How Does (South) Africa Stack up when it comes to Business Travel?

By IT-Online

In the dynamic world ofbusiness travel, South Africa is wrestling with economic pressures, rising inflation, an evolving aviation industry, andemergingtrendsthataredrasticallyreshaping the landscape.

BonnieSmith,GMofFCM,sharessomeinsights on how South Africa is stacking up against the rest of the world, based on data provided by the FCM Consulting quarterly report.

Inflation: a balancing act

The weight of inflation has been felt globally, with rates anticipated to drop from 8,8% in 2022 to 6,6% in 2023 and further to 4,3% in 2024.

Despite this global trend, South Africa held its groundforalongtime.In2022,SouthAfricastood out, alongside China,Indonesia, and Vietnam,as one of the few nations where inflation remained aligned with official targets.

At that time, despite near-record grain and oil prices,SouthAfrica’sinflationratedidn’tbreached the6%uppertargetlimit,primarilyowingtothefuel levy reprieve. In comparison, the US, eurozone, and the UK all saw inflation rates exceed 8%.

Smith explains that South Africa has demonstrated remarkable resilience in the face of global economic pressures, and the country’s ability to keep inflation in check amidst global uncertainty has been commendable. However, today, South Africa’s economic equilibrium is precarious.

Smithsays:“Thecountrygrappleswithcurrency depreciation and energy crises. The rand hit historic lows against the US dollar, reflecting the global sentiment of increasing risk aversion, while the severe power crisis continues to pose significant risks to the nation’s inflation outlook andeconomicgrowth.Thishasadirectimpacton the business travel landscape.”

Navigating the skies

The aviation industry in South Africa, like many African nations, is yet to fully embrace the New Distribution Capability (NDC). NDC, to clarify, is a communication standard developed by IATA to facilitate the direct transfer of data between airlinesandtravel agencies.This protocol aims to bringtransparency, personalisation,and speed to the airline booking process. It intends to replace the traditional Global Distribution Systems (GDS) which act as intermediaries between airlines and travel agencies. However, the transition is proving to be a challenge. While airlines like American Airlines are leading this charge, the absence of African carriers, notably South African Airways, is conspicuous in this transition.

• Seatavailability:anuphillbattle–SouthAfrica continues to display robust corporate travel demand in Q1-2023 despite mixed economic signals.However,SouthAfricanAirways, which recently underwent business rescue, has only managed to provide 18% of the seats it offered in 2019, a stark contrast to LATAM Airlines Group and United Airlines’ forecast to surpass their

• Airfares: a mixed bag – Airfare trends paint an intriguing picture of South Africa’s business travel landscape. During the first two months of 2023, Africa saw a 24% increase in business class fares and an 18% increase in economy class fares. Yet, the Cape TownDubai route has witnessed a 2% decrease in economy class fare, an anomaly in the African and Middle Eastern region. Fares on other significant business routes such as FrankfurtJohannesburgandJohannesburg-Londonhave increased by 17% and 15% for economy and 14%forbothbusinessclassflightsrespectively. This oscillation in airfares hints at the complex dynamics affecting ticket prices in the region, which could significantly influence business travel decisions.

Hotel occupancy: a ray of hope

In terms of accommodation, South Africa, particularly Cape Town, offers a beacon of hope. Witha99%occupancyrecoveryratecomparedto 2019, Cape Town ranks among the cities with the highest recovery globally.

Simultaneously, Cape Town has seen their average corporate rates increase by 86%, one of the highest increases worldwide. Meanwhile, Johannesburg is more on par with global trends with corporate rate increases of just 8% in Q12023.

One of the most successful traveler offerings in Q1istheemergenceofthelifestylehotel,focused on travelers who want to experience something unique. Ingredients of a lifestyle hotel include lobbies that encourage interaction, offering green initiatives, having slick technology, and offering well-being choices.

Newer hotels such as Lyf Collingwood, Melbourne, or The Hoxton, New York are challenging legacy hotels. South Africa is also seeing the emergence of lifestyle hotels, which are becoming popular among business travelers seeking a blend of work and leisure.

Smith comments: “The lifestyle hotels trend reflects the evolving preferences of today’s travelers. In SouthAfrica, we’re seeing a surge in interestinhotelsthatoffer not justaplace tostay, but an immersive experience that aligns with the values and lifestyles of the guests.”

Car rentals and micro mobility: a distant

dream?

