Opinionista Gidon Novick 8 July 2020

Do not bail out SAA – rather feed seven million hungry South Africans for a year

While I appreciate valiant efforts by the Department of Public Enterprises to save SAA, throwing good money after bad stopped making sense the moment millions of South Africans faced lockdown-induced starvation. The logic dictated by the numbers is truly persuasive.

I was never a disinterested observer watching SAA gobble up South Africans’ funds over decades while competing with privately-owned airlines – one of which was my own Kulula.com, which I helped start in 2002.

During the last few months, I have had an engagement with the Department of Public Enterprises’ highly impressive advisory team regarding my recommendations regarding SAA’s future.

Notable in my presentation was a plan for SAA that precludes any future state-funding for the airline and the rebirth of a proud national carrier utilising private funding. I have no doubt that following this SOE’s disastrous past and a cost to our country of more than R57,000-million (I have restated the R57-billion in order to make this extraordinary number that much more real), this is an urgent and critical issue.

Apart from my endeavours in the travel and tourism industry, I chair a food rescue organisation called SA Harvest. Since the Covid-19 pandemic broke, our team has delivered more than one million nutritious meals via beneficiary organisations to hungry South Africans at a cost of around R2 per meal. The organisation is built on a core belief that food is indeed a human right, as enshrined in Chapter 27 of our Constitution. SA Harvest and many other NGOs are trying their best to fill a gargantuan void that the government has left behind.

I noted the latest request is that the government will need an additional R10,000-million of further state funding for SAA and its subsidiaries. A privately-funded, commercially-run, demand-led airline would require only a fraction of this. We all know the funding won’t end with the requested R10,000-million and it will merely be the start of another unaffordable annuity burden on our country. It would also create a platform for further corruption.

How could it be justifiable to unnecessarily allocate precious and scarce resources at a time of national crisis to an industry that serves the top 5% of wealthiest South Africans? Clearly, this is not a strategy to reduce inequality in our country.

At the risk of oversimplifying, R10,000-million could provide 5,000 million meals. According to StatsSA, millions of South Africans were below the food poverty line pre-pandemic. The R10,000-million that is necessary to keep SAA going, albeit in a severely slimmed-down version, could feed seven million hungry South Africans almost two meals a day for an entire year.

Arguments for the need for a state-funded airline are outdated and illogical and I can only assume are politically driven. I summarise the following facts that have been put forward repeatedly and remain relevant and valid:

  • Private enterprise is willing and able to service the local airline industry and historically has done so.
  • These commercially-run businesses pay taxes (VAT, PAYE, income tax etc) to government, which in turn utilises these funds to subsidise a competitor.
  • The protection of a few thousand jobs at SAA does not warrant billions in ongoing subsidies.
  • The government can choose to subsidise “strategic routes” operated by private airlines if it so chooses.
  • The government’s focus is needed as the regulator and key infrastructure provider to the airline industry, not as a player in the industry.
  • This is an approach followed by the vast majority of progressive nations across the world.

It would be irrational, unconscionable and inhumane for South Africa’s leadership to even consider prolonging the pain that SAA has caused its struggling people. Any further wasteful expenditure will encumber future generations as well. Covid-19 has presented the government with a once in a lifetime opportunity to free itself from the SAA noose forever.

Any additional cent spent on SAA will be coming directly from the mouths of starving South Africans.

I implore the government to use this opportunity to provide relief, hope and confidence to our struggling nation, especially the hungry among us. We cannot once more choose to waste money on a failed and hopeless enterprise while we can use the money to help millions of fellow human beings avoid food deprivation of cataclysmic proportions. This choice should not have been so difficult. DM

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