Comair huge success reveals extent of SAA black hole

ON March 19, airline operator Comair will transfer R18.47-million in cash into the bank accounts of its investors.

Another R4.99-million will be transferred into the bank account of the SA Revenue Service on the same day.

The first amount goes to the holders of its 469-million issued shares, to reward their faith in the operator of low-cost carrier kulula.com and the franchise holder of British Airways in Southern Africa.

The latter is Comair’s dividend tax, payable to the people of South Africa as a reward for providing the good, safe and fair environment in which the 72year-old aviation company operates.

Except, the South African commercial aviation market is not good, safe or fair for private airline companies.

The gross R23-million that Comair declared as a dividend in the six months ended December comes after it paid income tax of R85.4-million to the taxpayer.

This is in addition to the gross R65.7-million final dividend it paid for the year ended June last year.

On that occasion the company also paid R137.7-million in income tax to the people of South Africa, which was R35.6-million higher than the tax it paid in the year to June 2016.

In the unlikely event that anyone is confused: dividends and taxes get paid from profits. Comair reported a net profit after tax of R296.97-million in the year to June 2017, up from R192.7-million the year before.

On that occasion it paid a gross dividend of R51.6-million to its investors and the taxpayer.

This exercise of paying taxes and dividends has been repeated for 68 of the 72 years of Comair’s operations.

At the same time the company has been eating the breakfast, lunch and dinner of SA Airways (SAA).

Now, let us recap: in the past two years, Comair has paid more than R350-million in income tax to the people of South Africa – for the luxury of having us as passengers on its planes.

In addition to this, it has also paid airport fees to the Airports Company SA and other airports at which its planes land, park and take off.

And it has paid the salaries and taxes of the employees whose job it is to ferry its passengers around.

Now, compare this seemingly rosy picture with the sorry state of affairs at Comair’s largest competitor.

National nosedive

Last week, Malusi Gigaba, who was then finance minister, wrote a letter to the speaker of parliament explaining that SAA will again not be able to publish its financial results for the year ended March 2017.

Read that again.

And remember that we’re two weeks away from the end of another financial year.

Where Comair has been sending hundreds of millions of rand into the pockets of its investors and government, SAA has been draining billions of rand from its investors – the people of South Africa – for all 84 years of its existence.

SAA has not paid a cent in dividends to its investors – us – for as long as I’ve been alive.

Neither has it paid any taxes to the fiscus in the past 23 years.

However, over the past 25 years the people of South Africa have given about R57-billion in cash bailouts to the perennial liability that is SAA – from money that is collected from taxpayers such as Comair.

For all that investment, there has been zero return.

What has not been stolen from the carrier by politicians and their friends has been used to undermine the airline’s competitors, including Comair.

No fewer than 13 companies have succumbed to the unfair competition posed by SAA in the past 21 years alone.

Government is still holding onto the primitive and outdated idea of owning an airline – despite 84 years of evidence showing it will never work.

In the six years since SAA stopped direct international flights to Cape Town, tourist arrivals to the city have jumped about 26%.

If that doesn’t tell you what a negative role SAA is playing in the domestic market, nothing will.