By Bonnie Smith, General Manager of FCM
The skies over Africa are changing drastically as more international airlines “touch down” on the continent. Most recently, Qatar Airways announced its intentions to expand its presence with a significant investment in a Southern African airline. The airline is also expected to acquire a 49 percent stake in Rwanda Air and a 60 percent stake in a new Kigali airport currently under construction.
Investments like these will not only increase air traffic over Africa, but can also take the travel industry’s impact on the broader business economy to the next level.
Bonnie Smith, General Manager of FCM, an established travel management company (TMC) catering to large organisations, believes this development heralds a transformative period for corporate travel. “Qatar’s expansion into Africa is set to enhance connectivity significantly, which is crucial for business travellers. Better connectivity means more travel options and leads to competitive pricing, making international business travel more cost-effective,” she says.
Enhancing Connection and Competition
According to the International Air Transport Association (IATA), the African aviation sector saw an 8.1% increase in demand from internal passengers compared to 2023. Qatar’s entry into Africa can offset the ticket price hikes that normally come with increased travel demand.
During the first two months of 2023, Africa saw a 24% increase in business class fares and an 18% increase in economy class fares as business travel. However, when other airlines enter a market, everyone has to lower their prices to stay competitive.
International airlines introduce new fare categories, from basic economy to premium business class, each with different pricing and service levels. This allows business travellers to prioritise cost-saving or more comfort and services based on their individual needs.
And, because international airlines operate on a larger scale than most regional carriers, their extensive networks and larger fleets can lead to cost savings in operations, as well as for customers.
Expanding air travel networks enables businesses to establish and grow their operations in more markets. This includes exclusive access to untapped markets, allowing companies to foster economic development and enhance business prospects (as well as job opportunities) for underserved communities.
Embracing Codeshare Agreements
International airlines have codeshare agreements with several African airlines. Qatar Airways, for example, has one with RwandAir. This gives business travellers access to markets not serviced by their usual airlines.
“It also allows for more flexible and convenient scheduling options,” explains Bonnie. “Airlines coordinate their schedules to minimise layover times and optimise connections, making it easier for business travellers to find flights that suit their tight schedules.”
She adds that this can be especially beneficial for travellers needing to make short-notice travel arrangements or changes related to specific events or crises.
In addition, business travellers who rely on frequent flyer programmes to earn and redeem miles gain access to more airline partners. For example, someone flying with Qatar Airways can earn miles on flights operated by RwandAir, and vice versa. This results in more reward opportunities for travellers.
Similarly, services are also interchangeable. Codeshare agreements allow airlines to bundle services and offer comprehensive pricing packages to passengers. These packages may include additional services like lounge access, priority boarding, and baggage allowances. By bundling these services, airlines can create more value for travellers while streamlining the booking process. This approach is particularly appealing to business travellers who value convenience and efficiency.
Another aspect of combined pricing strategies involves offering multi-segment pricing options. This means passengers can book complex itineraries involving multiple flights with different partner airlines at a single, consolidated price. This approach also simplifies the booking process and ensures pricing transparency for business travellers with complex travel needs, such as multi-city trips or international connections.
Combined Pricing and Cost-Saving
Connectivity, competition and codeshare agreements help business travellers save costs through combined pricing strategies. Codeshare agreements, for example, enable airlines to pool resources and negotiate rates with each other. This results in mutually beneficial pricing structures that are often more competitive than individual rates.
TMCs can help businesses leverage these strategies with insight and access to these exclusive rates and corporate discounts. “By taking advantage of these discounted rates, we can help businesses manage their travel budgets more effectively and reduce overall travel expenses,” says Bonnie.
As international airlines like Qatar increase their presence and footprint across Africa, businesses must jump on the opportunity to enter new markets and save travel costs to keep up with the international competition that ensues. With the support of TMCs like FCM, businesses can navigate these changes seamlessly, leveraging combined pricing strategies to unlock savings and maximise the value of their travel.