is among the top five fastest declining visitor markets to the UK’, according to Visit Britain statistics.  SAA’s justification appears South African demand driven, and does not reflect the radical decline in the demand for the route from UK tourists, which has been evident in the past summer season.

Only British Airways operates direct flights between the two cities all year round. Virgin services the route between October and March. Emirates has good value flights to Dubai, which has become a hub connecting travelers to other hubs such as Heathrow. SAA is planning to increase its capacity by 13% through the use of larger aircraft on its reduced twice-daily (from three times a day) London-Johannesburg route, and has justified its decision on its ‘long-term growth and business optimisation strategy’, reports News24.

Reacting to the news, Cape Town Tourism issued a joint statement yesterday. Its CEO Mariette du Toit-Helmbold’s waffled and garbled response was disappointing and was not aggressive in challenging SAA on a decision it has made on a purely financial basis, without recognising that Cape Town is the most important drawcard for tourists in South Africa, something which Mrs Helmbold should be countering on behalf of its Cape Town tourism constituency: “This is disappointing news for Cape Town’s tourism industry and we fear it could affect tourism arrivals from the UK and the rest of Europe negatively… Whilst SAA’s growth strategy’s emphasis on expansion of routes into Africa and new markets like South America and Australasia is encouraging, the issue of direct air access to Cape Town is again highlighted. Airlines must make economic sense. When a flight is cancelled this is the reason. Decreased business travel, as a result of troubled economies, continues to plague key source markets. The business traveler is a major contributor to covering flight expenses, which points to a need to work hard on forging stronger business ties in addition to the leisure market.”  ACSA’s Cape Town Manager of Service Standards Ian Bartes is the Chairman of Cape Town Tourism, and one could expect that Cape Town International will lobby SAA to consider reversing its decision.

Surprisingly, the media release also contained a statement by Wesgro CEO Nils Flaatten, now responsible for tourism in the Western Cape, in having taking over the operation of the ex-Cape Town Routes Unlimited.  His comment was far more practical and business-orientated, and one hopes that it will lead to action, especially given that ACSA’s Cape Town International GM Deon Cloete now is Chairman of the still-existent Board of Cape Town Routes Unlimited: “Our research has indicated that the London-Cape Town route still holds strong economic value for the Western Cape and neighbouring Eastern Cape. International airlines identified this and are increasing their capacity during peak season. Many business and leisure travelers from the United States are using London as a connecting flight into Cape Town and we are at risk of losing these visitors, as the traveling time has been extended even further. A national debate on airlift strategy is urgently required to discuss direct flights into Cape Town International Airport as well as the other regional airports. Poor economic conditions in the global north and escalating fuel prices were making it difficult for many international airlines to remain competitive. These market conditions would also have an impact on the pricing of domestic flights and the ability to move tourists throughout South Africa.”

Once again City of Cape Town Councillor Grant Pascoe, Mayoral Committee member for Tourism, Events and Marketing, has demonstrated how out of touch he is with the tourism industry, which has just experienced one of its worst May months since 2007 and thereby proving that Seasonality is getting worse, in his reaction to the SAA announcement in Cape Town Tourism’s media release: “In order to sustain tourism in Cape Town, we need to counter seasonality with year-round inbound tourism. It is vital that flights to Cape Town remain consistent throughout the year. The only way we can secure more direct flights to Cape Town is by stimulating both business and leisure tourism demand for Cape Town. This will translate in more visitors and ultimately more jobs for the sector, year round.  Perception does not shift overnight – and it needs proof – the industry must stand together to tackle our tourism weaknesses and grow a more complex offering of product to multiple markets. Leisure and business visitors need to see that Cape Town is a 365 destination for a thousand good and different reasons.”

Provincial Minister of Tourism Alan Winde also expressed his concern to Southern African Tourism Update about SAA’s decision, and probably is the only tourism player able to come up with a viable solution to this tourism dilemma, affecting not only Cape Town but the whole Western Cape, describing it as sad and disappointing for the whole of the province’s economy, saying direct airlift was important for business, tourism and airfreight. ‘I have no doubt it will have a negative impact,’ he said. ‘We will push forward with our airlift strategy to encourage other airlines to fly here.’ He said the Cape must review its long-haul competitiveness and create the right economic conditions for airlines to fly there”.

