Public enterprises mulls national aviation policy for state airlines

Malusi Gigaba (Image: GCIS)

The route networks‚ fleet acquisition and long-term strategies of the three airlines would be aligned in pursuit of SA's national development goals.

Gigaba also indicated in an address to Parliament's public enterprises portfolio committee that a Fly SA policy or act was envisaged that would require all government officials to use the state-owned airlines - with the proviso that these airlines improved their customer service and efficiencies.

He said the government wholly endorsed SAA's long-term turnaround strategy which would involve SAA's withdrawal from loss-making long-haul routes and place a greater focus on the profitable domestic and regional African markets.

SAA's African routes were coming under increasing competitive pressure‚ particularly from Middle Eastern airlines.

The turnaround strategy was unveiled by SAA's chief executive Monwabisi Kalawe to the committee for the first time. The long-awaited strategy will determine SAA's business over the next 12 years and is intended to put the national airline on the path of profitability‚ financial sustainability and operational efficiency.

Routes are the foundation

In his opening remarks Gigaba stressed that a re-worked route network was the bedrock of this strategy.

He said that the department was engaging with Treasury with regard to a recapitalisation of SAA to re-establish the national airline as a going concern.

While these talks were underway‚ SAA would focus on cost containment and strengthening its balance sheet‚ in particular by reducing its high level of debt and improving its debt-to-equity ratio.

Gigaba said the department would beef-up its monitoring and evaluation of SAA to ensure that it was steadfastly implementing the long-term strategy.

He noted that the new board which was appointed late last year was given the mandate of coming up with a turnaround strategy and reviewing the airline's business model.

This‚ Gigaba said‚ would have to include a review of the route network‚ fleet optimisation‚ an assessment of the state's airline assets‚ the development of a cost-management framework and the incorporation of an African strategy.

The minister said it was paramount that SAA delivered on its mandate and become commercial sustainability while recognising that the airline industry was a highly competitive one which operated on low margins.