Acting Chief Executive Officer of South African Airways (SAA), Matshela Seshibe, said the ongoing conflict in the Middle East has delayed some of the airline’s expansion plans, while rising fuel prices continue to pressure operating costs.
Speaking during a CEO interview with Maureen Kahonge, AFRAA’s Director of Commercial and Communications, at the recent AFRAA 14th Aviation Stakeholders Convention, Seshibe said SAA’s immediate priority was to preserve cash and adapt its business model to remain resilient in a challenging operating environment.
He said aviation fuel had traditionally accounted for about 30% of an airline’s ticket costs, but that in some instances this had increased to between 40% and 50%. According to Seshibe, fuel represents about 31% of airline operating expenses, while maintenance accounts for around 12%, leaving airlines with average profit margins of approximately 4%.
Seshibe said the cost of aviation fuel in South Africa had risen by nearly 150%, adding that airlines could not absorb such increases through their profit and loss statements alone. As a result, SAA has passed between 50% and 60% of those additional costs on to passengers, he said.
He added that SAA has introduced several measures to reduce financial pressure, including cost-cutting initiatives, route optimisation and route rationalisation aimed at protecting cash flow and profitability.
Despite the short-term challenges, Seshibe said SAA remained optimistic about Africa’s long-term aviation prospects.
He cited annual passenger traffic growth of 7.8% across the continent, alongside capacity growth of 6.5%, and said rising urbanisation, increasing household wealth, and the strong performance of several African economies were creating favourable conditions for the aviation industry.
Seshibe said SAA intended to expand its market presence through a combination of partnerships, joint ventures, codeshare agreements and the acquisition of additional aircraft.
However, he stressed that fleet expansion alone would not guarantee growth. Growth, he said, would also depend on joint ventures, partnerships and codeshare agreements.
Seshibe also said changes in passenger travel patterns resulting from the Middle East conflict had benefited some African carriers, with more travellers choosing to connect through Addis Ababa and Nairobi instead of Gulf hubs. He added that passenger traffic through South Africa had remained relatively stable despite the changing market dynamics.
Looking ahead, Seshibe said Africa’s aviation sector had significant growth potential, given the continent’s population of approximately 1.4 billion people.
He noted that Africa currently operates about 700 commercial aircraft, with projections suggesting that the fleet could grow to around 1,700 aircraft by 2030. Despite this expansion, he argued that Africa would still account for only a small share of global aviation activity.
Seshibe also identified high aviation taxes as a major obstacle to the industry’s growth, saying it was often cheaper to fly between Africa and destinations such as São Paulo, Brazil, than to travel within Africa.
He called on governments and industry stakeholders to work together to lower the cost of air travel and avoid using aviation as a revenue collection mechanism through excessive taxation.
In addition, Seshibe said African airlines should be managed as commercially viable businesses, regardless of whether they were state-owned or privately owned.
He noted that several of Africa’s most profitable airlines are government-owned, demonstrating that public ownership and commercial sustainability are not mutually exclusive.
Seshibe said closer collaboration between governments, airlines and other industry stakeholders would help position aviation as a driver of tourism, economic development, regional connectivity and continental integration.
He added that SAA’s long-term vision over the next five to ten years was to build an airline that is customer-focused, operationally reliable, financially sustainable and recognised by employees as an employer of choice.
