SAA’s return to the skies postponed
• Pandemic and lack of funds are behind the delay, with local flights put on ice until April 30
SAA does not have plans to get into the air any time soon, saying in an update on its website that domestic and regional flights have been suspended until April 30 and international flights until October 31. The airline had hoped to resume flights by now and, in addition, it was not allocated any additional money in last week’s budget, after a plea for another R3.5bn to fund its business rescue plan.
SAA does not have plans to get into the air any time soon, saying in an update on its website on Friday that domestic and regional flights had been suspended until April 30 and international flights until October 31.
The airline had hoped to resume flights by now but international travel remains conditional due to the Covid-19 pandemic and the demand for domestic travel has dropped significantly and not recovered. In addition, the company was not allocated any additional money in last week’s budget, after a plea for another R3.5bn to fund the business rescue plan.
“Although SA is travel ready, demand for domestic air travel has been significantly reduced, therefore to avoid overcapacity and to ensure commercial viability SAA has taken the decision to only operate our marketing [SA] flight numbers. We are delighted that the South African Airways code (SA) is available for booking on the domestic route network as our subsidiary low-cost carrier Mango continues to operate,” it said.
The failure to secure additional funding in the budget and the prolonged mothballing of operations will make it difficult for SAA to recover its market share, which has been taken over by other operators.
In addition, the latest projections on the anticipated recovery of air travel by the International Air Transport Association’s (Iata) revised outlook for 2021, released last week, show a bleaker picture than previously expected. In December, Iata estimated that in the first half of 2021 air travel would return to 51% of 2019 levels. Its new projection is 33%-38%.
The SAA business rescue plan is predicated on a far healthier and bigger market than appears likely now.
On Wednesday, finance minister Tito Mboweni said he had received a request from SAA for additional funding but still had to examine whether it was worth supporting. While the Budget
Review stated that an additional R3.5bn was required to meet the needs of the rescue plan, which it said had been amended, this was incorrect. The business rescue plan has not been amended and requires R10.5bn in funding.
The Treasury did not respond to questions from Business Day on whether it had made an error or had been misled by the department of public enterprises.
Last week, the government chartered an SAA flight to Brussels to fetch a batch of 80,000 vaccines amid criticism that this was an enormously expensive exercise when normal freight could have been used. The SAA Pilots Association, which is in a labour dispute with SAA and has been locked out of the workplace since December, said in several interviews that far cheaper options existed. This included an Ethiopian Airlines flight from Brussels to Johannesburg on Thursday, as well as standard cargo flights by European operators.
The estimated cost of using the A340-600 — an Airbus — to fly to and from Brussels, mostly empty, was about R5.5m.
The department of public enterprises, which is believed to have chartered the flight, did not respond to questions from Business Day on the cost of the flight and whether it was the most cost-effective option to use, as required by the Public Finance Management Act. The department of health did not reply to similar questions.
The department of public enterprises issued a statement on Friday accusing the pilots of discrediting the flight to Brussels for their own selfish and greedy agendas.
“This flight was also a test relaunch of the SAA cargo business. Many airlines around the world including Lufthansa and Ethiopian, have intensified their cargo businesses while the passenger loads declined sharply, in order to bring in revenue.
“There will be many such flights by SAA in the months to come. This will also include transport of vaccines from manufacturers to African countries during the next months,” it said.