It has been a historical year for South Africa’s national airline, SAA, transitioning from business rescue, a form of bankruptcy protection to entering a startup phase for an all new airline albeit one emerging from ruins of the old and flirting with a new business model that the government promises will largely be under private hands. All in the middle of a global pandemic that has threatened the survival of the industry
New beginnings have inspired a new era of broader collaboration. A recognition that we cannot do it alone especially if the glory days are to come back.
The carrier recently announced a strategic partnership agreement signed with Kenyan airways, with the aim of establishing a pan-African carrier. This came just after Kenyan President, Uhuru Kenyatta had recently visited South Africa to discuss bilateral business relations in the area of trade, tourism and aviation.
The strategic partnership is poised as an enabler for both Kenyan Airways and South African Airways and aims to prop up both airlines’ viability, toward increasing cargo opportunities and passenger traffic.
The news however was welcomed by a mixed audience, with some believing this to be another case of the blind leading the blind.
Version 2.0 of South African airways is still in its infancy stage, having risen from the ashes of its predecessor and taken back to the skies two months ago, after it succumbed to financial trouble and ultimately the covid pandemic. The national airline’s struggles started long before the pandemic, with net losses spanning over a decade.
Between the period of 2015 and 2020, SAA recorded cumulative losses of up to R23.3 billion: a loss of R1.5 bn for its 2015/16 financial year, R5.6 bn in 2016/17, R5.3 bn in 2018/19 and R5.5 bn (estimated) in 2019/20.
It was brought back to life in September this year with a process underway to establish new management and different ownership, with the government holding 49% of the shares and 51% belonging to the Takatso consortium in a public-private partnership.
Kenyan Airways (KQ) is no saint either, as the national carrier has been facing its fair share of problems. The airline posted a historic loss of US$333 million for the fiscal year of 2020. They attributed this record loss to the pandemic and were awaiting a government bailout of US$91 million.
However, KQ’s Dutch partners, Air France-KLM who owned 7.8% of the airline pulled out their equity holding in a mutual agreement at the onset of the pandemic. The rest of the airline’s shareholding is held by the Kenyan government with 48.9% with 38.1% belonging to the KQ Lenders Company, and the rest to private shareholders. However, KLM’s departure is viewed as a step towards the airline’s plan to be fully nationalized. A bill to this effect is currently before the country’s parliament.
It boggles the tax payer’s mind therefore, on both sides of the equator, who will pick up the bill when these two record their next loss, this time as a united front.
A glimmer of hope was however noticed this week as South African airways signed an interline agreement with the COVID bloomer, CemAir which has been doing very well and enjoying exponential growth in the recent past. CemAir is a South African privately owned domestic and regional airline. The airline has standing agreements with aviation giants, Ethiopian Airlines and Qatar Airways.
The cooperation agreement between the two players which was announced earlier this week, will play a pivotal role in extending the network reach of both operators. Customers will now be able to book a single ticket when connecting to multiple destinations. “Airlines the world over constantly strive for efficiency and the benefit for the customer is that this agreement is convenient and lowers the cost of booking one ticket instead of two separate tickets,” said SAA’S Interim CEO, Thomas Kgokolo.
The partnership will also expand SAA’s domestic reach, which until now, has only consisted of flights between Johannesburg’s OR Tambo International airport and Cape Town. With CemAir as a partner, SAA ticket holders will now be able to fly to Durban, Hoedspruit, George, Kimberly, Bloemfontein, Plettenberg Bay, Margate, Sishen and Gqeberha. “We are excited to partner with South African Airways, one of the oldest airlines on the continent and a brand known by perhaps every South African,” said Miles van der Molen, CemAir’s CEO.
Are SAA’s strategic partnerships a sign that the airline is building back different and will ultimately be successful? Has the airline learnt from past mistakes?
Time will tell!
By Eleazar Mabunda