JOHANNESBURG - The recent changes implemented at the national carrier South African Airways (SAA) have invoked mixed reactions from pundits across the aviation and aeronautics sector in the country.
Whilst some believe that government is throwing money into a bottomless pit by regularly bailing out SAA, others feel that the country is on the right path since the national carrier performs a function that transcends the transportation of people and cargo.
Javed Malik co-founder of PAK Africa Aviation which owns Johannesburg based low-cost aviation company Skywise Airlines, insists that SAA must be supported by all South Africans and hails government for the recent R13 billion bailout for the national carrier.
Malik, who was recently appointed to be the inaugural chairman of the newly formed Regional Aviation Working Group of the South African Chapter of BRICS Business Council (SA-BBC), is unapologetic about the need to rally support for South African Airways (SAA) to regain its pole position as the leading carrier in Africa, and a major player in the global aviation industry.
SAA, he notes, services 60 destinations, in partnership with SA Express, SA Airlink and its low-cost carrier, Mango, within South Africa and across the continent, and nine intercontinental routes from Oliver Tambo International Airport in Johannesburg.
In an interview at his Sandton offices, Malik shares his views.
What is the basis for your strong support of SAA?
There is so much positive going on for the national carrier to dwarf the challenges it currently faces. We should look at the bigger picture. SAA is the country’s brand and ‘business card’ to the world. It fulfills a bigger function than just carrying passengers from one destination to the next. It is more than just a provider of cargo transport services. SAA is our bold and confident introduction to the world and an unapologetic statement that South Africa is open for business. All nations need their own carriers to stimulate trade, boost tourism and, in many cases, assert their sovereignty.
SAA is a member of the largest international airline network, Star Alliance. Its core business is the provision of passenger airline and cargo transport services together with related services, which are provided through SAA and its wholly owned subsidiaries: SAA Technical; Mango its low-cost carrier; and Air Chefs, the catering entity of SAA. The national carrier is the winner of the 'Best Airline in Africa’ Award in the regional category for 14 consecutive years and the winner of ‘Service Excellence Africa’ for three years. Mango and SAA hold the number one and number two successive spots as South Africa’s most on - time airlines. Need I say more?
But SAA has faced many challenges in recent times attracting less than positive press in its wake.
The challenges faced by SAA are not unique to South Africa. Airlines, including giant national carriers from well to do countries in the world, face such challenges too. Today’s aviation environment is more challenging and competitive than ever. We have seen high profile bankruptcies in our time in this industry - think Swissair and Sabena. Spanair and Air Australia are other examples that could be cited as having faltered along the way. So this is not unique to SAA. That is why we all have to work together as government, the private sector and all stakeholders in the aviation industry and business circles to ensure the survival of our national pride. As they say in aviation circles a national airline is an embassy with wings – transporting culture, cuisine, commerce and goodwill around the world. SAA is just that to us in this part of the world. SAA is our flag carrier that instills a sense of pride when its tail is spotted on the runway of a far-off land.
As the Monocle Minute publication puts it: in an increasingly globalised world, smart governments recognise the importance of having their flags fluttering on as many routes as possible. I agree fully with the author in publication who observes that as governments around the world continue to tighten their belts, they also have to remember there are some things you simply have to protect: education, national security, banks and infrastructure are all fundamental. An airline to call your own is also useful to get your citizens around the world and bring in visitors to invest and marvel at your achievements. The airline recently received a bailout from government to the tune of R13 million.
As someone with vast knowledge and experience of the local and international aviation industry, what is your take regarding the bailout?
As South Africans we must take pride in our national carrier and support it. As someone with over a decade’s experience in the aviation industry, I support the move by government for the capital injection recently made for the airline. Indeed, such support will go a long way to stabilise the airline financially and will also help restore the confidence of all stakeholders in the operational sustainability of SAA.
I also fully support Minister of Finance Malusi Gigaba and his team for having taken such a stance. This is borne of a deep understanding that if SAA is not assisted and it faces challenges in meeting its debt obligations, such a situation would have a ripple effect on the government’s entire loan guarantee framework.
The new board and the CEO have placed it on record that the national carrier is fully aware and appreciative of the reality that the allocation comes at a time when the country faces a number of demands competing for resource allocation. That demonstrates astute leadership. SAA is implementing some major initiatives as part of its remediation to improve financial performance and optimise operational performance. The airline has already announced its network changes and other milestones will be announced as the turnaround plan is implemented.
What are your views on the new Board of Directors and CEO?
I have full confidence in the new board that has been appointed to stir SAA to new heights. They have shown themselves in other assignments to be diligent, hardworking and they embrace innovation. They are very clear about what needs to be done to turn the airline around. Under the able leadership of Mr Johannes Magwaza the board hit the ground running to bring stability and a turnaround of the national carrier. I also have full confidence in the ability and integrity of chief executive officer (CEO) Vuyani Jarana. His experience as a former executive at mobile-network operator Vodacom Group Ltd makes him the ideal candidate with a vision to drive the strategy. His business expertise will be a game changer for the airline. I can say without fear of contradiction that SAA has quality leadership. Reports that SAA will capitalise on a growing market through its significant network of flights are encouraging.
We recall that government advised SAA to look for an equity partner that would help strengthen the airline’s financial position so that it eases heavy reliance on state bailouts. What is your take to such a proposition?
I am encouraged by media reports that SAA is paying much attention to a plan to find an equity partner that will provide capital resources and operational savings to help turn the state airline around. There are numerous potential candidates in the aviation industry in South Africa and indeed the greater continent who would be enticed by such a business proposal and come on board to assist in forming such a partnership. This is our airline and flag carrier across the world and such an equity partner would enable SAA to distribute its costs, further improve customer service, which in turn would attract more business to the airline. The national carrier would also benefit in terms of cash flow to meet its obligations and to fund its expansion programmes.
As the newly appointed chairman of the Regional Aviation Working Group of the SA-BBC, give us insights on the aviation sector.
The aviation and aeronautics sectors are a catalyst for growth and powerful tools for economic development, intra-continental trade, and poverty alleviation through job creation. BRICS governments and the private-sector within the five countries, and emerging economies understand that they must up their game in this regard.
As stated in the Fourth Annual Report of the BRICS Business Council, worldwide, airline traffic is forecast to grow over 4.5% annually over the next two decades. This will bring growth to the industry and fuel demand for new equipment and infrastructure.
The current worldwide fleet of 25,000 aircraft will grow to approximately 45,000 between 2016 and 2036 and the passenger numbers will reach 7.2 billion by 2035. The demand for air travel will continue to put pressure on the aviation sector.
It is important for us as BRICS countries to invest in people that will drive innovation and ensure excellence. The public-private partnerships are crucial to success and to ensure investment in the industry.
What about the domestic aviation sector?
The South African aviation industry contributes over R74 billion to the economy and supports 350 000 jobs within the airlines, airports, grounds and auxiliary levels. If we play our cards right we stand to see major growth in the industry. Alan Pardoe, marketing communications director of Airbus, notes that flying has become a commodity and the number of people supported by the airline industry is expected to double every 15 years. We need to invest more in skills development and bring on board more young people. We must create a reliable pipeline of young aviation professionals throughout the industry, share knowledge and skills with them and prepare them to take us into the future we want. Emphasis must be placed on STEM education in the early years of the young people’s school life.