Air Austral in the starting-blocks

Let us see how the Reunionese airline is paving its way to recovery with Vincent Chappard and Anuradha Deenapanray.

“The hardest period of the crisis is certainly behind us. Our teams are ready for restart”, says Chairman and CEO Marie-Joseph Malé.

He underlines that despite a particularly difficult year, the airline has demonstrated its ability to adapt in a complex context like other insular economies depending on air connectivity for travelling, tourism and businesses. But above all, it has been able to rely on the unflinching support of its partners and employees.

The Reunionese airline has been able to respond efficiently to new demands and needs emanating from its customers but also from government which has been supportive financially. It has deployed the necessary human and technical resources within a given time frame to operate EVASAN, repatriation or even all-cargo flights. 

Air Austral was also the only airline to fly to and from Mayotte continuously, ensuring that the local population is not cut off from the rest of the world.

“The scenarios on which we are focussing are based on a gradual restart of our activity as from the end of 2021, followed by an approximately two years’ recovery period, to reach the level prior Covid-19 by early 2024. We are constantly adapting and updating our business plan according to the elements available”, adds Malé.

Optimism despite competition

Air Austral's regional network (Mauritius, Madagascar, South Africa and India) is still closed except the Seychelles. The archipelago allows international flights.  The situation has not evolved a lot since the start of the IATA summer season which started in April. A study carried out among travel agencies has shown a low demand which does not justify the relaunch of the regular programme of Air Austral.

“The international destinations we serve remain closed. But we are more optimistic about a limited and gradual opening as from mid-summer”, says Malé.

To be noted that the Reunionese airline has to some extent taken advantage of the void left prior to the outbreak of the pandemic especially by Air Mauritius which is still facing huge financial problems.

But the sky might not be that clear as Air Austral will still be facing strong competition, particularly on the Paris-Reunion route from Air France, Corsair and French Bee, the long-haul low-cost carrier. The upcoming services of Air France and Corsair on the Mayotte-Paris route will add up to the existing competition.

New funding to restart

In April 2020, Air Austral obtained a first loan for the hypothetic resumption of its activity at the end of 2020. The prolongation and persistence of the sanitary crisis and its multiple consequences have constrained Air Austral to review its forecasts. The airline needs new funding to support its recovery plan.

“We have already obtained support from our reference shareholder, SEMATRA, and discussions are ongoing with our direct and indirect shareholders as well as with the French government, which has always supported us”.

The A220 delivery postponed

The delivery of the first two A220-300s (out of three ordered) from Airbus has been delayed. The economic crisis entailed by the Covid-19 pandemic has slowed down the delivery process. The priority of Air Austral CEO is to finalise the deal with its financial partner and Airbus. “We should be able to set a delivery date very soon.”

Prior to the pandemic, Air Austral had planned the modernisation of its fleet and consolidated its route strategy and partnerships.In 2018, it signed a Privileged Partnership Agreement with Kenya Airways to enhance connectivity, code sharing and training. This enabled Kenya Airways to extend its hub to the Indian Ocean, which through Air Mauritius links all the continents.

According to analysts, the main challenge facing these airlines like those of mainland Africa might face a deficiency in offer. Even though, the Vanilla Alliance has not really taken off, Indian Ocean airlines need more than ever to cooperate and find synergies to boost and strengthen intra-regional connectivity.

Or else, past scenarios will be repeated. Foreign carriers (European, Middle East, Asian) will fill the gap as it has been the case in Africa and the region and continue using them as springboards to broaden their networks.

In the aftermath of the pandemic, partnerships between African and Indian Ocean airlines will most certainly be essential to follow the new behaviour of passengers who prefer point to point travel option for better safety. They need to strike a good balance between demand and offer to get market shares.