Comair criticises state guarantee of R5 billion awarded to SAA

JOHANNESBURG Stock Exchangelisted aviation company Comair Limited has challenged the application of the latest R5 billion government guarantee for SAA.

CEO Erik Venter said yesterday Comair had an obligation to challenge further government support that would benefit SAA’s domestic operation. This was a matter of industry survival and maintaining competition in the market for domestic air travel.

SAA had accumulated losses of R17 billion since deregulation in 1992. Over this period, nine of the 11 private airlines competing with SAA had failed.

This was a clear indication of the impact of SAA’s assurance of state support, Venter said.

In 1992, on deregulation of the domestic airline industry, the government developed an aviation transport policy intended to govern the behaviour and funding of SAA in a competitive domestic environment.

This included the provisions that SAA was not allowed to cross-subsidise domestic with international operations, and that it could not receive government funding or guarantees as long as private competitors were required to rely on commercial funding.

“We understand SAA has to rely on its shareholder to the extent that it is required to deliver a public service, in this case servicing routes that are not commercially viable for private airlines.

“This does not apply in the domestic market, or even on many routes into Africa where South African based airlines are attempting to compete against SAA,” Venter said. – Sapa