Flying too expensive in South Africa

Mzwandile Masina, chairperson of Parliament’s Portfolio Committee on Trade, Industry, and Competition, has called out South African airlines for charging exorbitant prices that are not affordable to South Africans.

In a media briefing on Tuesday, Masina took aim at some of the country’s domestic airlines, saying they entered the market as budget airlines only to raise the price to the point where South Africans can no longer afford them.

“The Competition Commission will have to do serious work in some areas. We have raised the issue that some budget airlines have come in and displaced South African Airways as budget airlines,” Masina said.

“Their costs are exorbitant and not affordable for our people. We will need to do a market inquiry in this regard and ensure that our people can move from province to province.”

Following the onset of the Covid-19 pandemic, a complete ban on travel disrupted South Africa’s budget airline market, one in which competitors operated on the tightest of margins.

This led to the grounding of the country’s two main budget airlines, Kulula, operated by Comair, and Mango, a subsidiary of SAA.

Kulula was grounded for good in June 2022 after Comair announced that it would be liquidated after its business rescue efforts failed.

This was partly due to the debt incurred by spending R818 million on eight Boeing 737 Max planes, one of which had already arrived when Covid-19 reached South African shores.

Another contributing factor was the Civil Aviation Authority suspending Comair’s licence on disputed safety grounds.

British Airways flights were a casualty in this saga, as Comair operated it under a franchise licence.

A few months later, in August 2022, Mango was grounded due to SAA entering business rescue in December 2019 and the state refusing to fund Mango’s restructuring.

As a result of South Africa losing these two airlines, the supply of affordable flights plummeted, causing prices to go up.

Then came FlySafair, Lift, CemAir, and Airlink to step into the gap left by Kulula and Mango. However, the domestic air travel market has yet to recover from the disruption that swept it during the Covid-19 pandemic.

The effect of increased competition and supply is also evident in the international aviation travel market. Now that SAA has reopened its route to Australia, Qantas responded by dropping its prices.

SAA recently reported its first net profit in years, swinging from a R1 billion loss in the 2022 financial year (FY2022) to a R252 million net profit for FY2023.

The interim SAA board confirmed the airline’s surprising achievement at its annual general meeting on 20 November.

The airline’s revenue increased 183% from R2 billion in FY2022 to R5.7 billion.

In addition, the airline made its final legacy debt repayment and is, therefore, completely debt-free, leaving the door open for growth opportunities.

The board’s interim CEO, Professor John Lamola, described the “pleasing” results as “emblematic of the hard and careful work that went into the relaunching of SAA as a reliable airline and globally admired brand.”

According to SAA interim board chair Derek Hanekom, the management and board no longer took instructions from politicians about its strategic direction.

Hanekom, a senior member of the ANC, was one of President Jacob Zuma’s most outspoken critics during the Gupta State Capture era.

The Zondo Commission of Inquiry found that political interference had played a role in SAA’s financial deterioration.

Among the most prominent examples was a conspiracy by two SAA directors and former public enterprises minister Malusi Gigaba to drop the airline’s profitable Johannesburg-Mumbai route so that the Gupta-linked Jet Airways could take it over.

SAA’s new board reported that such issues no longer plagued it.

However, it should be noted that the airline’s entire current financial state is unknown, and it remains to be seen whether its turnaround will be sustainable.