SAA’s revival shows that we can face and overcome adversity in this country
Zingiswa Losi
The turnaround of South African Airways (SAA) is a remarkable testament to South Africa’s ability in the face of great adversity, to hit rock bottom and to recover.
SAA’s 90 years, are definitely worthy of a book and perhaps a movie. It was built by workers with strategic state support over many years. It won the admiration of the world, scooping many international awards.
Then came our chapter of state capture across the state and SAA too. We witnessed the tragic collapse of this once proud airline.
No amount of state bail outs, estimated at about R50 billion, could stem its freefall. Covid-19 seemed to mark the final blow. This was a devastating moment for the then 10 000 employees in the SAA Group.
Countless voices demanded it be privatised. The trauma its workers went through was brutal with staff going unpaid for months, thousands laid off, families losing everything.
Few could imagine let alone predict that today we would see SAA once again flying. None would have believed that this could be done with SAA making a profit and not asking for further state bail outs.
Yet this is happening.
Cosatu is pleased that our efforts, the dogged determination of the late Minister for Public Enterprises, Pravin Gordhan, the support of government led by President Cyril Ramaphosa and the ANC, the appointment of a board and management for their competence and strategic vision, and most importantly the tireless efforts of the SAA Group’s staff; are paying off.
Today SAA is reopening routes across South Africa and internationally.
The aviation industry is one of the most difficult to operate in and survive, let alone thrive, across the world. Countless airlines, including international giants, have disappeared over the years. Routes are highly competitive, fuel prices extremely expensive and volatile, and profit margins very tight.
The industry is highly susceptible to external shocks, e.g. economic recessions, disease outbreaks, wars on distant shores etc. Life does not operate in a vacuum, and since SAA reached rock bottom in 2020, the domestic airline industry has seen fierce competition for low-cost domestic travel.
SAA is flying again on South African routes, but this remains difficult terrain. However, there is space to grow, especially for domestic business travel, which is not really catered for by low frills airlines. That’s a niche space SAA can exploit.
SAA has strategically based its rapid revival during a still fragile global economic climate, a short period after we emerged from Covid-19, on international travel and most importantly the African continent.
This is where the market is not over saturated, where there is unfilled demand for direct and comfortable connections to our shores, where tourism and trade needs strategic linkages, and SAA’s reputation is sought for.
Over this period, we have seen SAA once again open routes across the region from Namibia to Zimbabwe, Zambia, Congo and more recently Ghana and Nigeria, and further afield to Brazil and Australia, tapping into major international sources of tourism and investment for our economy.
As SAA’s recovery continues, we hope to see flights connecting our economy to major investment partners across Africa to the United States to Europe, China, India, the Gulf States and Russia.
We appreciate the strategic step by step approach that SAA has embarked upon this revival with. It has been pragmatic, gone for the right aircraft and routes, opening them one at a time. It’s an airline and not a political rally. It must be guided by numbers not emotions.
Why is Cosatu excited by this turn in fortunes for SAA?
First is jobs. SAA’s staff were abused during the previous era when the state-over-enterprises (SOE) was treated as the personal toy of a corrupt elite. Workers paid a horrific price with unpaid salaries, retrenchments and absolute misery.
Today the SAA Group employs 2 800 workers and supports an estimated 33 000 indirect jobs in the value chain, tourism industry and the economy at large. It is hoped that by 2029 this will increase to 3 900 direct jobs and a total of 86 700 jobs supported along the value chain and the economy.
Unemployment at 41.9% is our number one crisis and we must support every possible effort to turn the tide.
Second, SAA’s strategic role internationally has been to connect South Africa to the region and Africa where our future lays and the broader global economy. Low-cost airlines can’t fulfil that demand.
Yet tourism is one of our largest jobs rich economic sectors. Our economy needs to attract investment from overseas to accelerate our recovery.
SAA’s contribution to the economy is currently estimated at R9.1 billion with the potential to reach R32.6bn by 2029 according to recent studies by Oxford Economics.
Lastly, the revival of SAA confirms Cosatu and our affiliates, including the South African Transport and Allied Workers’ Union (Satawu)’s steadfast belief in the potential of this South African icon and that not only can the state, including its SOEs be fixed, but that they can play a critical role in growing the economy and creating thousands of badly needed jobs.
The state today is under enormous fiscal pressures. The days when it could bail out SOEs are over. Yet SAA and the direct and indirect jobs, procurement and investments it supports contribute R1.5bn in taxes to the state and with a potential of R6.4bn by 2029.
We must as South Africans applaud our success stories. It’s easy to be negative and disparage. And we must criticise wrong things. But equally encourage our successes.
SAA’s revival has meant food on the table for workers. It has the potential to play a critical role in spurring the economy and reducing unemployment. It will remain fragile for some time, but we are optimistic that we are turning the tide as we emerge from the decade of state capture.
We need to support these efforts and ensure we never allow our nation or workers to be subjected to such abuses again.
Zingiswa Losi is President of Cosatu.