BUSINESS MAVERICK OP-ED: SAA rescue plan reveals government’s tunnel vision

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What is the point of throwing everything at SAA when the rest of the air transport system and entire industries upon which SAA depends are collapsing?

The statement by the Department of Public Enterprises on Monday 13 July, urging creditors to approve the proposed SAA business rescue plan, is like asking turkeys to vote for Christmas. Its fixation with SAA also ignores much bigger issues.

This must surely be a worry for employees as the voluntary severance benefits the DPE has promised employees will also crumble to dust. There is no doubt that South Africa needs a locally domiciled airline capable of connecting our country with long-haul markets. This ensures local jobs are created, revenues are kept inside the country and taxes on its earnings would be paid here. In our present circumstance, we should interrogate whether this role should be performed by a state-owned airline.

Ownership and control have been a contentious topic for years. Compared with all other sectors in South Africa’s economy, the airline industry is a rarity because foreign ownership is restricted to 25%, which excludes it from meaningful foreign direct investment. However, it does present opportunities for local investors.

The big banks, which also rely on retail deposits and loans, should be asking themselves the same questions before rushing to back a plan that will abuse the taxes they pay in addition to those paid by their hardworking and long-suffering retail clients. But high among the priorities is the need to provide and disburse financial relief across South Africa’s entire air transport and tourism industry. Right across the spectrum, cash-strapped airlines, ground handlers, airports, air traffic management and meteorological services, as well as the country’s aviation safety regulatory authority, are in a desperate state.

 

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