Global airline execs believe in SAA – with a few caveats

“I don’t think privatisation is the answer. You need to have an open market,” was the frank assessment from Irishman Willie Walsh, the outgoing director-general of the International Air Transport Association (IATA), when asked what the turnaround strategy should be for South Africa’s embattled national carrier, SAA.

The airline veteran also said it was not arrogance for the country to still be seduced by the prestige of operating a national airline. “I wouldn’t call it arrogance because, to be honest, you know, I ran British Airways. It was privatised in 1987, but still people saw it as the national carrier. So, it is just human nature.”

Daily Maverick was part of a sizeable global media contingent, flown to and hosted by IATA at the organisation’s 82nd annual general meeting in Rio de Janeiro, Brazil.

It was the first time for the newly minted interim SAA chief executive Matshela Seshibe to be attending the conference. He seemed calm but slightly overwhelmed while chatting on the bus to the Boeing-hosted welcome reception, and spoke of positive interactions with airline CEOs from the Star Alliance (there are two mandatory alliance meetings per year and one happens at the IATA AGM).

The other large airline alliance, OneWorld, welcomed Philippine Airlines into its fold with a press conference at the AGM – which prompted Daily Maverick to ask Walsh whether struggling economies like those in sub-Saharan Africa could leverage a subsidy or development funding from the alliance networks.

“No, I don’t see it,” he said, explaining that the structural challenges in Africa would persist regardless of who was making the investment. His position was based on the presence of these structural barriers making the overall case for investment weak, and approaching the issue from an alliance perspective would not make a difference.

Instead of relying on alliances for subsidies, Walsh reiterated that the true solution for African aviation was the implementation of the Single African Air Transport Market, a project of the African Union.

A world on its own

A separate discussion with Kamil Al-Awadhi, IATA regional vice-president for Africa and the Middle East, yielded a different perspective on the South African situation and the issues plaguing SAA. Though he was largely satisfied with Mzansi’s airline industry, there were a few concerns.

“What I maybe [am] not impressed with, is this internal squabble between entities that’s affecting the [industry] ... I think there’s a lot of room for improvement in some of the coordination between different entities within the government to improve the airports, the ANSP [air navigation service providers] and how to handle South African airlines.”

And because taxes were very much on the lips of all the IATA representatives, Al-Awadhi had some choice words for what is emerging as a serious sore point in the South African business market: “The B-BBEE that the government wants to force on the airlines without understanding [their operations]… What do you mean? Fifty percent of my employees in Italy have to be South African? Well, how am I going to do that? It’s these little things that sort of sort of hamper and, let’s say, disrupt the aviation industry in South Africa.”

This may have been in reference to the FlySafair situation in 2024 when South Africa’s International Air Services Council (IASC) found Ireland’s ASL Aviation Group to be in breach of the Air Services Licensing Act. Domestic airlines are required to maintain at least 75% local shareholding, while the International Air Services Act requires what is interpreted as 51% local ownership.

The IASC found that a 74.86% shareholding rested with the Irish group and FlySafair was at risk of losing its operating licence as a result.

Despite the challenges, Al-Awadhi and Walsh agreed that South Africa’s foundational infrastructure, banking systems and industry intelligence presented massive opportunities for growth, positioning it far ahead of other African nations.

“South Africa is a different ballgame. So when I say Africa is 54 different countries, South Africa is the 55th different country,” Al-Awadhi explained.

“Look at the quality of the airport in Johannesburg, for example. It’s an efficient, well-run airport. It’s a nice airport. People would want to transit through Joburg.”

Turning the bird around

Just like Walsh, Al-Awadhi believed that SAA still had a bright future. He did, however, also provide a decidedly blunt assessment of SAA’s leadership revolving door, stressing that turning the airline around required a highly specific “firefighter” chief executive who had to be given the autonomy of a private entity executive.

“There are different types of CEOs, and there’s a CEO that you bring in who firefights and pulls it out of shit, okay. But that’s the hardest CEO to find.” Nothing he said hinted at his believing that Seshibe was that kind of CEO. “You don’t give a person who has never done this before this situation. I mean, why?” he questioned.

“Treat it like a private entity. Get a CEO who knows what he’s doing. You can turn airlines around. And I tell you, that airline – I can turn it around in two-and-a-half years, and in the third year the P&L [profit and loss] will be profitable.”

Al-Awadhi speaks from experience having led Kuwait Airways in different positions and from various states of decline to moderate success.

Speaking to many alliance partners and IATA members revealed an interesting consensus that South Africa possessed foundational strengths, notably its infrastructure. At least two of its airports, they claimed, rivalled major global hubs like New York, Chicago and Heathrow for quality.

Al-Awadhi did raise concerns about the subsidisation of the airports and recommended that South Africa change its airport management structure by adopting the Saudi Arabian model, which involves separating airports into different entities based on their profitability.

Currently, South African airports are predominantly managed by a single entity, Acsa, and the highly profitable hubs like OR Tambo International Airport are forced to “prop up” the unprofitable smaller, regional airports. Al-Awadhi criticised this approach, arguing that it unfairly penalised airlines and passengers operating out of major hubs to support struggling airports they never use.

In turn, South Africans could look to industry ­bodies like IATA as pure profit-focused entities that want to find multiple routes to fully liberalised and privatised markets. But all sides of the airline market makers have their faults. DM

This story first appeared in our weekly DM168 newspaper, available countrywide for R35.