Fallout with UAE not good for business of SA Inc

The ugly, protracted public spat between Pretoria and the United Arab Emirates over a bilateral air services agreement would have done little to convince foreign investors that South Africa Inc is truly open for business.

''Transport department pledges not to bar Emirates from the skies'' read a gob-smacking headline in The Times's sister newspaper, Business Day.

Backtracking on its earlier threat to "disrupt" the services of Emirates Airline over the latter's decision to introduce a fourth daily flight between Johannesburg and Abu Dhabi last month, the transport department stated "categorically" that it had no intention whatsoever of doing so.

Pretoria insists the fourth flight is not authorised and that the bilateral agreement, which arose from the need for additional flights for the 2010 World Cup, must be renegotiated.

Whatever the merits of the dispute, the government's imperious approach, including reportedly summoning a UAE minister to an immediate meeting, has not helped the country's investment case.

The need to protect South African Airways from too much competition lies at the heart of the disagreement. To be fair, most governments would come out to bat for their national carrier. But the perennially cash-strapped SAA is something of a special case.

Massively in debt and invariably in need of huge government bailouts, it is riven by messy boardroom battles that not even the Minister of Public Enterprises, Lynne Brown, appears able to solve. It also persists in flying expensive long-haul routes that make no sense economically.

At present its CEO is not in his job, despite Brown's instruction that he be reinstated after his suspension by the board's chairman, who is close to President Jacob Zuma.

Yesterday, Brown said the government would consider a strategic partner for SAA, in line with the Treasury's efforts to rein in public spending. The Emirates debacle will make this option that much more difficult.