The Organisation Undoing Tax Abuse (Outa) has called on South African businesses and consumers to boycott South African Airways (SAA).
This followed Finance Minister Tito Mboweni’s announcement that the government will allocate R10.5 billion to SAA to help it implement its business rescue plan.
Mboweni made this statement during his medium-term budget speech on Wednesday 28 October, which drew sharp criticism from many commentators.
Sygnia CEO Magda Wierzycka said the government is using money which can be better spent elsewhere on trying to save something completely unsalvageable.
DA shadow minister of finance Geordin Hill-Lewis said the ANC government has chosen to cut essential services to the public, like education and policing, to fund another bailout of SAA.
He added that Mboweni should have held the line and refused this bailout and that the decision shows the ANC’s disregard for poor South Africans.
Outa has now called for a boycott of SAA to send a strong message to the government that further tax wastage will not be tolerated.
Outa CEO Wayne Duvenage said since 2007, SAA has cost the taxpayer more than R72 billion in bailouts – R54 billion in treasury grants and R19 million in government guarantees.
“This money could have been used instead to stimulate the economy by creating real and sustainable jobs,” he said.
Outa raised concerns regarding the need for the state to waste more funds on SAA, saying the latest R10.5-billion injection will not be the last.
“The current aviation industry climate and economic environment is the ideal time for the state to close down this once-successful airline that was ruined through mismanagement and corruption,” said Duvenage.
Outa said keeping unjustifiable SOEs afloat is a waste of the state’s scarce resources and SAA is now nothing more than a vanity project.
Not the first call to boycott SAA
This is not the first time there has been a call to boycott the struggling airline and to not fly SAA.
Earlier this year, Vestact CEO Paul Theron said SAA is a massive drain on the economy, and the sensible and patriotic thing to do is to boycott the airline.
He explained that the embattled airline relied on funding to operate, which is becoming increasingly difficult.
“They are going to keep borrowing money on less and less favourable terms every week until the whole circus goes down,” Theron said.
“SAA flights are empty. No one in their right minds would book a flight long in advance if there is a risk that the airline will go under.”
Theron said an airline is a challenging business, which is made even worse when it is owned by the state and run by amateurs.
He said the SAA is using state subsidies to compete unfairly and has been fined billions for anti-competitive behaviour in the past.
This view is shared by many other commentators, including former FNB CEO and entrepreneur Michael Jordaan.
Commenting on SAA’s losses and mounting bailouts, Jordaan said flying wealthy people at a loss shouldn’t be a national priority.