Smaller players want in on some of SAA's bail-out billions
The Times Editorial: The continuing bailouts to state entities like Eskom, SAA and Telkom are killing the industry they operate in and if not reviewed, the private sector will have no option but to close shop.
Low-cost airline 1time and other private carriers that are still operating are challenging the government's decision to yet again bail out SAA to the tune of a R5-billion loan guarantee.
Since 1990 when government decided to deregulate the industry in 1992, SAA has amassed losses of R17-billion in total and it seems more will still be thrown its way.
As we state in our front page story today, private carriers are asking the government to play fair.
Comair CEO Erik Venter argues that private carriers would never be able to operate at such losses and that, if the state of business continues as it is, they will be driven out of the market.
While the government might argue that the country needs to have a state carrier, it however, does not make business sense if other small players whose service is vital to the industry are driven out. The sharp rise in the price of jet fuel in the past two years has made life even more difficult for private airlines to survive in a market SAA dominates.
The challenge faced by small private airlines should be looked into.
We should begin to ask whether we need a national carrier that continues to operate because of a guarantee from the government.
If the argument is that SAA flies the country's flag and represents who we are internationally, is it worth the price we are paying every year?
The billions paid out to public entities is a sign that the trend is not going to stop any time soon.
Though 1time in its letter to the government is not asking for a bailout, it does, however, request "a reduction in the fuel levy and taxes to the aviation industry".
To put it bluntly, private airlines are asking for a government "subsidy" to survive.