VZCZCXRO1740
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHSA #1134/01 1561403
ZNR UUUUU ZZH
R 051403Z JUN 09
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 8719
INFO RUCPDC/DEPT OF COMMERCE WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE
RUEANHA/FAA NATIONAL HQ WASHDC

UNCLAS SECTION 01 OF 03 PRETORIA 001134 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
DAKAR FOR FAA REP 
FAA FOR NANCY ANGELO 
DEPT FOR EEB/TRA 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EINV ETRD SF
SUBJECT: DELTA AND SAA INCREASE SERVICE BETWEEN U.S. AND AFRICA TO 
TAP GROWING MARKET 
 
REF: A. 09 PRETORIA 990 
     ¶B. 09 PRETORIA 329 
     ¶C. 09 PRETORIA 473 
     ¶D. 08 PRETORIA 2754 
 
This cable contains company proprietary information. 
 
¶1. (SBU) Summary.  Charge La Lime hosted a lunch for Delta officials 
on May 14.  Delta Southern Africa General Sales Manager Margaret 
Copeland and outsourced Cargo Manager Anne Sanders discussed Delta's 
expansion strategy in Africa and provided an update on the impact of 
the global economic crisis on Delta's passenger volume in South 
Africa.  Increased air service between South Africa and the U.S. has 
improved bilateral tourism and trade growth.  Delta is 
well-positioned to take advantage of this growing market considering 
the fact that state-owned carrier South African Airways (SAA), its 
main competitor, is experiencing severe management and financial 
difficulties.  It will take time and a substantial financial 
commitment from the incoming leadership at the Department of Public 
Enterprise (DPE) to deal with past mismanagement and financial 
constraints at SAA.  (See Septel for discussion of cargo volumes and 
security issues).  End Summary. 
 
¶2. (U) Charge La Lime hosted a lunch on May 14 for Delta Southern 
Africa General Sales Manager Margaret Copeland    and outsourced 
Delta Cargo Manager Ann Sanders.  Representatives of the Commercial, 
Consular, Economic, and Management sections of the mission attended 
the luncheon.  Post provided an update on USG policy and consular 
administrative changes that would impact Delta's operations in South 
Africa. 
 
---------------------------------- 
COMPETITION HEATS UP AS CONFIDENCE 
IN AFRICAN AVIATION MARKET GROWS 
---------------------------------- 
 
¶3. (SBU) Copeland said Delta's main competitor in the African market 
is South African Airways (SAA).   Copeland explained that Delta 
first entered the African market when SAA was part of the Sky Team 
alliance and both airlines shared a code.  SAA later ended its 
relationship with Sky Team and joined the Star Alliance.  (Note: SAA 
had its first U.S. code share with American Airlines when it 
operated a service from Miami to Cape Town).  Delta decided to use 
the experience it had gained under this code-share agreement to 
launch its own independent service to South Africa when SAA joined 
the Star Alliance.  Both companies have announced expansion of 
service between the U.S. and Africa and will continue to develop 
Dakar, Senegal as a hub for Western Africa.  Delta is the only U.S. 
carrier that operates its own direct flights to Sub-Saharan Africa. 
 
 
¶4. (U) Tourism growth has declined in Africa as a result of the 
global economic crisis, but it has not contracted as a number of 
other major international markets had.  For example, the growth in 
foreign arrivals to South Africa slowed to 5.5 percent in 2008 - 
down from the double-digit growth of the past few years - but South 
Africa still welcomed a record 9.6 million tourists.  Copeland 
stated that business class seats on Delta's South Africa routes were 
currently running at full-capacity.  The latest UN statistics 
project that Africa will experience the highest air traffic growth 
rate of any region by 2010, with a projected 8.5 percent increase in 
passenger kilometers travelled.  A Delta press release further 
states that traffic between the U.S. and Africa is projected to grow 
by more than five percent annually through 2027. 
Qby more than five percent annually through 2027. 
 
¶5. (U) Copeland said Delta was proceeding with its planned route 
expansion in Africa.  Delta announced Africa-wide expansion plans in 
November 2008, to take advantage of projected demand growth.  It 
launched non-stop service between New York's JFK International 
Airport and Lagos, Nigeria in December 2007.  Delta planned to 
launch new flights between Atlanta and Nairobi, Kenya; Monrovia, 
Liberia; Abuja, Nigeria; Luanda, Angola; and Malabo, Equatorial 
Guinea (via Cape Verde) in June.  However, the Delta flight to 
Nairobi has been postponed indefinitely to delays in acquiring U.S. 
Transportation Security Administration approvals, required to 
operate flights to the U.S. 
 
¶6. (U) Delta also introduced its first daily, non-stop service to 
South Africa with flights between Atlanta and Johannesburg on June 
¶3. Delta has upgraded the aircraft to a Boeing 777 for the new 
service.  Johannesburg passengers flying non-stop to Delta's U.S. 
hub in Atlanta will save around three hours in travel time in each 
direction when compared to the previous service, which stopped to 
refuel in Dakar.  Delta has also rerouted its New York-Cape Town 
 
PRETORIA 00001134  002 OF 003 
 
 
flight to become an Atlanta-Cape Town flight.  Copeland noted that 
Atlanta works as a better destination for the U.S. since 80 percent 
of the inbound passengers required connections further west and the 
onward connections in Atlanta avoided the lengthy delays experienced 
at JFK International Airport. 
 