One has seen in the past that Cape Town Tourism does not have the clout to address something as substantial as this tourism issue, despite its Board Chairman’s job at ACSA, and we have no confidence that this tourism body will do anything about turning around SAA’s decision, or in devising a campaign to ensure that Cape Town does not lose any more precious UK visitors, which already are in short supply.

POSTSCRIPT 7/6SAA agreed yesterday to pay a R18,8 million penalty to the Competitions Commission for fixing fuel rates and other surcharges for cargo, reports Southern African Tourism Update today! This probably is what they need the cost-cutting Cape Town-London saving for!

POSTSCRIPT 8/6: Columnist Tony Weaver wrote in the Cape Times today that it is clear that the tourism industry was not consulted by SAA in cancelling the Cape Town – London route as of 15 August. He wonders if it is a ‘punishment’ of the Western Cape to be DA-party led, seeking a reason greater than just cost-cutting for this drastic action by SAA.  A writer to the Letters page today highlighted that SAA’s decision is ‘bottom-line’ based, and not considerate of the ‘bottoms’ of its customers, many of whom have already migrated to other airlines serving the route, which may be the reason for the decline in demand on this route! The newspaper also provides response from some tourism players to the news:

*  Wesgro CEO Nils Flaatten told the FEDHASA Cape AGM yesterday that they have “secured a ’round-table’ discussion with South African Airways..”, given that their ‘research indicated that the London-Cape Town route still holds ‘strong economic value for the Western Cape and its neighbouring Eastern Cape'”. The increased travelling time for long-haul flights in having to travel via Johannesburg could adversely affect tourism to Cape Town, he said.

*   Surprising to read is that City of Cape Town Councillor Grant Pascoe has written to SAA Chairman Cheryl Carolus and CEO Siza Mzimela, expressing his ‘concern and disappointment‘ on behalf of the tourism and conference industries, importers and exporters, and investors, given that the tourism industry adds R14,6 billion to the GDP of the city annually, and employs 300000 staff.

*   Provincial Tourism Minister Alan Winde sounded more upbeat, saying that other airlines servicing this route ‘will pick up the slack‘.

*   Mossel Bay Tourism said that the ‘province seems to be under-supplied with direct flights’, and that the quickest way in which foreign tourism arrivals can increase is to ‘land larger numbers at Cape Town International‘.  The ‘hinterland‘ has suffered greatly since the soccer World Cup, with an over-supply of accommodation in Cape Town, and related offers,  making it attractive to stay in the city for longer, and to do day trips into other parts of the Western Cape, instead of staying over in towns and villages in the province, it added.

POSTSCRIPT 8/6:  On Twitter negative Tweets about SAA’s decision met with strong resistance from @JamesStyan, a journalist for Beeld and Die Burger today.  We met for coffee this afternoon.  He had met with SAA on Wednesday afternoon, after their announcement of the cancellation of the Cape Town-London route, and was told verbally, not documented in their media statement, that should the economics improve, that the route could be reinstated.  He is adamant that this decision is based on economic considerations and SAA’s hub strategy, making Johannesburg its hub from/to which all its flights connect.  He also reminded me that other airlines have cut their Cape Town routes since the World Cup too.

POSTSCRIPT 13/6: The band Roxette performed in venues around the country last week, and flew out of OR Thambo airport to their next destination. On their Facebook page they wrote: ‘Just spent 90 minutes at one of the world’s worst airports, Johannesburg. Could actually be the no.1 on that scary list.. how about some organisation with customs’, reported The Times on Monday.

POSTSCRIPT 14/6:  The MasterCard Global Destination Cities Index 2012 shows, according to Southern African Tourism Update that ‘the majority of international visitors to Cape Town are from London, with 185000 visitors expected to spend US$361 million throughout the year. This is followed by 127500 travellers from Dubai spending US$118 million, and 76000 visitors from Amsterdam spending US$68 million’. Once again this survey makes a mockery of the SAA decision to axe its Cape Town-London route!

