17 October 2017

South Africa: Op-Ed - Why Does the Government Hold On to SAA?

analysis

It is a truism that governments have no business running an airline. The airline industry is notoriously capital and skills intensive and yet has hair-thin margins. By GUY LEITCH.

Richard Branson famously said that the airline business has made more millionaires - out of billionaires - than any other industry. So why does the South African government persist in throwing billions at the now terminally afflicted SAA and its stunted sibling, SA Express? There is no reason to believe that this time around SAA will magically become profitable.

What happened to the intention to privatise SAA in the late 1990s? One of the reasons the state claims it won't consider privatising SAA is the "development agenda".

I have on my desk a copy of SAA's latest turnaround strategy - "Corporate Plan April 2017 to March 2022". Like the countless turnaround plans before it, this plan claims that SAA fulfils a "developmental agenda". However, what this agenda entails is not defined, other than to state in sweeping terms that SAA's role is to "support South Africa's National Developmental Agenda through: transformation, job creation and connecting RSA to trade and tourism partners".

Notably though, the National Development Plan makes no reference to...

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