SAA’s ‘unfair advantage’ in focus

The airline industry is in survival mode and needs to move beyond that into an era of sustainability, said Erik Venter, joint chief executive officer of Comair. Speaking at the monthly Transport Forum in Woodmead last week, Venter said in South Africa specifically it was important that the playing field was levelled to give everyone a fair chance. Referring to government’s continuous bail-out of South African Airways, Venter said this affected both passengers and freight. “As private airlines there is just no way we can compete with an entity that operates in an environment where they are just given money as and when it is needed.” He said it was clear that sustainability was a major problem for domestic airlines taking into account that 73% of the start-up airlines since deregulation had failed compared to the state-owned airlines where there had been growth. “With the industry not making a profit at present it is difficult to attract investors and just as difficult to raise funds. Add to that operation in an arena where state-owned entities have an unfair advantage, and we are facing big challenges.” He said a practical example of this was SAA Cargo offering a 25% discount on rates for three months. “No private company could even consider such an offer as it would be unaffordable. It then makes sense that they were taken to the Competition Commission by their competitors.” Professor Jackie Walters, head: Department of Transport and Supply Chain Management at the University of Johannesburg, agreed saying it was important to protect the principle of competition. “The playing field is not level in the aviation industry, be it for passengers or cargo. With the State still competing with privately owned airlines in a fully deregulated market, we have a situation where Government is the referee and a player in the market.”