SAA – the end?Back to Forum
I understand that contrary to what was expected, salaries were paid for November. This probably means that on Monday they will realise they don’t have money to pay for fuel.
Their loadings on JNB LHR JNB for next week look very poor, but some of BA’s aren’t brilliant either, so it may be a seasonal thing.1 Dec 2019
This article probably explains why SAA is doomed :
Ferial Haffajee: SAA strike grabs headlines, but the flying market has moved on
We thanked our lucky stars flying out to London last Thursday night, the first day of the SAA strike. We had booked BA. It’s much cheaper than flying SAA.
The British carrier was packed to the gills: there wasn’t a seat to be had from first-class to business and economy, said ground staff. SAA passengers rebooked themselves or the national carrier had to make plans for its clients who had to be somewhere – which, when you think about it, is almost everybody with a booked flight.
But last week on leaving and this week on getting back, the strike was barely noticeable at OR Tambo, the Johannesburg international airport. The routes into and out of South Africa (especially the Johannesburg-London and Cape Town-London flights) are so lucrative that a range of airlines fly them.
To get to London, you can fly BA, Virgin and SAA. If you don’t mind a layover, Emirates and Qatar are good value, and so is Ethiopian Airlines, which is quickly replacing SAA as the continent’s leading carrier. In the absence of SAA, if you need to fly on our continent, you can use Ethiopian, Kenya Airways or RwandAir, in addition to SA Express, the regional airline which was not on strike.
And domestically, SAA’s market share of 56% has steadily been whittled down by Comair and its budget operator, Kulula, as well as by the nimble FlySafair, all three of which have proven wily competitors, even faced by the highly subsidised SAA.
Barriers to entry into the low-cost airline market are still high, but the strike this week was more muted than it might have been because there is so much competition. The SAA monopoly has largely been broken by competition. A study for the National Treasury showed how, when FlySafair entered the market, prices came down significantly as it created triangular competition. Eleven airlines hit the skids in the Noughties, according to the study, but Comair and FlySafair seem to be well-captained and sustainable.
SAA CEO Zuks Ramasia thanked patient passengers this week, but there may not be so many of those left. Last year, SAA bumped me off a long-haul flight, and when I tried to use the coupon they gave me to fly again, the customer services number rung off the hook for about an hour.
That was me gone. The competition is better and cheaper, and while I had been a patriotic flyer, believing that it was part of my national duty to fly SAA (plus the staff are really nice) – no longer. I guess it will be much the same with most passengers, disrupted by the strike this week or made nervous by the negative headlines and Numsa’s threats against passenger safety. You don’t play with flying and safety, and the market moves on, as I guess it did in great numbers this week.
Convenience went down; risk went up. SAA has eaten itself up. Unlike a strike at a factory or a mine, the audience or stakeholders available for disruption by labour are not static or captive in an airline strike beyond the single disrupted flight. Thereafter, you can move and my guess is we have. In droves.
The risk for SAA now is that the hard rump of its full-fare paying customers – corporates and individuals – are largely gone, and that its captive market of government employees and politicians remain.
If you look at SAA’s ticketing structure, politicians get a wad of free flights for themselves and families from SAA (or from taxpayers) while government departments get highly discounted prices. The free flights explain why Public Enterprises Pravin Gordhan got a dressing down from the ANC caucus this week for his comment that SAA is not too big to fail. Who else will fly them with families for free all around the country? Perhaps a dodo.
There’s a big ideological free-for-all happening about whether or not SAA should exist. But the people who really matter – the paying passengers – have flown the cuckoo nest.1 Dec 2019
Alex….Bloomberg is suggesting that the large SA travel agent Travel Start is refusing to book pax on SAA due to the compromise of the lack of insurance cover on domestic flights. Many pax are connectors from international to domestic flights in SA. So, should the UK CAA take urgent action to investigate the insurance cover of pax to and from the UK and elsewhere?2 Dec 2019
The promised ‘announcement’ has not happened.
There are rumours of a merger with Ethiopian, or as one news medium said ‘another west (sic) African carrier’. One can’t really place much credence on that. I have been in touch today with 3 friends, all ex-SAA employees, who are in turn in touch with several past and present colleagues at the airline and nobody appears to have any new concrete information.
Gordhan says SAA in ‘intense discussions’ with lenders, calls on public to buy tickets
Dec 02 2019 06:19 Jan Cronje
Minister of Public Enterprises Pravin Gordhan has said that cash-strapped airline SAA is in intense discussions with lenders to secure much-needed funding and will go through a “radical restructuring process” to ensure its financial and operational sustainability.
Gordhan, in a statement on Sunday afternoon, said a weeklong strike by members of National Union of Metalworkers of SA and the SA Cabin Crew Association had “caused immense damage to the reputation, operations, and the deterioration of the finances of SAA”.
The strike, which cost the airline an estimated R50m per day, ended on November 22.
The finance minister’s latest statement comes after Flight Centre on Thursday said it would stop selling SAA tickets until “certainty” returned to the market.
Both Santam and Hollard insurance have withdrawn insolvency cover benefit on SAA tickets.
Support the airline
Gordhan on Sunday said it was the “collective responsibility as South Africans to support SAA in its efforts to restore sales confidence among its customer base and rebuild revenues in the shortest possible time”.
“We therefore reassure customers and encourage them to buy tickets with confidence.
“SAA is determined to remain open for business. Management is also committed to ensure financial sustainability going forward.”
SAA’s board and management would intensify marketing campaigns to rebuild confidence, said Gordhan. He added that the airline’s leadership would be taking “bold initiatives to increase its market share,” without providing further details.
Gordhan did not say which lenders the flag carrier is in discussions with. In mid-November the minister said that while the government as committed to saving SAA, there was no room for further bailouts.
“Even if there were funds available, there is no legal mechanism to provide funding to SAA in the current year,” he said after meeting with striking workers on November 19.
Finance Minister Tito Mboweni, meanwhile, presenting his mid-term budget in late October, announced that the state would no longer be bailing out state-owned enterprises, but would be open to providing loans that had to be paid back with interest.2 Dec 2019
Apparently, the airline agreed to a pay rise of 5.9% backdated to february after an 8 day strike. It will be paid in February 2020 – provide the airline has the cash to do so!!3 Dec 2019