Opinion: South African Airways is Africa’s airberlin, and is on its last breath

Nick McGowan & Lorenzo Schaaf

EDITOR’S NOTE: The views expressed by the authors in this opinion piece do not reflect any positions taken by Layoverhub as an entity.

The media has been dominated with stories about airberlin’s financial failure, with insolvency declared taken after Etihad Airways withdrew financial support, and the airline looks as if it will fail by next year. However, a parallel story seems to be playing out in Africa: South African Airways is running out of money, and every day, seems closer to facing bankruptcy.

Following the steps of Germany’s airberlin, South African is at the edge of filing for insolvency. How are these two related? Years of bad management have plagued both airlines, with airberlin’s failed shift from holiday airline to hybrid, full-service carrier, and South African Airways struggling as an over-staffed government carrier. airberlin filed for insolvency due to Etihad pulling out, and South African Airways is nearly the same — the government has decided to give up on reforming the airline and is essentially leaving it in the wind, hoping for change to occur spontaneously, as if by magic.

The South African government has been notoriously corrupt over the past years, as the African National Congress (the ruling party in South Africa) has been falling apart, its dominance slowly chipped away by allegations of mismanagement and corruption. President Jacob Zuma has been battling corruption cases since 2005 over a 1999 arms deal and was instructed to pay back the government in 2016 over renovations to his private residence, showing that corruption in South Africa’s government goes to the top of its head. Russell Loubser, a former Johannesburg Stock Exchange CEO and South African Airways board member has said that the airline is dying because the airline is forced to give contracts to politically connected companies, instead of those that offer better a better product.

Two days ago, the South African Parliament’s Standing Committee on Public Accounts (SCOPA) said that mismanagement at South African Airways continues to exacerbate issues at the airline. SCOPA paid a visit to the airline’s main office, with SCOPA Chairperson Themba Godi stating that SAA has “a leadership that is totally disconnected, especially management, which takes bad decisions and which is unable to implement the correct decisions.” However, the committee was vague on changes to be made, and South African Airways has only recently released a turnaround plan, that seems only to hurt customers instead of helping the airline.

The airline will be retiring five narrowbody aircraft this year, including one that has already left the fleet. In addition, the airline will be cutting its flight schedule by 23%. Interestingly enough, these were some of the same steps that airberlin took earlier this year, wet-leasing a large number of its Airbus narrowbody fleet to Eurowings to fuel its expansion, and as a result, airberlin moved to cut routes and frequencies. See the pattern?

The cuts include canceling many flights to destinations in Central Africa and one of two daily London flights. However, given the strong historical demand on the Johannesburg-London route, the strong financial, historical and political links between the two cities, and the price of slots at London’s Heathrow Airport, canceling a daily service only seems to benefit the airline in the short term, and shows one of the flaws in South African Airways’ strategy — only looking for short-term, quick fixes, instead of the larger issues that plague the airline.

The airline will also be cutting flights between Johannesburg and Cape Town down to about 60% of its previous schedule and will cut flights to Port Elizabeth and East London, the fourth and fifth busiest airports in South Africa. While these routes are well served by other airlines, including South African Airways’ low-cost subsidiary Mango, removing the airline from some of the busiest routes in South Africa only diminishes the reputation of the airline and further disconnects the flag carrier from its people — all at the behest of management.

Furthermore, the airline is cutting 5% from the salaries of its employees in order to save on costs. The airline has been plagued by high labor costs, due to its status as a government institution and having the same employment characteristics as one. However, to promote an airline and to turn it around, cutting salaries will do nothing to actually improve the airline’s image in the eyes of passengers who see schedules getting cut and aircraft being removed, in the name of financial savings.

This plan just establishes what we already knew: the management of the airline and the government itself are both out of touch with the customers, and that change will be slow to come (if it ever comes) due to the bureaucracy and lack of direction at the airline. South African Airways is at the same stage as airberlin once was — letting those who have more money destroy the airline. Expanding South African Airways in the 1990s and the 2000s was too risky for an apartheid-era institution that relied so heavily on government funding; daily flights to smaller European cities and the rapid expansion that followed the airline’s era in the dark was too much for the airline, if only someone paid attention to the numbers. The airline’s aircraft are just like the airline itself: all old and dated, with products that can’t match those from Africa’s best carriers such as Ethiopian Airlines and Kenya Airways.

The only solution for the airline is to completely revamp itself, from its management to its aircraft. But, with the rate of change, and the airline tied financially to the government, there is little hope for the airberlin of South Africa.

Featured image by Konstantin von Wedelstaedt via Wikimedia Commons

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