Therentalcarmarketisflourishing,withaverage daily rates increasing by 23% from Q1-2022 to $51.ThistrendisexacerbatedinSouthAfricadue to limited fleet availability resulting from supply chainconstraints.Ontheotherhand,thepotential of micro mobility, encompassing short-distance travel using bikes, e-scooters, and e-mopeds, seems far off. Factors such as high crime rates, lengthytraveldistances,andpoorroadconditions render this trend impractical in SouthAfrica.

South Africa’s business travel sector is facing numerous challenges but also exhibits resilience and remarkable potential for growth.

Smith concludes: “South Africa has a diverse business travel sector that is adapting to the challenges of our reality. The nation’s approach to managing inflation, embracing digitalisation in aviation, and adapting to emerging trends such as lifestyle hotels, will be critical in shaping its future in the business travel landscape.” https://it-online.co.za/2023/07/03/how-doesafrica-stack-up-when-it-comes-to-businesstravel/

Image credit: Booking.com

Flying Back to South Africa: Major Airlines Including Cathay & Ethiopian to Increase Service

By Tatenda Karuwa

Three major airlines want to increase their frequencies between their hubs and South Africa’s major airports. According to the notices published in the Government Gazette, Cathay Pacific, TAAG Angola Airlines, and Ethiopian Airlines could boost the number of weekly flights to and from Johannesburg, Cape Town, and Durban.

South African aviation has seen tremendous post-pandemic recovery, with several airlines reinstating their daily flights. However, regarding increased frequencies and according to News24 Business, aviation experts believe it is still early, and not all airlines may be granted rights to fly on all requested routes.

Cathay Pacific

Cathay Pacific is set to reinstate its service to SouthAfricaafterdiscontinuingflightsattheheight oftheCOVID-19pandemic.FromAugust2,2023, the airline will resume its service between Hong Kong International (HKG) and Johannesburg OR Tambo (JNB), with three non-stop weekly flights. The carrier will deploy its Airbus A350-900 on the route, offering customers a superior flight experience. The service will provide travelers from Southern Africa with direct access to Hong Kong and options for further connections on the airline’s Asian network, including destinations in the Chinese mainland, Indonesia, and Thailand, to mention a few.

The airline has applied to increase its service between Hong Kong and South Africa to 11 weekly flights, with a daily service to JNB. In addition to the JNB service, it is looking to launch three weekly flights to Cape Town on Mondays, Wednesdays, and Fridays and one weekly flight to Durban on Saturdays.

Although the gazetting process is primarily for public engagement before awarding the licenses, Cathay Pacific told News24 Business that they hadreceivedpermissiontooperateflightstoCape Town and Durban, as stated in the Government Gazette.

TAAGAngolaAirlines

TAAG is looking to enhance its service between Angola and South Africa to 23 flights per week. It currently operates daily flights from Luanda Quatro de Fevereiro (LAD) to Johannesburg and CapeTown.

Inadditiontothisservice,TAAGiseyeingatleast three weekly flights between Luanda and Durban King Shaka International (DUR). This would see thecarrierconnectSouthAfrica’sGoldenTriangle and become the only airline operating flights betweenAngola and these three destinations.

With major route and fleet development plans, TAAG is eyeing significant growth in the next five years. As part of the company’s growth plan, it formalized the order for nine aircraft during the 2023editionoftheParisAirShow.TAAGnowhas an order of 15Airbus A220 aircraft through lease agreements with various international partners.

EthiopianAirlines

Africa’s leading carrier is also eyeing increased flights between Ethiopia and South Africa. This includesupto 35 weeklyflightsfromAddisAbaba Bole International (ADD), with 14 operating directly to CapeTown. https://simpleflying.com/cathay-pacific-ethiopianairlines-south-africa-capacity-increase/ Image credit:Thiago BTrevisan/Shutterstock, IanC66 | Shutterstock, Markus Mainka I Shutterstock.

The carrier currently operates Airbus A350 and Boeing 787 Dreamliner flights between ADD and JNB up to 21 times a week. It offers passengers three daily flights, with morning, afternoon, and late-night options.

Several airlines flying into South Africa operate flights to Johannesburg. However, Cape Town is seeing an increase in demand because of the Cape Town Air Access project by Wesgro. Since 2015, the city has welcomed six new African airlines and continues expanding its network. If these airlines receive permission to increase their frequency, CPT will see more enhanced passenger activity.