Focus should be on aviation sector not just SAA - former Treasury budget head
Industry may only recover in 2024, according to economist Thabi Leoka
The government should be focused on the aviation industry, rather than just SAA, as it considers forking out scarce funds for the embattled airline, says Wits academic Michael Sachs, the former head of the budget office in the Treasury.
Speaking on Political Currency with Tim Modise, Sachs said SA needed a vibrant aviation sector, and while bailouts globally for the industry were not unusual, the government was unfortunately focused on bailouts for SAA.
“The problem with SAA is that it’s an incredibly wasteful way of subsidising our aviation sector,” said Sachs.
The government had refused to confront the trade-off it faced over bailouts, said Sachs, even as it tried to convince investors it was running a sustainable budget.
“You can hide the trade-off and pretend that there is no cost from allocating this money to SAA, ” he said. “That is what we have been doing for many, many years, but at the end of the day there is a cost, and that cost is borne by the poorest in this country, whose resources are being diverted into this bottomless pit of waste,” Sachs said.
“Unfortunately, like is the case with many state-owned companies, when we should be discussing an industry, whether that industry is electricity supply, or defence, or aviation, instead of discussing the industry and how the industry should work for all South Africans, we discuss a company,” said Sachs.
Global aviation has been battered by the Covid-19 pandemic in 2020, with private airline Comair also grounded but expecting to resume flights in December.
SAA business rescue practitioners announced on Tuesday they would be suspending operations, pending funding discussions with the government.
This has raised the prospect of yet another bailout for SAA, even as the government faces a budget crunch as Covid-19 hits tax revenue and general economic activity. The government was not doing a good job of prioritising funds, said economist Thabi Leoka, who sits on the board of SA Express. The aviation sector may only recover in 2024 and there was a high degree of uncertainty about how far the government would have to stretch its limited funds, said Leoka.
Leoka said she found it difficult to understand how the government would consider SAA more strategic than energy, rail transport, health and education when there were other airlines that would be able to fly to SA, even if this wasn’t ideal.
It ’ s inhumane to take money away from health and schooling, which is much needed in this country,” she said.
What is strategic for me is getting energy sorted out,” said Leoka.