Western Cape declares dispute over Mbalula’s ‘silence’ on Delta Air application

The Western Cape has declared an inter-governmental dispute over the Department of Transport’s silence on a request for Delta Airlines to fly a triangular route from Atlanta in the US via Johannesburg and Cape Town.

Western Cape MEC for Finance and Economic Opportunities, David Maynier, says he is alarmed at the continued silence of Transport Minister Fikile Mbalula over the province’s request to urgently grant US airline Delta the right to fly a triangular route.

“As far back as May 2021, I wrote to the Minister, to request that Delta Air Lines’ application to operate a triangular route between Atlanta – Johannesburg – Cape Town, be processed urgently precisely because tourism is a significant contributor to job creation and economic growth in the Western Cape,” says Maynier in a statement.

Seven letters sent

Over a period of six months, no fewer than seven letters were sent to the minister over the Delta matter, with “no substantive response” received, adds Maynier.

An inter-governmental dispute was declared on November 25, 2021, to which the minister replied on February 21, 2022, asking for more time.

Maynier says he acceded to an additional 15 days, which expired at midnight on March 16.

An aviation analyst who asked not to be named says it remains unclear why the Department of Transport has not granted the Western Cape’s request to allow Delta a triangular route, which would allow it to offload and take on new passengers in both Joburg and Cape Town – known in the industry as co-terminalisation. The Department of Transport’s previously stated position is that airlines may not service two airport terminals on a single service.

Joburg favoured?

“There is a clear policy to promote OR Tambo [International Airport] in Joburg as the preferred international hub in South Africa, and that’s what Cape Town is running into,” says the analyst.

“Unlike in other countries where individual airports are free to negotiate individual tariffs with airlines, all such negotiations in SA are taken care of by the regulator.

“The danger in taking a hardline stance with Delta is that international air travel rules are reciprocal. South African airlines flying abroad could find themselves being blocked from flying triangular routes in the US, for example.”

United Airlines and Delta are both competing for the remaining slots available to US airlines under that country’s bilateral air services agreement with South Africa. Delta has applied to launch a non-stop Atlanta-Cape Town service and United (which currently flies between New York and Cape Town) has applied to launch a new Washington DC-Cape Town route.

Available slots

The US-SA bilateral agreement specifies the number of weekly services that may be operated between the two countries.

According to Aviation Week, there are only four unused weekly flights available to US carriers flying to SA.

Delta is hoping to take three of them for a service between Atlanta and Cape Town, though United accuses Delta’s plans for a three-times-weekly Atlanta-Cape Town service as “an afterthought” according to Aviation Weekly.

However, the US Department of Transportation would accept an immediate allocation of two weekly frequencies each to both United and Delta and so avoid undergoing a lengthy, contested department carrier selection process.

United’s return

United returned to the African market in December 2019 after a three-year hiatus with a service between Newark (New York) and Cape Town, and added a Newark-Joburg route in June 2021.

“As well as seeking approval for the nonstop Atlanta-Cape Town route, the airline in 2020 and 2021 tried to launch an Atlanta-Johannesburg-Cape Town-Atlanta triangle service but failed to secure the green light from South Africa’s government,” says Aviation Weekly.

Delta last flew into Cape Town in 2009.

In its latest application for the ATL-CPT route, Delta says: “The proposed service will increase travel and trade opportunities, boost Atlanta and regional economies, create jobs, and provide benefits to travellers across the US. Delta’s superior operational reliability and customer service will benefit passengers who would make use of these proposed services.”

According to Wesgro, the Western Cape government’s marketing organisation, the estimated economic losses of this decision not to allow Delta a triangular route could total R420 million, made up of:

• R278 million in tourism spending;
• R13 million in landing and passenger fees for Airports Company of South Africa; and
• R130 million in air cargo export value.

In addition, 160 local jobs would be lost for the Western Cape economy.

The request to grant the Delta application is given urgency by the growing trade and investment ties with the Western Cape.

The US ranked as the Western Cape’s largest export market in 2021, with an export value of around R17 billion that year (out of a provincial total of R167 billion) – 57.5% higher than 2020’s R10.8 billion. The US has also become the province’s largest source of inbound tourism.

For the past decade, the US was the largest investor in the Western Cape by capex, accounting for R2.9 billion and R4.4 billion in 2020 and 2021 respectively. This has resulted in the creation of thousands of job, training and skills development opportunities, and support for local communities through outreach and humanitarian programmes in the province, says Wesgro.

“I will continue to apply the necessary pressure to secure this triangular route, for the benefit of the tourism and hospitality sectors in the Western Cape and so that we can get up, get out, push forward and do even better in the Western Cape,” says Maynier.

Moneyweb reached out to the Department of Transport and the US Embassy in Pretoria, but had not received comment at the time of going to publication. This story will be updated as and when comment is received.