By Bonnie Smith, General Manager of FCM
The skies over Africa are changing drastically as more international airlines “touch down” on the continent. Recently, Qatar Airways announced its plans to expand its presence with a significant investment in a Southern African airline. The airline is also set to acquire a 49 percent stake in Rwanda Air and a 60 percent stake in a new Kigali airport currently under construction.
These investments will not only increase air traffic over Africa but also elevate the travel industry’s impact on the broader business economy to new heights.
Bonnie Smith, General Manager of FCM, an established travel management company (TMC) catering to large organizations, sees this development as a transformative period for corporate travel. She believes that Qatar’s expansion into Africa will significantly enhance connectivity, which is essential for business travelers. Improved connectivity means more travel options and leads to competitive pricing, making international business travel more cost-effective.
Enhancing Connection and Competition
According to the International Air Transport Association (IATA), the African aviation sector witnessed an 8.1% increase in demand from internal passengers compared to 2023. Qatar’s entry into Africa can help offset the ticket price hikes that typically accompany 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 for business travel. However, with other airlines entering the market, everyone must lower their prices to remain competitive.
International airlines introduce new fare categories, from basic economy to premium business class, each offering different pricing and service levels. This allows business travelers to prioritize cost-saving or greater comfort and services based on their individual needs.
Moreover, due to operating on a larger scale than most regional carriers, international airlines can achieve cost savings in operations, benefiting both the airlines and their customers.
Expanding air travel networks enables businesses to establish and expand their operations in more markets. This includes gaining access to untapped markets, enabling companies to foster economic development, enhance business prospects, and create job opportunities in underserved communities.
Embracing Codeshare Agreements
International airlines have codeshare agreements with several African airlines. For instance, Qatar Airways has one with RwandAir. This partnership provides business travelers access to markets not serviced by their usual airlines.
“It also allows for more flexible and convenient scheduling options,” explains Bonnie. “Airlines align their schedules to minimize layover times and optimize connections, making it easier for business travelers to find flights that suit their tight schedules.”
This arrangement can be especially beneficial for travelers needing to make last-minute travel arrangements or changes related to specific events or crises.
In addition, business travelers relying on frequent flyer programs to earn and redeem miles gain access to more airline partners. For example, flying with Qatar Airways allows travelers to earn miles on flights operated by RwandAir, and vice versa, providing more reward opportunities.
Furthermore, services are interchangeable. Codeshare agreements enable airlines to bundle services and offer comprehensive pricing packages to passengers, including additional services like lounge access, priority boarding, and baggage allowances. By bundling these services, airlines enhance value for travelers while streamlining the booking process, appealing particularly to business travelers valuing convenience and efficiency.
Another aspect of combined pricing strategies involves offering multi-segment pricing options. Passengers can book complex itineraries involving multiple flights with different partner airlines at a single consolidated price, simplifying the booking process and ensuring pricing transparency for business travelers with complex travel needs.
Combined Pricing and Cost-Saving
Connectivity, competition, and codeshare agreements enable business travelers to save costs through combined pricing strategies. Codeshare agreements allow airlines to pool resources, negotiate rates with each other, and develop mutually beneficial pricing structures that are often more competitive than individual rates.
Travel management companies (TMCs) can assist businesses in leveraging these strategies by providing insight and access to exclusive rates and corporate discounts. By capitalizing on these discounted rates, businesses can manage their travel budgets effectively and reduce overall travel expenses.
As international airlines like Qatar expand their presence across Africa, businesses must seize the opportunity to enter new markets and save on travel costs to keep up with the ensuing international competition. With the support of TMCs like FCM, businesses can navigate these changes seamlessly, utilizing combined pricing strategies to unlock savings and maximize the value of their travel.