POSTSCRIPT 14/6: The irony grows – the International Air Transport Association (IATA) has announced that it will hold its AGM and World Air Transport Summit in Cape Town from 2 – 4 June 2013, reports Southern African Tourism Update!  SAA is the host airline for the event!

POSTSCRIPT 4/7: Reuters reported today that Lufthansa will no longer service Cape Town from Frankfurt, due to the night flying ban over this airport.  All Cape Town flights will be serviced from Munich five times a week from 28 October.

POSTSCRIPT 6/7: The meeting with SAA and the Cape tourism industry representatives, hosted by Wesgro yesterday, has not made any impact nor reversed SAA’s decision to cancel the Cape Town – London route from next month. Instead it was agreed that greater demand needs to be built in attracting visitors to the Cape, so that SAA can then meet the demand and reinstate the route. Other airlines must be attracted to service the city with direct flights, it was agreed.

POSTSCRIPT 17/7: News24 has reported today that SAA has sold one of its three slots, being its Cape Town – London route, at Heathrow for an estimated R300 million!  The cancelling of the route therefore appears more cash driven than motivated by the low demand!

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter:@WhaleCottage

19 replies on “SAA crashes Cape tourism in cancelling direct Cape Town-London route!”

  1. Nick Jones says:

    Although I always fly BA I agree that this is very sad news for the local Cape Town tourist industry. However, it sadly reflects both the weak economic situation in Europe (likely to worsen in the short term as the useless EU politicians fail to make ANY decisions) & the debilitating affect of the pernicious APD inflicted by HMG.

    On the bight side it should ensure that BA continues to operate a 52/7 service & who knows, may even use one of their new A380s when they enter service next year?????

  2. Frances Beasley says:

    It is indeed sad news but not totally unexpected with the return of the recession to the northern hemisphere. People just can’t afford to travel as they used to. Perhaps it’s time for capetonians to realise there are loads of other destinations that are serious contenders for those wishing to travel. Here in France the weather has been so bad so far this year that it has adversely affected the bookings of many places offering tourist accommodation, air and train travel and even ferry bookings. The result has been a decrease in flights here too from traditionally strong routes. In addition the lack of money available for people to travel has caused many to forego their holidays or stay in their country of origin. Cape Town is not alone.

  3. WTF says:

    Where is the minister of tourism now to tell us that international arrivals are up? The drop in traffic on SAA highlights the fact that South Africa, and Cape Town in particular, have priced themselves out of the market. People can easily compare packages, flights and hotels online and get alot more value elsewhere in the world than here. The momentum built up for the World Cup is all but gone and now SA has to rely on its image and prices to attract tourists and their strategy is clearly not working.

  4. Thank you Frances and Nick for your feedback from a European and UK perspective, on this very rainy Cape winter day.

    From the European rumbles we are seeing, it could get worse. We saw the massive decline in the UK travel market in the past summer, and it could affect BA’s frequency too.

    Chris

  5. None of us have believed those ‘glowing’ arrival stats of our Tourism Minister van Schalkwyk, echoed by the former CEO of the new defunct Cape Town Routes Unlimited ‘WTF’.

    I think the airlines are to blame for the overpricing, and not the tourism industry, as there is a wide range of accommodation and restaurant prices available to all tourists (and locals)in Cape Town.

    Chris

  6. Nick Jones says:

    I agree Chris that if the savvy traveller shops around then there are good bargains to be had in the way of accommodation, particularly in the B&B market. The wise business owners need to be aggressive in their marketing & up front in their deals. Surely it’s better to have 80% occupancy at a 20% discount than a miserable 30% occupancy at full price.

  7. Nigel says:

    The cost of International air travel for the tourist market is of the utmost importance and here Emirates stands out for a first rate service – better than I have had on any SAA flight all at a substantial discount to SAA.

    Added to this BA must be very happy to have fuller planes for those who can afford and want direct flights to SA’s No.1 tourist destination.

