Comair challenges SAA

National carrierc is burning piles of cash and using an unsustainable business model which is hurting the industry.

So said Comair CEO Erik Venter yesterday when he announced a decision to take legal action after disappointment with SAA's "turnaround strategy".

Comair will today launch an application in the Pretoria High Court to challenge SAA's R5-billion government loan guarantee.

SAA, led by acting CEO and Mango boss Nico Bezuidenhout, made a presentation to the portfolio committee on public enterprises in parliament last week.

It was granted the loan guarantee last year to keep its planes in the air and was ordered by Public Enterprises Minister Malusi Gigaba in October to formulate a new strategy that would focus on "cost containment and revenue enhancement".

But its board suspended acting CEO Vuyisile Kona earlier this month.

Comair, which operates Kulula and the domestic flights of British Airways, has been keenly watching developments at SAA.

Kulula is the last privately owned low-cost airline in South African skies, and Venter has long been a critic of SAA's Mango.

He said that the carrier charged airfares that are "unviable" and still uses a business model based on an oil price of $40 a barrel.

Industry experts expect oil to stay around $120 a barrel this year.

Last year saw the demise of both Velvet Sky and 1time as the jet fuel price increased.

"Comair's sole objective is to attain a level playing-field in the domestic aviation market to ensure that all airlines face the same risks and the same requirements to operate on sound commercial principles.

"By receiving government bailouts, SAA avoids this commercial reality and this negatively impacts on all current and potential airline operators," said Venter.

Comair claimed yesterday that SAA had received about R11-billion in state support since 1990.

Comair wants to use the c onstitution, the Promotion of Administrative Justice Act and the Public Finance Management Act to get SAA and the government to comply with the Domestic Aviation Transport Policy.

"We regret that we have had to resort to legal action to achieve compliance and have not done so lightly. However, we have no other recourse," said Venter.