The Bigger Picture
AS THE COUNTRY grapples with a long-term turnaround strategy to return SAA to profitability, the government must look at the bigger picture and resist moves to place the flag carrier airline in business rescue or cut jobs.
Javid Malik: Opinion and Analysis
AS THE COUNTRY grapples with a long-term turnaround strategy to return SAA to profitability, the government must look at the bigger picture and resist moves to place the flag carrier airline in business rescue or cut jobs.
The aviation industry is not just about ferrying passengers from one destination to the next, but it contributes immensely to economic growth, investment growth and nation building.
The South African aviation industry – which contributes more than R74 billion to the economy and supports 350 000 jobs within the airlines, airports, grounds and auxiliary levels – holds the key to turn the tide for the country’s economic fortunes.
A strong and affordable air transport network facilitates domestic growth, tourism, trade, job creation and security, while expanding local access to foreign supplies and markets. It also provides invaluable opportunities for cultural and social exchange by bringing people together. It is essential to look at the bigger picture when discussing options for restructuring of a national airline whose operations may be going through turbulence.
As a loyal, proud South African with vast experience in the local and global aviation industry, I do not agree with recent calls to either place SAA, our flag carrier airline, under business rescue or moves to cut jobs in this state-owned enterprise.
We should also be wary of moves that may essentially be a precursor or disguised to lay the foundation for privatisation of the airline. So too must we resist calls to reduce routes for the airline as that is not the answer to its success.
There are various, more effective and sustainable routes we, as a country, could take to properly manage the situation that SAA is faced with, with a view to make it sustainable and return it to profitability.
Consider the following short and longterm repercussions we would have to deal with if we take the business rescue or similar option:
A national symbol It would mean that SAA’s image and status as a national symbol would be heavily dented, causing uneasiness in the domestic aviation sector as well as the travel and tourism industry. The country’s image as a leading destination for business and tourism could suffer. This could have a drastic effect on jobs and thousands of livelihoods associated with the aviation industry.
The call to place SAA under business rescue could also have a telling effect on investor confidence at a time when unemployment, particularly among young people, is high. From the onset, we must lift employees’ morale as they are at the forefront of the business. Low morale can lead to poor co-operation, low productivity and increased turnover of valuable skills.
If we fail to boost staff morale and ensure job security, as the initial step towards turning our airline around we will create a situation that hinders the business from reaching its set goals. This step is crucial to lifting the image of the airline.
Corruption Everyone in the airline’s value chain must recognise corruption and mismanagement as problems that need solving if we are to turn SAA’s fortunes around. These maladies seem to have been left too long in some departments at SAA, such that they are tacitly accepted as the norm.
Any form of abuse of process within the airline or the industry in general should be nipped in the bud through appropriate disciplinary and remedial action. Evidence shows that our flights are full, some tickets expensive, no new aircraft is purchased, yet we are bleeding money.
We have to plug the leakage while we still can by reviewing all tenders and contracts. We should ensure that everything is above board and contracts and tenders are not given to the connected, but most qualified and skilled. The government, as the shareholder, and all stakeholders should work together to ensure that the management and financial models of SAA are sustainable and effective. There are numerous ways to do so without taking the business rescue route.
Open skies policy The repercussions of the calls to place SAA under business rescue are far reaching and not confined within South Africa. With South Africa being the economic powerhouse of Africa, what we do in South Africa’s aviation industry affects operations in the whole continent. South Africa’s leadership role as part of the Brics alliance of nations would not being sparred either, especially at a time when a summit is to be held in July 2018.
As the Brics Aviation Working Group, of which I am co-chairperson, we are hard at work trying to convince principal players in the global aviation industry to strengthen co-operation with us to make South Africa the hub of Africa’s airline industry.
We continue to make great progress for intra-Brics co-operation in this regard. Our country has already signed the “open skies policy”, making its role more important in Brics, on the continent and even globally. Currently South Africa is eagerly and carefully advancing its role engaging fellow members of the Brics alliance of nations to strengthen economic relations and networks. No one needs to be reminded that South Africa’s influence to the tourism economies of the rest of Africa may also be dealt a big blow should we place SAA in business rescue.
Business consultants While it is a normal business tool to bring outside help to solve complex issues, SAA management could do well to avoid rushing to engage international business consultants as history within the airline has shown that most of them are only too keen to make a “quick buck” than provide solutions to rescue the entity. We are not challenging their expertise and, knowledge, but on the ground reality and experience is totally different to reading through reports and making recommendations.
Some business consultants can present more sensible and intelligent turn-around strategic plans on paper, but history is witness to their failures. I believe outside consultants cannot bring long-term success.
I feel offended when such personnel are brought in and in my observation, these international aviation experts leave the airline bleeding of much needed funds.
It is well known that South Africa has its own home-grown aviation experts and consultants who are more than willing to assist and can do a great job in supporting our national carrier to be at the top and be the envy of many international aviation players.
Lessons from the past SAA has had no less than nine turnaround plans in the past 15 years. What is being embarked upon now is the 10th. I am sure a good number of citizens have lost interest and trust in these turnaround formulas and promises. But that does not mean we should stop now to do our best to improve the national airline’s operations. Previous turnaround plans have resulted in the airline losing vital funds, thus extinguishing the trust of more people.
It is my view that SAA has great potential to grow and become hugely profitable. All that is required is adequate support be given to the current crop of management and board of directors. All we need to do is unite and make our national flag carrier the best it can be.
Turnaround goals Steps should be taken to ensure meaningful participation of the labour formations or unions in all processes meant to turn around the airline. They represent workers on the ground and they are an important stakeholder towards stability to the airline. Their support and co-operation are crucial to success. Unions are one of the key proponents to uplifting the morale of the workforce.
The management of SAA should be supported in their turnaround goals and their target to make the airline a sustainable organisation.
Management must also have full discretional authority to act on their plans as it appears that in the past it was given limited power to take decisive action.
This should be supported through maintenance and expansion of existing routes and flight destinations, as the airline badly needs to improve revenue levels. Making profit, whether on long- or short-haul routes, should be aligned with the best service offerings such as memorable flying experience. Management should also employ the right candidates. It is known that there are good and qualified individuals from the previously disadvantaged segment of the South African society.
Where qualified but inexperienced personnel is recruited to meet affirmative action objectives, management should prioritise ways to further train them in-house or externally, depending on sound decisions and without jeopardising the overall affairs or performance of the flag carrier. Informed choices should always be made when mixing qualified but inexperienced personnel.
I once received advice from two leading aviation industry mentors when I was about to start an airline, who said that for one to succeed in running an airline, they “must put on their takkies and jeans” and that it is very important that executives must have direct access and co-operation with ground workforce. Similarly, SAA’s management should consider that aspect in order to run the organisation from a combination of knowledge and informed decisions.
Transformation As a person who regularly writes and fights for transformation in all sectors of society and the aviation industry in general, I have first-hand experience for aviation sustainability and would like to collaborate with more like-minded individuals in this regard. Transformation in our aviation will create more jobs. While transformation is happening it is at a snail’s pace, particularly in areas such as uplifting pilots, engineers and executives from previously disadvantaged communities.
President Cyril Ramaphosa has called for transformation and job creation in all sectors of the economy. Job creation will not happen without transformation. I always believe that creating a full army will not create one general, but one general can create the full army. I believe that if most of the above is well implemented within SAA the results will be great and there for anyone to see. And there will be a great turnaround story to tell in no time at our national flag carrier.
Javid Malik is co-chairperson of the Brics Aviation Group and co-founder of PAK Africa Aviation Group.