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SA Express, SAA fail as 'going' concerns – bail-out needed

Denis Worrall
Photo by Duane Daws
Denis Worrall

2nd October 2014

By: Denis Worrall

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That is the headline in Business Day yesterday. Once again, it is a sad story as Linda Ensor tells it: “Two of the state's airlines are so financially stricken in that they cannot meet the criteria of a “going” concern unless they get more financial support from the government.  SAA already has a R5-billion state guarantee and SA Express one of R539 million"

Airlines are supposed to be a source of national pride. That's why they are described as a country’s "flag carrier". SAA, regrettably, is nothing of the sort. The annual financial statements of both airlines are being withheld by the Department of Public Enterprise until they can provide the assurance that they are "going" concerns. This is the third year in succession that SAA has had to delay holding its annual general meeting and the release of its annual results, pending the receipt of state assistance.

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There are a number of things wrong with SAA, and it’s not all the airline’s fault.  Firstly, it is one of the most bloated airlines around and there is a lack of willingness to cut back on staffing – because, as the responsible Minister said, that is not government policy. Secondly, in so far as there are some competent and experienced people within the company and on the board, they are stymied by government intervention. Thirdly, there has been a drastic fall-off in the service SAA offers. There are, of course, exceptions, but the general impression is that staff simply don’t care. And fourthly, SAA makes what should be strictly commercial decisions on a political basis. One example of this was its decision to cancel its flights to and from Argentina – something which Tony Leon, former ambassador to that country, made a justifiable fuss about.

But another example, and one even more blatant, was SAA's decision in June 2012 to cancel the direct flights from Cape Town to London Heathrow. Given Cape Town's International importance in so many ways as a destination, and London's perceived natural access to Cape Town, this was a crazy decision and has effectively lost SAA most of the business travel out of Cape Town to London and out of London to Cape Town. Instead of taking a flight at around 8 PM and arriving in London Heathrow just after 6 AM the next day, a Cape Town business traveller must leave Cape Town at lunch time on one day on a flight to Johannesburg, then catch an evening flight to London arriving next day. It is roughly the same story on the return when the traveller has to collect baggage and check in again in Johannesburg for the connecting flight to Cape Town. Given the inconvenience and the hassle factor this is completely unacceptable. So what has happened? BA has increased its direct flights from Cape Town to London from one to two a day and Emirates has two daily flights from Cape Town direct to Dubai and onwards, which our friendly travel agent (Kloof Travel) says are very reasonably priced.

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The result is that there is very little sympathy among the travelling public and a total lack of willingness on the part of taxpayers to throw money into what is a bottom-less pit. What is the answer?

British Airways and Lufthansa have both experienced serious financial trouble, and with that experience behind them in 2012 they diplomatically suggested to SAA what it should do. Privatise! Or introduce a public private partnership (ppp). That's what happened to BA in February 1987 and to Lufthansa in 1994. Both, as a consequence, are today major international airlines that have managed to keep ahead of modern aviation technology to the benefit of their customers.

While British Airways and Lufthansa clearly tell us what we need to do, we don't have to go that far for the answer. We only need to look in our own backyard for inspiration. We have an airline in this country called Comair which rightfully boasts on its website that it was established in 1946 and has been owned by South Africans through a listing on the JSE in July 1998, and is the only known airline operator to have achieved operating profits for 68 consecutive years. Isn't that something!

So much for advice. How about some action. Omega is a Cape Town and London-based Company. We want to do something about restoring direct flights from Cape Town to London Heathrow and back. But we need your support. We will make available our Facebook Page to the many persons we know who find the present arrangement unsatisfactory and to demand the revival of direct flights between these two major destinations. The timing is right! SAA has its back to the wall! And it can't afford to play politics as it is did with Cape Town two years ago.

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