5bn Not Enough To Turn Sa Into Aviation Hub

8th October 2012

The government recently granted SAA a R5bn guarantee for a period of two years starting from September 1, 2012. The guarantee will enable SAA to borrow from the financial markets, thus ensuring that the airline continues to operate as a going concern. In return, the government requires that the SAA Board develop a turnaround strategy for its planned purchase of short and long haul fleet.

“The South African government is not seizing the available opportunities,” Tatalias says. He explains SA is ideally located to become a major connecting aviation hub of the southern hemisphere and could easily and flawlessly connect Australia, South Africa and South America. However, the government seems to be failing to recognise this golden opportunity and is reluctant to make a serious commitment while in the meantime passing costs on to passengers. “If we carry on making aviation in our country so expensive, we are well on our way to become a banana republic,” Tatalias says.

Meanwhile the major Gulf-based airlines seem to have taken up the challenge and are aggressively expanding into South America and India, positioning the Middle East as a major aviation hub between East and West. Only recently, Etihad announced it is launching its first route in South America with daily non-stop flights between Sao Paulo and Abu Dhabi. Etihad CEO James Hogan says: “With some of the fastest connecting flight times to China and Japan, Brazil’s largest and fifth largest trade partner, respectively, Etihad Airways is providing vital air links between the world’s major emerging markets.”

According to Barsa CEO Allan Moore, the Gulf based airlines have taken advantage of a huge gap in the market by not only offering connections to multiple destinations in India, China and South East Asia, but also offering transfer flights into multiple cities in Eastern Europe. He says: “They offer easier and cheaper transfer facilities and single cost effective "through fares" that make it more practical to fly through the Gulf.”

Does the aggressive expansion of Middle Eastern airlines mean South Africa has missed the boat? At a Tourism Sector Forum meeting in Durban recently, Mmatšatši Ramawela, CEO of the Tourism Business Council of South Africa, suggested South Africa might just have missed its chance. She explained although South Africa is ideally located to become an aviation transfer hub linking the East and the West, the country unfortunately doesn’t have an airport that fits the bill.

Tatalias disagrees however and says: “No, we haven’t missed our chance yet.” He also warns however, it is time for the government to take urgent action within the next two years if we want to live up to our potential. He says: “The government now needs to decide if it wants to start playing like one of the big BRICS boys or continue to be considered as the small African partner. The presidency needs to start making changes, take charge and stop thinking with its head in the sand.” He adds the government needs to take radical decisions, open up South Africa to other airlines and invest in fuel, airports and SAA to make the national carrier a competitive airline to be reckoned with and to become a real aviation hub that fits into the 2020 Vision.

written by Dorine Reinstein for Tourism Update