Not if you are South African Airways (SAA). Then you get a bailout to the tune of R5biliion. Don’t like the sound of this? Well, here is more bad news. You – the poor taxpayer – will be footing the bill.
Don’t forget that SAA, like Woolworths SA, is fundamentally a racist company. By its own admission it clearly states it only wants to train black pilots. Also don’t forget that SAA, by continuing to employ incompetent people (and we don’t care what colour their skin is) should not be protected with our money if they make a hash of things. One could argue that a national carrier should be protected by the state, but at least in the domestic market they should compete on a level playing field.
That is why we wholly support Comair’s bid to challenge the application of the latest R5billion
government guarantee for SAA. Comair’s CEO Erik Venter says “Comair has an obligation to
challenge further government support that would benefit SAA’s domestic operation.
“SAA had accumulated losses of R17 billion since deregulation in 1992. Over this period, nine of the 11 private airlines competing with SAA had failed. This was a clear indication of the impact of SAA’s assurance of state support, argues Venter . And we agree with him. In 1992, on deregulation of the domestic airline industry, government developed an aviation transport policy intended to
govern the behaviour and funding of SA Airways in a competitive domestic environment.
SAA may not cross-subsidise its domestic shambles with its international operations. It also may not receive government funding or guarantees as long as private competitors were required to rely on commercial funding.
According to Venter he understands that SAA has to rely on its shareholder to the extent that it is required to deliver a public service. In this case servicing routes that are not commercially viable for private airlines. “However this does not apply in the domestic market, or even on many routes into Africa where South African based airlines are attempting to compete against SAA,” Venter says.
The losses incurred by SAA and Mango in the domestic market could not be sustained by a private airline, and had been incurred to protect SAA’s market share at the expense of its competitors and
the taxpayer.
The only way to achieve a level playing field would be to separate SAA’s domestic operations, including Mango and SA Express, that prop-driven regional airline that cannot seem to keep account of its books. These state funded airlines should be an independent legal entity with its own
leadership and transparent financial reporting. The will have to operate domestically on sound
commercial principles and without any government support, which we as SA Promo are saying they will not be able to do because they have already proved their incompetence – even with state funding. But remember, no direct or indirect cross-subsidy from SAA international may occur.
SAA’s latest request for government funding for new planes was a result of SAA and Mango fighting their domestic competitors for market share at the expense of generating profits. If we ran our private businesses this way we would have been homeless or in the knocker by now.
The National Treasury has now said the government had granted a R5billion guarantee to SAA for two years, starting this September. SAA requested recapitalisation at a cost of between R4 billion and R6 billion. This would enable the bungling bunch to strengthen its balance sheet and – wait for it – order new planes.
