EMIL GUMEDE | SAA should tap into high-income routes to maximise growth

To ensure long-term success, SAA needs to consider targeting potential new high-income routes now under-serviced, strategic partnerships with other airlines and pivoting South Africa as a key international connecting hub between continents.  

SAA has experienced a moderate yet steady recovery since resuming operations after the Covid-19 pandemic, slowly acquiring additional aircraft and reintroducing destinations it once served.  

Despite facing a few obstacles, such as the privatisation deal with Takatso Consortium disappointingly falling apart and the recent pilots strike causing significant delays and cancellations, which have since been resolved, SAA appears to be on the up. SAA claimed to have achieved a net profit of R252m for the 2022/2023 financial year.  

While SAA’s reported modest net profit is encouraging, further progress will require strategic planning, entrepreneurial foresight and global partnerships.  

Restarting a direct flight between Johannesburg and Mumbai seems an obvious strategic move. In 2019 more than 3,000 passengers travelled between the two cities each month in both directions. Because of SAA’s endemic past struggles nearly 50% fly the India-South Africa route via Addis Ababa with Ethiopian Airlines.  

This highlights a clear demand for a nonstop connection. A recent study by Airbus suggests a direct flight between Johannesburg and Mumbai would significantly increase passenger numbers between Johannesburg and Mumbai. The convenience of nonstop travel would not only benefit business travellers and tourists but also South Africa's significant Indian diaspora.

Furthermore, direct flights to Mumbai could open smoother connections to other major Indian cities such as Delhi and Bengaluru. This would offer SAA a valuable opportunity to tap into an underserved market. This enhanced connectivity would strengthen economic, business and cultural ties between the two regions. 

South Africa is geographically situated between Asia and Latin America. This offers an opportunity for SAA — to serve as a bridge, offering efficient transit options for passengers travelling to and between these two regions. SAA is particularly well-placed to be a link between Brazil and China via South Africa. As two prominent members of the Brics trade alliance, China and Brazil are taking steps to boost economic collaboration. 

Many global airlines leverage their geographic advantages to facilitate travel between Asia and the Americas. Leading carriers such as Qatar Airways, Ethiopian Airlines, Turkish Airlines and Emirates have positioned themselves as key transit hubs connecting these regions. However, there is a surprising lack of direct air connectivity between China and Latin/South America, with only one direct route linking China to Mexico City.  

China and Brazil have strengthened their bilateral ties, including signing a mutual visa agreement. This agreement allows ordinary passport holders to obtain visas valid for up to 10 years for purposes such as tourism, business and family visits. Visa holders can stay for up to 90 days per visit, with the option to extend their stay to 180 days if necessary.  

There is great potential for SAA to expand its connecting role by linking Latin America, Asia and Australia through a South African transport hub. These routes are strategically important for the airline as they benefit from strong point-to-point demand, ensuring consistent passenger traffic.

Furthermore, these routes position SAA to serve as a key connector for passengers travelling between Latin America, Australia and other destinations via its Johannesburg hub. Over and above business and tourism travel, with more than 200,000 Latin American-born people living in Australia and a growing number of Australians with ethnic or cultural ties to Latin America, there is an increasing demand for connectivity between these regions. SAA, as of writing, operates direct flights to São Paulo, Brazil, and Perth, Australia.

LATAM Airlines, the largest airline company in Latin America after LAN Airlines of Chile took over TAM Linhas Aéreas of Brazil in 2012, expects to transport more than 200,000 passengers annually on routes connecting Australia and Latin America. This is also a potential opportunity for SAA to explore to partner with LATAM Airlines.  

The Cathay Pacific Group last week announced plans to expand its routes, changing strategy from rebuilding to expansion, with a focus on new destinations including to mainland China and the southeast Asian (ASEAN) region. The Cathay Group, which includes the low-cost carrier HK Express and Cathay Pacific, carried more than 28-million passengers in 2024, up 30.7% year-on-year. The Cathay Group has strategically used Hong Kong as a hub to attract transit passengers, particularly those travelling between mainland China and the rest of the world. SAA could for example explore a strategic partnership with the Cathay Group.  

SAA is desperate for a capital injection. SAA has for example been outspoken about its struggles to acquire additional aircraft since its return to the skies — because of lack of capital. 

A strategic partnership with a capital-rich airline group is one option to secure new capital. In Africa, a strategic partnership between SAA and Ethiopian Airlines, modelled after Qatar Airways’ arrangement with International Airlines Group (IAG), could offer significant financial, operational and strategic benefits. An SAA-Ethiopian Airlines partnership has been talked about for many years but has never been realised. The Qatar Airways-IAG partnership offer an example for how an SAA-Ethiopian Airlines or an SAA strategic partnership with a Latin American, Asian, Middle Eastern or European airline group could look like.  

Qatar Airways first acquired a 9.99% stake in IAG in 2015, gradually increasing it to 25.1% by 2020 with a $600m (R11.13bn) investment. In 2024, IAG announced a €350m (R7.40bn) share buyback and Qatar participated by selling €88m (R1.86bn) worth of shares. Despite this sale, Qatar maintained its 25% stake due to the reduced number of shares in circulation after the buyback. Through this move, Qatar Airways can maintain its influence in IAG, but at the same time providing liquidity to IAG. 

Ethiopian Airlines could, for example, provide SAA with a much-needed capital injection, through acquiring an equity stake or participating in a share buyback programme if one were initiated. This would immediately strengthen SAA's financial position.  

SAA stands at a critical juncture, with encouraging signs of recovery marked by a reported net profit and the gradual expansion of its fleet and routes. However, sustaining this momentum requires strategic foresight, new capital and partnerships. Above all, it will require bold decision-making. 

Reintroducing key routes such as the Johannesburg-Mumbai connection, leveraging Johannesburg as a strategic transit hub between Latin America, Asia and Australia and exploring financial partnerships with established carriers such as Ethiopian Airlines are essential steps. By capitalising on these opportunities, SAA can strengthen its competitive edge, drive sustainable growth and reaffirm its position as a leading African carrier on the global stage.  

SAA will have to fix its failing governance. Lack of competent management, political interference in operations, appointments and contracts and procurement corruption have been among the reasons the organisation has struggled. In February the cabinet approved the appointment of John Lamola as permanent group CEO for a two-year term. However, the decision has sparked controversy, with the DA filing a complaint with the public protector against Deputy President Paul Mashatile and transport minister Barbara Creecy for alleged undue political interference in the selection process. 

The SAA board initially recommended Allan Kilavuka, the CEO of Kenya Airways, as the preferred candidate. Philip Saunders was also recommended as an option by the SAA board, who ranked Saunders higher than Lamola. Saunders was appointed SAA’s chief commercial officer in 2019 and briefly became the airline’s interim CEO in 2020.

SAA will have to be run not like a failing state-owned entity, with political management and board appointees and needing state bailouts year after year, but as a profitable commercial company run by experience, merit-based management and board.   

• Gumede is an aviation analyst based at the University of Sussex.

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