  8. Peter Castilov says:

    BA is laughing all the way to the bank as the South African routes have always been their cash cows. Willie Walsh probably broke out a bottle of Krug in his private office to celebrate the announcement. Look forwards to seeing a Daily double A380 service in the future.
    People from the Cape won’t travel via Johannesburg if they can possibly help it. The value offerings of Emirates will see that they travel via Dubai before they even consider Johannesburg.

  9. Must agree with you Peter – amazing when the competition helps you in your sales!

    There is so much bad publicity about theft out of luggage at OR Thambo airport.

    Chris

  10. Thank you for your pricing comments Nigel and Nick.

    Pricing is key at the (depressed) moment. SAA should be subsidised to bring in as many tourists to the country as possible.

    Chris

  11. Dave Snoek says:

    Hello Chris,
    I cannot say I am gobsmacked or anything similar. Our beloved tourism industry in SA is bleeding. And it is certainly not assisted by a minister, MvS, who is totally toothless. Unfortunately, his (MvS) cronies are in positions of power and he is obliged to ‘toe the line’. As for the DP, the less said the better as Alan Winde, as his name suggests is all wind, has done very little to impress. In fact, the last time we saw him (AW) here in Hermanus was immediately prior to local elections!!! Enough said.

  12. Toothless is a good description of the whole tourism ‘leader’ lot David!

    I do want to exclude Minister Winde – he does try, e.g. the cruise liner debacle, and it looks like something is happening on this front, tenders closing for a cruise liner terminal in the next few days.

    As for the City of Cape Town clown Pascoe – a joke a minute!

    I am looking forward to seeing Wesgro’s Nils Flaatten again next week, to find out what is happening with provincial tourism since he took over two months ago! Don’t have high expectations at all.

    Chris

  13. Nick Jones says:

    Further to my suggestion that business owners should consider discounting their products, Avis have just reduced some of their SA 2013 peak season rates by 15% compared with 2012. Obviously this applies to £sterling rates.

  14. Thank you for the feedback Nick – are you planning your next trip to the Cape already?

    Chris

  15. Dave Snoek says:

    Hello Chris,
    Yes you are correct once again my Angel. I should perhaps have not included Alan Winde in my attack on those ‘in power’. I apologize to Alan as he is one of the guys that is championing for our cause. In my defence, however, I would like to say that it’s out of pure frustration that I make these outbursts. We have a tourism jewel here in the Western Cape and we are mucking it up.

  16. Nick Jones says:

    Hi Chris, I booked our flights for Feb 2013 a few days after we met in Camps Bay! 2x BA First Class reward flights thanks to Amex. Who says that air travel is expensive!

    We’re doing a R62 to Knysna via Barrydale, returning via Hermanus for 5 days at the end at Entabeni. Apart from Camps Bay we’re trying new B&Bs so it should be fun. I’ve made lots of use of your favourite website. 😉

    PS I totally agree with your PS 13/6. I avoid JNB like the plague. It’s so bad it makes Heathrow look good. SAAs decision to route it’s tourists via JNB is definitely NOT going to improve your tourism industry. What a way to finish your vacation, queueing for 3 hours to check in for your overnight JNB-LHR & arriving home without half your luggage. No thanks!

  17. Thank you Nick – I am fascinated to see if our tourism authorities locally have enough clout to change anything on this issue – don’t have very high hopes, unfortunately!

    Chris

  18. Marc says:

    Dear Nick, when you get to Knysna you should stay at The Royal Hotel Knysna. They have done a wonderful job of restoring the historical building and have also added an indoor pool and gym. It was a great experience staying there and the prices are really good value.I think that Capetown should negotiate with another carrier and create value holiday packages. These days price counts and the Hotels, B&B’s and restaurants will need to help ride this one out.

  19. BG says:

    This is a shame but not surprising. SAA have priced themselves out of the market. In 10 years of living in London and more than 20 trips home to CT I booked SAA once. Sadly this is the trend amongst all Saffers I know in the UK. We’d love to support SAA but cant justify the extra expense when BA are consistently more affordable and more reliable. Moving forward the Gulf airlines are the ones to watch – Etihad, Emirates and Qatar are fantastic with friendly crew, new planes, great flexibility and pricing that makes sense.

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