'Beware of Greeks bearing gifts' - old Trojan proverb.
PUBLIC Enterprises Minister Jeff Radebe appeared to have chosen his words rather carefully last weekend after the announcement that Sun Air had, to coin a phrase, crashed. A declaration by the Competition Board that the domestic market could not sustain a fourth airline "raises concern about some of the basic assumptions that were made when Sun Air was privatised".
That's smooth talking. Note that he did not say he believed the domestic market was saturated. Note that he didn't say that the privatisation was a bad decision. But I'm getting ahead of myself here...
Last month, the World Economic Forum released its global competitiveness report which showed South Africa slipping five places to end at 47 out of 59 countries.
Except for domestic air travel, where South Africa was rated the highest in the world.
Those standards — in my not so humble opinion — were set by Sun Air. Consistently rated the best airline in the country for service and reliability by frequent fliers and by the tourism industry, the other carriers found themselves having to play catch-up. They resorted to expensive promotions and tie-ins with fast food chains but Sun Air kept knocking them back with three things: Quality, reliability, price.
My own thumbsuck survey among frequent fliers found that of those who flew South African Airways, all would have been willing to leave were there a way to transfer Voyager miles. Sun Air's own loyalty programme was mostly good for travel within South Africa while SAA frequent fliers had the option of working towards overseas holidays.
Comair solved this problem admirably by entering into a franchise agreement with British Airways. Comair frequent fliers became part of British Airways Executive Club, with access to all the benefits of the BA's world network.
Sun Air might possibly have struck a similar deal with Richard Branson's Virgin Atlantic, and we might have seen the blue "S" logo replaced by the red Virgin emblem on the fleet. Except Virgin discovered that their arch-competitor British Airways - via Comair's 25% stake in Sun Air and representation on Sun Air's board - would get access to Virgin's strategic planning were the deal to go through.
(Hang on, you may ask, Comair owns 25% of Sun Air? Isn't that really stupid? Yes, but that's another story.)
Minister Radebe knows quite well that markets determine their own levels of sustainability and not any Competition Board, no matter how well-intentioned. Markets also thrive on fair play, and the fact that the largest player in this particular market is majority-owned by the state means that it has the ability to play dirty in a way that a freely-traded public company would not.
In November last year, Sun Air, Nationwide and Comair approached the Competition Board claiming SAA was dumping seats. Sun Air subsequently withdrew its objection. SAA has now rushed in to "save" Sun Air by buying it out. How exactly is SAA wanting to rescue its competitor?
Sun Air leases most of its planes, and the owners have already indicated that there are customers in other parts of the world willing to take over those leases. The one plane Sun Air does own - worth about R50 million - can be sold to offset the R25 million owed to government.
On the other hand, Sun Air carried 70 000 passengers per month. Assuming a profit of, say, R100 per passenger, that's R7 million per month that can now go directly to SAA's bottom line. Nice!
This is not the end of the tale. Moves to phase out older planes under the guise of "noise pollution" will directly affect Comair and Nationwide — not SAA. Those airlines cannot afford to replace those planes in the short-term.
Can we afford the systematic destruction of competiveness in the one area where we are No 1 in the world? No. Would Virgin be interested in acquiring 100% of Sun Air and keeping the airline alive? Probably. Would we let them?
What do you think?