Air Namibia suspends Gaborone route

Gaborone ‑ Air Namibia has suspended flights to Gaborone, Botswana, citing limited passenger volumes on the route.
The Namibian national carrier introduced the route a year ago and managed to capture 86 percent of the market share during that period. It managed 294 flights over the 12 months.
It initially operated three flights per week, on Tuesdays, Thursdays and Saturdays. But the flight schedule was changed to Tuesdays, Thursdays, Fridays and Sundays when Air Namibia re-arranged its entire network.
During that period, it managed to capture 80 percent of the market and had 294 flights, but its operating margins were negative ‑ leading to the decision to suspend the route.
Air Namibia General Manager Commercial Services, Xavier Masule, recently revealed that there is limited traffic numbers on the route, which they knew from the beginning, but had hoped that would improve with the introduction of a direct service.
“We captured 86 percent market share, but this translates to a load factor of 35 percent, meaning even if we have 100 percent market share we will still be having lower than 45 percent load factor,” he said.
He said though they had recorded growth in traffic numbers, and had frequent flyers on this route, levels were not sufficient and it would take a very long time to reach desired economic levels.
Masule added that at the current average fare, “we need a load factor of 103 percent to break-even, which is not only impractical, but simply unattainable”.
According to Masule, if they are to break even at 50 percent load factor, they will need to increase fares by 106 percent to N$2 217, but warned that fares are already too high to consider increasing, given that people have the option to use competitors via Johannesburg.
Masule noted that reducing capacity by reducing frequencies would make the company lose part of the market share, and thus worsen the financial performance levels.
“Given the foregoing, we decided to suspend our operations into Gaborone for a while, and we will be looking at new options on how we can re-enter the market,” he said. Air Namibia will, however, continue the Maun route, which is critical for the transportation of tourists from Botswana and Namibia. On the regional challenges, Masule pointed out that Ethiopian, Kenyan and South African Airways are focused on executing distinct business strategies.
He said the three airlines are building intra-African connections and they are also linking Africa with the world, but competition from larger, better capitalised foreign competitors is tough.
Masule noted that South African Airways (SAA) has shifted to a more regional approach by growing its intra-Africa services, adding that it is currently seeking additional support from the government.
He observed that Kenya Airways’ stated goal is to serve all African capitals by 2014 but progress has slow but it is still on track to double the fleet in the next five years. Meanwhile, Ethiopian Airlines ‑ the most consistently profitable airline in Africa, has ambitious growth plans (Vision 2025) and is creating new subsidiaries in other parts of Africa.

June 2013
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