Engineering News

The Free Market Foundation (FMF) think tank launched, on Monday, a scathing attack on State-owned regional airline SA Express (SAX), accusing it of being “obscenely subsidised with money diverted from poverty relief and tax payers”. It also warned that the airline might “be using illegal predatory pricing” to undercut its competitor, private-sector, airlines.

From August 2018 to July 2019, SAX benefitted from government bailouts and guarantees worth a total of “at least” R1.54-billion, pointed out the think tank. Over that same period, the airline carried a total of 400 000 passengers. This, the FMF calculated, amounted to a subsidy per passenger of R3 850 on a one-way trip, or R7 700 on a return trip.

“Every person who flies SAX must look down as they fly over conspicuously poor settlements and reconcile their conscience with the implications of their ticket,” asserted FMF executive director Leon Louw. “Every time you are at an airport and see a SAX plane take off, think about the subsidy that you are paying to enable rich people to fly while tax-payers are fleeced and the poor are denied services, housing and welfare. It is immoral and obnoxious.”

The FMF has calculated that, assuming 50 passengers on each one-way SAX flight, the value of the subsidy for that flight would have paid for two RDP houses. (RDP houses are fully government-funded houses for the poor.)

The think tank also cited an interview by The Citizen newspaper in December with SAX CEO Siza Mzimela in which she reportedly said that the airline would compete in the market by offering fares, on certain routes, that were 35% to 55% less that those of its rivals. “Such predatory pricing is possible only by fleecing taxpayers and the poor,” argued the FMF in its press release.   

“Such shameless temerity is an attack on private, tax paying, employment generating airlines,” it added. “It runs contrary to government rhetoric about supporting private enterprise, creating jobs and generating revenue.”