Air Namibia has announced the termination of its direct flight from Windhoek to Gaborone citing challenges such as low traffic volumes coupled with fuel price hikes.
Speaking at a media briefing yesterday, Air Namibia general manager for commercial services Xavier Masule said the decision would allow them to go back to the drawing board and re-strategise before re-entering the market at a later stage.
He explained that they knew from the start that there was limited traffic on the route but hoped that the introduction of a direct service would help grow traffic levels. He said some of the challenges included the economic recession, which saw airlines’ annual revenues dropping by billions of dollars.
Although the industry recovered to reach pre-recession traffic levels during 2011, it became stagnated. The suspension of the direct flight, which started May 2012, will take effect 1st June 2013.
The airline is currently operating three flights per week. Masule said although they recorded growth in traffic and had frequent flyers on the route, the levels are not sufficient to reach desired economic levels which looked set to take a lot longer. Moreover, Masule explained that since the operation, they managed to capture 86 % market share which translates to a load factor of 35 %, meaning that they are still at a shortfall.
|Fast facts about Air Namibia:|
|Hub||Windhoek Hosea Kutako International Airport|
|Destinations||15 destinations, 16 Airports, 7 Countries|
|Parent Company||Government of Namibia, January 2013|
He pointed out that even if they had 100 % market share, it was still going to be lower than 45 % load factor.
He said if they were to break even at 50 % load factor, there would be a need to increase the fares by 106 %, a risk that could see them losing customers to other competitors. He said reducing capacity by reducing the frequency of flights would cost them their market share hence worsening their financial performance levels.
He explained that the Windhoek to Gaborone route is not the only one they have experienced difficulties with. He revealed that they were forced to scale down on the number of times they fly their other routes.
The airline has however promised to continue its relationship with Botswana through the operation of its Maun flight.
By: Mpho Mokwape
Date: 28 May 2013