Flying the home flag
We have a responsibility to support the local aviation sector, the public enterprises director-general writes
A well-run national carrier is vital to the overall logistics network in the country. The aviation industry, as an apex industry, acts as a “force multiplier” and enables many other sectors that would otherwise struggle without it.
The International Air Transport Association (Iata) has shown that the commercial aviation sector adds four to six jobs in adjacent sectors for each aviation job. A recent Iata study indicates that the South
African aviation sector contributed 70,000 direct jobs, 130,000 jobs through the supply chain and 230,000 through tourism. In addition, there were 57,000 jobs created as a result of spending by employees in the air transport sector.
It is against this backdrop that the department of public enterprises (DPE) has sought to build a basis for a restructured airline to emerge out of the ashes of the old South African Airways. Limiting job losses is one of the pillars behind our decisions as it would have been immoral to leave the SAA employees “in the streets”.
The resuscitation of the South African economy will require air connections and support for airlines to be re-established. That many countries are providing financial support to their airlines indicates their strategic importance to economic growth.
We cannot overemphasise the importance of a dynamic aviation sector to our economic advancement plans. A strategic decision taken by the Ekurhuleni metropolitan municipality to develop an “aerotropolis plan”, which is about a purpose-planned city anchored around the airport ecosystem, is one example. The aerotropolis plan leverages the OR Tambo International Airport precinct to inform industrial and spatial development over the next 30 years. It is expected to increase the capacity of the airport to handle 60-million passengers from the current 21-million.
The plan has already seen massive investment by local and multinational companies in the logistics and distribution network around the airport, with many of these developments located along the Albertina Sisulu highway. In addition, industrial and manufacturing development across the continent will require airlift, and the paucity of freighters opens an opportunity.
As we await passenger air services to resume once safety concerns subside, we look to a vibrant passenger and air freight transportation sub-sector. SA is lucky to have a competitive, dynamic and vibrant airline sector that offers choice and value for money to the public and businesses alike.
When SAA first took to the skies 86 years ago, no-one could have imagined the size and importance of commercial and leisure aviation today, nor the impact it has had on changing our world.
The economic impact is several times larger when we take into account the further benefits gained through the speed and reliability of air travel. There is no better illustration of this than the freight of essential medicines and food as the pandemic slowly tightened its grip on SA and the region.
SA has the strongest aviation market on the African continent as five of the top highest-revenue routes to and within Africa are in SA.
Three of the top 10 airports in Africa are in this country and six of the busiest air routes within Africa are in SA. It would be reckless if policymakers and authorities do not leverage this competitive advantage to create income streams for our people and entrepreneurs.
Air travel is essential in developing countries, where disparate parts of the country need connecting. It can be said to promote a sense of nationhood, dousing flames of regionalism and tribalism as people who would not ordinarily engage with each other get to appreciate how much they have in common.
Impact of Covid-19
In the context of the coronavirus pandemic, the aviation sector will not right itself. As in many other countries, SA’s aviation has suffered greatly. The government understands its responsibility to the aviation industry and its place in the South African economy. The Oxford Economics report, which brings together data for airlines, airports and ground-based infrastructure and highlights the sector’s contribution to economic growth, supports the efforts to resuscitate aviation. It points to the hospitality industry, which provides economic opportunities to many low-skilled people, as a case in point.
Industry resuscitation requires clear thinking, farsightedness and determination. It will require longterm investment and strong relationships to be built. Therefore it will be important that narrow interests be put aside and collaboration from all sides be sought.
How should we proceed with this task?
Future of SAA
The new airline, because that is what it will be, will not be allowed to follow the destructive path of its predecessor. The government has made a firm commitment that the new airline must be commercially sustainable and will not be bailed out by the fiscus for bad decisions and poor governance practices. The new business model will be premised on the foundation of a strategic equity partner (SEP).
The government has also agreed that it will not burden the SEP with SAA’s past. Therefore the DPE is seeking to conclude the business rescue process by settling all debts owed by the old SAA. We are in discussion to ensure that the SEP, once selected, will appreciate and support the character of the government’s transformation agenda and its developmental objectives for the aviation industry.
For example, the development of new pilots should become a key imperative built into the agreement with the equity partner, along with the capacity of aircraft engineers, airline executives, revenue managers and others which reflect the demographics of the South African landscape.
We are aware of the immense task that lies ahead and know that major decisions and significant changes must occur to turn the old SAA into a new airline as a sustainable business.
We shall take our time to ensure we have a fit-forpurpose national carrier that will once again promote SA to the rest of the world.