----------------------- 
CHANGES EXPECTED AT SAA 
----------------------- 
 
¶7. (SBU) SAA also announced expansion plans last December despite 
major leadership and financial crises at the state-owned carrier. 
SAA has one of the highest debt-to-turnover ratios in the world (110 
percent) and CEO Khaya Ngqula's contract was terminated in March 
following charges of mismanagement and corruption (see Reftel B and 
D for additional information).  SAA pursued and managed to acquire 
fifth-freedom rights in West Africa in an effort to remain 
competitive in the African market.  These rights allowed SAA to 
launch new services in May.  SAA Head of Network Development Jason 
Krause said SAA was in a strong position to fly passengers 
originating in North America to West African destinations as a 
result of these rights. 
 
¶8. (U) SAA also began operating a non-stop service from Washington 
to Dakar and from New York to Johannesburg on May 1.  North American 
passengers can now fly from Washington to West Africa via Dakar or 
from New York to West Africa via Johannesburg.  SAA also launched a 
new twice-weekly service to Buenos Aires, Argentina in April to 
complement its existing daily South American service to Sco Paulo, 
Brazil. 
 
¶9. (SBU) Post asked Delta officials whether the changes in 
leadership at the Department of Public Enterprises (DPE) would 
resolve the leadership and financial problems at SAA.  Copeland 
thought incoming DPE Minister Barbara Hogan was a good choice for 
the position and expected "Hogan to clean-up SAA's act."  Copeland 
cited the improvements Hogan brought to the Department of Health 
during her brief stint as its Minister during the interim Mothlante 
administration. 
 
----------------------- 
INCREASED SERVICE LEADS 
TO TOURISM GROWTH 
----------------------- 
 
¶10. (U) The growth of international service and the entry of new 
foreign carriers has contributed to an increase in international 
passenger arrivals in South Africa.  South Africa received less than 
12 international airlines in 2003.  More than 70 international 
airlines now fly into the country.  Recently released Statistics 
South Africa data reveals that the U.S. displaced Germany as the 
number two source of overseas tourist arrivals behind the UK in 
¶2008.  The number of U.S. visitors grew 3.8 percent to 302,090 
despite the U.S. economy slipping into recession.  The growth of 
U.S. tourist arrivals is directly related to the increase in direct 
air service provided by Delta and SAA. 
 
¶11. (U) Demand for additional direct flights to South Africa is 
expected to increase during the 2010 FIFA World Cup.  Copeland 
warned the Consular section to prepare for a large number of U.S. 
fans to travel to South Africa for the games.  More than 1.5 million 
applications for tickets to the 2010 FIFA World Cup had been 
received by March 31 during the first phase of ticket sales.  U.S. 
fans led foreign ticket applications (with over 93,000 tickets 
purchased), followed by the British, Germans, Italians, and 
Australians.  Copeland said there was a possibility that Delta could 
QAustralians.  Copeland said there was a possibility that Delta could 
consider increasing service just for the World Cup period, but Delta 
was worried about the ability of filling those planes with 
passengers on the outbound trip to the U.S. while the tournament was 
ongoing. 
 
------------------------- 
SOUTH AFRICA TO INCREASE 
TOURISM MARKETING IN U.S. 
------------------------- 
 
¶12. (U) The South Africa Tourism (SAT) chamber also announced that 
it would increase its marketing efforts in the U.S. in light of the 
increase in U.S.-based tourism to South Africa.  SAT Acting CEO Didi 
Moyle said "historically, SAT marketed only to Americans who would 
spend $5,000 in two to three weeks, but this was a low-volume and 
ultimately unsustainable market."  Recent SAT research revealed that 
young urban professionals were the most interested in South Africa 
travel and expressed a preference for $1,999 all-inclusive travel 
 
PRETORIA 00001134  003 OF 003 
 
 
packages.  The American Society of Travel Agents also had its annual 
expo at Sun City in South Africa this year, the first time it had 
been held in Africa.  SAT research estimates the number of Americans 
who would be interested in visiting South Africa at about 6.3 
million. 
 
----------------- 
PROMOTING REVERSE 
TOURISM AND TRADE 
----------------- 
 
¶13. (SBU) The Commercial Counselor told Delta officials that he 
would like to see a reciprocal increase in South African tourism and 
trade promotion to the U.S.  The Commercial Service would like to 
launch a series of quarterly conference calls with tourism boards in 
the U.S. and would welcome Delta's participation.  He would also 
like a Delta representative to make a presentation on its Africa 
route expansion strategy at the 2009 Corporate Council on Africa's 
(CCA) Business Summit in Washington, D.C. in September.  Copeland 
indicated that Delta had made efforts to promote the U.S. as a 
tourism destination for South Africans when it first launched its 
service in South Africa.  Delta sponsored U.S. trips for South 
African tourism journalists, but was disappointed by the way these 
visits were utilized by the journalists and the lack of media 
coverage following the trips. 
 
------- 
COMMENT 
------- 
 
¶14. (U) Increased air service between South Africa and the U.S. has 
improved bilateral tourism and trade growth.  The number of direct 
connections between the Western Hemisphere and Africa is still 
relatively low and there is still potential for increased growth as 
countries in the region develop their tourism industry.  Delta is 
well-positioned to take advantage of this market growth considering 
the fact that its main competitor SAA is experiencing severe 
management and financial difficulties.  It will take time and a 
substantial financial commitment from the incoming leadership at the 
DPE to deal with past mismanagement and financial constraints at 
SAA. 
 
LA LIME