I start with a disclaimer: the only discipline in which I received training is the art and craft of journalism. I have never been anywhere near a business school or a lecture hall where the intricacies of the economics of the aviation industry were unpacked. But even a lowly scribe can offer his two pennies’ worth on the situation at our beleaguered flag carrier. It’s a matter of common sense, really.
In light of the recent testimony at the Zondo Commission of Inquiry and in the North Gauteng High Court, it is easy to jump to the conclusion that South African Airways (SAA) finds itself in a parlous situation mainly because, at some point, its boardroom had become a nest of intrigue where schemes to siphon its resources were hatched.
This could well be true. But even if its governance were squeaky clean, SAA would still be facing headwinds. This is partly because the notion of a national airline has somewhat become an anachronism in the twenty-first century.
National carriers date back to the early years of commercial aviation. Those that were well run became national ambassadors, billboards that advertised a country worldwide. Countries that established national carriers included South Africa, in 1934; Dubai, in 1955; the UK, in 1974; and many more.
But in the current aviation environment, where budget airlines have proliferated, offering travellers a no-frills alternative, the national-carrier business model has become increasingly unsuitable. The British realised this as far back as 1987, when they privatised British Airways as part of a broader privatisation push under the Conservative Party government of Margaret Thatcher.
Like SAA, many national carriers that have endured find themselves in dire straits, proving that they do not stand that much of a chance against their budget counterparts, whose business model appears to resonate with many air travellers. Malaysian Airlines, for instance, has been struggling since 2014 and continues to lose business to low-cost rivals like AirAsia. Qatari television station Aljazeera reported in January that Air France-KLM and Japan Airlines are eyeing stakes of 49% and 25% respectively in the embattled airline. Domestic rivals are also circling around it.
Alitalia is another major national carrier that is ailing. It became bankrupt in 2017 but has been shored up by government since then. A fresh injection of $400-million was promised in December, in what Industry Minister Stefano Patuanelli said would be the last State intervention to keep the airline afloat. It was hoped this would sustain Alitalia until mid-2020, by which time it should have found a buyer, failing which it would be closed down.
Many national carriers have already folded. The more high-profile ones include Hungary’s Malev, which started flying in 1946 as Maszovet but went bust in 2012. In sub-Saharan Africa, many of the national carriers that were established when it was fashionable to do so are no longer in existence. Of the three major remaining ones – Kenya Airways, SAA and Ethiopian Airlines – only the last mentioned is profitable. But then again it is not managed by government.
Some in Mzansi appear to favour the retention of the bottomless pit that is SAA because it is a brand to which our national pride has been tied for decades. It is for similar reasons that there have been efforts to reboot defunct flag carriers across Africa, with Tanzania and Uganda having done so in 2018 and 2019 respectively. In February 2019, Nigeria announced a fourth attempt to take a similar course of action. And at the end of last year, Ghana signed a memorandum of understanding for three Boeing 787-9s for the planned doppelgänger of its national carrier, which collapsed in 2010.
While a few national airlines are profitable, they are the exception that proves the rule. It is for this reason that I believe refocusing SAA as a business ready to adapt to low-cost competition, preferably under the control of private operators, is the best option for the airline.