Air Namibia braces for competition

WITH more airlines granted rights to fly to Namibia, competition for the loss-prone state airline Air Namibia has become tougher.

The airline is currently undertaking a strategic plan for the period 2016/17 to 2020/21. The airline is six months into the implementation of the plan and still has four years and six months left to implement the plan.

“This plan has a number of initiatives to be undertaken and implemented, with timeliness defined. What we set to do in the first six months of this plan has been implemented successfully and we are seeing positive results as per the plan for the period thus far,” said Air Namibia’s corporate communications manager, Paul Nakawa, in response to a query by The Namibian.

This year KLM, Qatar Airways and Ethiopian Airlines have been granted rights to fly to Namibia, putting Air Namibia in a tight situation.

“It is just like in any other industry, when new competitors enter a given market, existing suppliers are exposed to having part of their market share to be taken. The difficult part is to quantify how much market share loss it will be,” said Nakawa.

He said on the other hand new players bring opportunities and said it depends on how Air Namibia positions itself to take advantage and benefit from the opportunities, the new airlines will bring.

“Airlines coming into our market on the one hand means the possibility of market share loss, and on the other hand their service will be complementing ours as they come from countries we currently do not fly to,” he said.

He said the airlines should not be seen as coming to substitute Air Namibia because they cannot fill the full role Air Namibia plays.

On Air Namibia receiving bailouts from the government, which have now run into billions of dollars, Nakawa said the subsidy from government is far less than the economic benefits the airline generate to the country.

“While this is the case, we have ambitions of being able to cover our direct operating costs without receiving subsidy from government by the end of the current five years’ strategic plan, and without compromising on our mission and vision,” he said.

Nakawa said adding destinations to the airline’s route network, as well as restructuring some of the routes is another point included under the financial sustainability programme. Flights to Gaborone and Durban are the most recent introductions.

“Other new routes will be announced as soon as requisite governmental approval has been obtained,” he said.

Nakawa said in line with its strategic plan, Air Namibia is working on making air transport in the domestic market to be affordable to ordinary Namibians. He said this will help ease pressure on the roads which has grown to dangerous levels because of long distances. The airline has in some cases cut local fares by as much as 25% effective 4 September.

Nakawa said the major limiting factor at the moment is the restrictions placed by the Namibia Airports Company on how many flights can operate out of Eros Airport.

“We ideally would like to operate up to six flights per day. More flights per day in the domestic market will mean lower operating costs per unit for us, which will enable us to lower fares, and improve affordability and also stimulate demand,” he said.

More flights cannot be allowed into Eros because of the condition of the runway, as this can result in it collapsing faster than anticipated.

He said the temporary solution is to look at operating domestic flights from Hosea Kutako International Airport. “If the market, including government can allow us to operate domestic flights from Hosea Kutako, we will be able to lower our fares much more by up to 50% in some cases,” he said.

Nakawa said market saturation and oversupply is a big risk. He said country readiness for increase in aircraft movements is another element to be considered, in particular Namibia Airport Company’s Hosea Kutako Airport and related suppliers.

“We are talking of huge aircraft here. An airport with one security screening machine, and two passenger conveyor belts, 14 check-in counters versus expected traffic volumes; 125 chairs in the departure lounge; what is the size of the business class lounge; how big are the fuel storage facilities for jet fuel versus demand, etc – these plus many other factors are what a country should look at so that growth in aircraft movements does not come and suffocate your system,” he said.

Air Namibia directly and indirectly competes with South African Airways and the full Star Alliance comprising 28 member airlines, British Airways, South African Express, Airlink, TAAG Angolan Airlines, Condor, KLM, Qatar, Ethiopian Airlines, Air France (via Johannesburg), Lufthansa (via Johannesburg) and Emirates (via Joburg and Cape Town).

Total passengers carried during 2015 were about 530 000, of which only 6% were on domestic routes while the rest is cross-border.

“This accounts for about 51% of all passengers by air between Namibia and the world. The remaining 49% is shared by our competitors, mostly SAA, Condor and British Airways. This makes us still the market leader and we are set to increase our market share of total traffic into Namibia over the next five years,” Nakawa said.

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