[ad_1]
The government’s plan to form a new state airline poses danger to the commercial air travel industry in South Africa.
This is according to the experts who spoke with Rapport on the future of air travel in the country after the COVID-19 crisis.
The inability to operate under blockade has strongly affected the viability of airlines worldwide.
In South Africa, almost all international, regional and national flights have been made on land, with the exception of those used to repatriate citizens.
These restrictions seemed to be the final nail in the coffin for SAA, which was already in commercial rescue before the pandemic and ground flights occurred.
Business rescue practitioners Les Matuson and Sizwe Dongwana have proposed a plan to liquidate SAA and cut 4,700 of its employees, after the government said it will not provide any more funds to help change the airline.
Public Business Minister Pravin Gordhan opposed the plan and suggested a new airline with a combination of public and private ownership.
On Wednesday, Gordhan told a parliamentary committee that he would present a plan for the new airline to commercial rescue practitioners within 48 hours.
The plan was created in collaboration with the relevant unions and the Seabury air travel consultant.
A presentation to the committee includes the sale of SAA assets and the consolidation of the industry, with the aforementioned private airline Comair.
The government must subsidize private planes
An airline’s business model requires that it carry as many passengers and cargo on as many flights per day as possible.
However, it is highly unlikely that airlines will be able to operate at full capacity when travel restrictions are lifted.
Travel economist Joachim Vermooten said it would be unaffordable for airlines to serve only a few flights and passengers per day.
Public transport expert Jack van der Merwe explained that the government would therefore have to subsidize private jets until demand for air travel recovers.
Independent air travel expert Rennie van Zyl warned that if private airlines went under for lack of government support, this would pave the way for the new SAA to gain a local monopoly.
The airline industry could return to a policy reminiscent of the years before 1990, where SAA was protected from competition.
“Without competition, consumer service will disappear and the old SAA culture will persist and return to a bottomless pit for the taxpayer,” said Van Zyl.
Alternatively, the government may add terms to its financial assistance to private airlines that would benefit the new SAA.
Comair in corporate rescue
Comair, which operates Kulula and British Airways in South Africa, this week Announced would enter commercial rescue due to the effects of COVID-19 travel restrictions.
Executive Director Wrenelle Stander said the company was facing an unprecedented situation.
“These extraordinary circumstances have completely eroded our revenue base, while we are still required to cover fixed overhead costs,” Stander said.
“This is a necessary process to ensure that a focused restructuring of the company is carried out as quickly as possible so that we can return to heaven as a sustainable business.”
Now read: car sales in South Africa fell 98.4% in April
[ad_2]
