John Patten shares more thoughts on current events and questions the need for a national airline.

SAA

Should South Africa actually bother to have a national airline? National airlines in years past used to be symbols of national pride for countries, but the idea has long gone out of fashion as other airlines have proliferated around the world.

South Arica’s national airline, South African Airways, has unfortunately for years not been a symbol of national pride. In fact, it is a symbol of national disgrace.

It has been headed by incompetent ministers appointed by disgraced former president Jacob Zuma and is a serious drain on the national treasury, as taxpayers have had to come to its rescue year after year. Privately owned airline Comair has meanwhile been consistently profitable without any state subsidies.

The Finance Minister, Tito Mboweni, has been blunt in saying SAA should be closed down. Apparently his view still does not have the support of the rest of the cabinet, but SAA has been given an ultimatum to set a course back to viability, otherwise help from the treasury will cease.

Some years ago, Swissair actually bought a minority stake in SAA, but the government bought it out to keep SAA as a 100% state corporation. The argument originally was that SAA needed to fly certain routes for strategic reasons, and that the airline should not be measured only by its financial results.

Destinations in Africa, for instance, were seen as important to South Africa’s self-generated image as the leading nation of the continent.

Similarly, a route to China was regarded as important for building trade with that upcoming country.

These routes were uniformly uneconomic.

It is interesting that New Zealand, which at one time also had notions that its airline should be a symbol of national pride, has dropped all uneconomic routes for other minor airlines to pick up, while concentrating only on mainline profitable routes.

With SAA under warning that its subsidies would be halted if it doesn’t show better results, trade unions National Union of Metalworkers and the SA Cabin Crew Association have nevertheless gone on strike in support of their demand for an 8% salary increase, rejecting SAA’s offer of 5.9% deferred to April next year. Their demand is almost double the inflation rate.

On top of this dispute, SAA is considering plans to retrench 900 SAA workers to assist it in becoming solvent. The unions want no retrenchments, regardless of the fact that it is widely recognised that SAA is overstaffed.

Every new demand the unions make endangers their whole workforce by another multiple.

SAA was forced to suspend its overseas routes over the past weekend, causing considerable chaos among booked passengers and adding a loss to the airline of R50-million a day.

The strike is not total, as some non-union workers are continuing to come to work, so the airline has managed to resume overseas flights this week, but all domestic flights have been cancelled and bookings have had to be picked up by SAA subsidiaries Mango and Safair or by Comair airlines British Airways or Kulula.com.

In spite of mounting losses on top of an overall sliding loss within the airline, the unions are pressing on with their demands and urging an extension of the strike to other airlines to close air traffic down entirely in, to and from South Africa.

If they were to succeed, considerable damage would be done to the whole South African economy, but there are serious doubts that staffs of other airlines would join the strike.

One union spokesman has even suggested that SAA flights would be unsafe during the strike, because it wouldn’t have the skilled staff to ensure safety. It is a claim that seriously damages the airline’s image and has been strenuously denied by SAA, which is threatening to sue.

The unions are playing with fire with their present tactics. Strikes such as this, backed up by demonstrations that amount to intimidation, may be effective when employers are in a position to yield ground, but the South African government is in no such position.

South African Airways is effectively bankrupt and has been for some years. It has no funds to offer for increased salaries.

The funds made available to SAA by the treasury are earmarked to reduce its huge debts, not to boost employees’ pay.
The government has other huge financial troubles, none more urgent than Eskom, which provides more than 90% of electricity to the country. While the government could afford to let SAA fail, it cannot do so with Eskom.

The priority of the Eskom problem has again be highlighted by the surprise appointment this week of Andre de Ruyter, former chief executive of Nampak and with long experience in Sasol, to head the organisation. He has been willing to earn a lower salary to take the job, which is seen as the toughest job in the country at the moment.

One of his first priorities will be to oversee the breaking up of Eskom into the different corporations handling different parts of Eskom’s responsibilities.

To all suggestions that it is unwise for the unions to press their demands in such desperate circumstances, the union spokesmen reply that the workers did not make the problem, so they should not suffer for the mistakes of their bosses.

They feel they are still entitled to a fair living at a respectable wage.

From a trade union point of view, that is very reasonable argument, but it may turn out to be a short-sighted one.

If the government were to bow to trade union pressure, it would probably be obliged to increase taxes or raise the rate of VAT (value added tax) on basic goods. This would be an exceptionally unpopular move, rippling right through to the municipal elections due in 2021.

Faced with such a quandary, the government could actually consider proceeding with largescale retrenchments at SAA or even taking the bit between its teeth and closing SAA down.

Besides having the effect of demonstrating to trade unions the dangers of overplaying their demands, the government would itself still be landed with a problem. The unemployment rate in the country is approaching 30%. There are more people on social grants than there are people employed.

In these circumstances, social unrest is a growing danger for South Africa. The government has to be very careful about how it acts.

It is difficult to see how the present confrontation with unions over SAA will end, but the government could well benefit from underlining to the unions the extremely dangerous situation that is looming, and refuse to bow to their demands, allowing the strike to run its course.

Airline workers would suffer greatly from that tactic, but the country would be saved some of the damage.

John Patten

John Patten is a retired newspaper editor and respected journalist whose father Jack Patten was the editor of the Star and whose grandfather, George Wilson, was the editor of the Cape Times. Educated at Kind Edward VII School and matriculated in 1954 and is a graduate of the University of Witwatersrand.