The aviation industry is one of the most competitive in the world. It is all the more so in South Africa where SAA has a long history of ruthlessly getting rid of competition in the domestic market.
Comair and Airlink survived these tactics in the past, which started a price war with fares so low that the new competitor went out of business. A practice that cost it huge fines from the competition authorities. Comair, whose profits were almost wiped out one year, protected itself by acquiring a British Airways (BA) franchise, a move that proved so successful that BA took shares in it.
Airlink’s managing director, Rodger Foster, decided to protect his airline by offering to act as a feeder for SAA by serving “thin” routes with its smaller aircraft. This worked so well that when he later decided to break with the national carrier because it was holding him back by preventing him from expanding his network, SAA persuaded him to stay by granting him a franchise while letting him expand to other areas in which it had no interest.
With this background, it’s not surprising that suspicion fell on SAA and its low-cost division Mango when award-winning airline 1Time gave up the fight it had hoped to win with the protection of business rescue, and closed without warning on Friday. Particularly as Mango was preparing to compete with it on its regional routes to Zanzibar, Mombasa and Livingstone and Minister of Public Enterprises Malusi Gigaba made it clear to the new boards of SA Express and SAA that he expected them to dominate the domestic market.
But apparently finance that the business rescue practitioner had hoped was forthcoming was, in the event, refused and the practitioner decided there was no hope of survival.
It appears that Airports Company South Africa (Acsa), which has put up its charges by 15 percent to enable it to pay off loans needed for improvements to our airports, is one of 1Time’s biggest creditors.
And it seems that the Department of Public Enterprises, which owns SAA, is in negotiations with the Department of Trade, under which Acsa falls.
It will be interesting to see if these result in some favourable treatment for state-owned airlines.
1Time
So South Africa might wake up to a new development in the 1Time saga. If this does not feel like a roller-coaster ride for chief executive Blacky Komani, then it must be like climbing Mount Everest. The man had been on the radio, television stations and newspapers the whole day yesterday and it felt like the more he talked, the more he said something different.
Yesterday, airline spokeswoman Refilwe Masemola was quoted saying at least three different things. First it was about customers that used cash to pay for their tickets and then later on it was how all would be revealed in a press briefing today.
Masemola is better than Komani, who was quoted denying that 1Time had filed for liquidation.
We live in an information age, news travels fast and the access is beyond anyone’s imagination. I counted at least three statements sent out by Komani or 1Time either on the company’s Facebook page or on the Stock Exchange News Service (Sens) saying that the company had applied for liquidation. One that Komani wrote to his employees on Friday read: “It is therefore with the utmost regret, disappointment and heartfelt disbelief that we have to file for liquidation, which means the end of a dream and an era for all of us.”
It could be a play of words in the instance of “we have to file for liquidation”, instead of “we have filed for liquidation”. Either way, 1Time said it had applied for liquidation and only yesterday the airline said it had not appointed any liquidators.
However, the Sens announcement said the company had filed for liquidation. Maybe the airline will surprise us by getting back into business sooner than anticipated and sort out its public relations mess. page 16
Telkom
Telkom has been as enthralling to watch from the sidelines as was the game of tennis between world champion sisters Venus and Serena Williams in South Africa last weekend. Only Telkom’s match has not created euphoria for all the right reasons.
Year after year, since the days of former chief executive Reuben September, little good news has emerged from Telkom.
To Telkom’s credit the launch of 8ta, its cellphone subsidiary, and its subsequent promotional initiatives and activities emerging from Telkom Business have created some hope that all is not dim.
However, to-date Telkom Business is the only star performer, leaving not much to be said of Telkom’s holistic strategy.
As a shareholder said yesterday, it would be difficult to decide at this point in time whether or not to pull out of the company and seek better and guaranteed returns elsewhere.
For all the mismanagement Telkom suffers, its assets and particularly its copper infrastructure are prized.
Speculation abounds over a proposal to merge 8ta with rival Cell C – the telecoms industry’s two smallest players – but all eyes are on the government to steer Telkom out of the embarrassing mess that it finds itself in. Just as the state’s grip on SAA has caused near paralysis of the national carrier, its unashamed possessiveness of Telkom is gradually destructive of the inherent value.
One commentator offered that perhaps the annual general meeting was an epiphany for Neo Dongwana,who happens to be slain activist Chris Hani’s daughter, and who was re-elected as director at the meeting by an overwhelming majority.
The state’s control over Telkom, with little regard for its minority shareholders, may have been too alarming a prospect to challenge, according to the analyst.
Edited by Peter DeIonno. With contributions from Audrey D’Angelo, Nompumelelo Magwaza and Asha Speckman.