Battered airlines get lifeline with limited business travel

The government will allow some limited air travel when the country relaxes its lockdown level by one stage at the start of June, President Cyril Ramaphosa said on Sunday, offering slight relief to a multibillion-rand industry that has been left on the verge of collapse by travel restrictions.

While accommodation and most domestic travel will remain among “certain highrisk economic activities” that will not be allowed, Ramaphosa said business travel would be phased in on dates still to be announced.

This could be a rare piece of good news for operators such as Comair and SAA that have been grounded since late March, though it is not clear if they will be able to operate on anything like the scale required to make commercial sense.

Aviation, and tourism more broadly, has been one of the biggest casualties of the eightweek lockdown, threatening the future of businesses throughout the value chain.

Majority state-owned Airports Company SA last week told MPs it might need R11bn in state guarantees after a hit to revenue due to the travel restrictions. The shutdown pushed

Comair, which owns Kulula and operates the BA brand in SA, into business rescue earlier in May after more than seven decades of uninterrupted profits.

According to a draft amendment to transport regulations seen by Business Day before Ramaphosa’s address to the nation on Sunday, the government was considering allowing flights between three of SA’s major cities as the country moved to level 3 from June 1.

HEALTH PROTOCOLS

Domestic flights would be allowed between Johannesburg, Cape Town and Durban at certain times and subject to health protocols put in place during the pandemic, according to the proposals by transport minister Fikile Mbalula.

SA has been in a nationwide lockdown for almost two months in a bid to curb the spread of the Covid-19 virus.

While the rate of infections has been contained so far, with the country recording just more than 400 deaths, it has come at great cost to the economy and the government has come under intense pressure to loosen restrictions.

The Reserve Bank last week said SA’s GDP could contract 7% in 2020, while the liquor industry estimates that a ban on alcohol sales has already cost about 118,000 jobs in a country that already had an unemployment rate of close to 30% before the Covid-19 outbreak.

Tourism accounted for 9.2% of total employment and 8.6% of all economic activity in SA, according to data from the World Travel & Tourism Council.

Tourism minister Nkhensani Kubayi-Ngubane, in an interview with Business Day on Friday, said as many as 600,000 jobs could be lost in the sector by September if it is not able to operate earlier.

“The sector has come to a standstill for more than three months without an income” and this was “too much even if you can have the cushion of the reserves”, she said.

The financial relief available was not enough to sustain it, she said, and with constraints on the fiscus it would not be easy to get more money to provide further relief.

“We are hoping that as regulations are issued, some level of activity in the tourism sector will come back.

”It may not be everything that we wanted, but some of the activities we are confident can come back in July because of what we have been able to present,” Kubayi-Ngubane said.

9.2% the share of employment tourism accounted for, while also representing 8.6% of all economic activity in SA, according to data from the World Travel & Tourism Council