SAWorldVoyager

You are partly right IMHO.

Yes the PEK is political its loosing a fortune and yup shouldn't be flying from an airline profitability point of view.

However South Africa (PTY) Ltd, and its shareholders (the citizens) need to decide on what SAA's role should be.

Personally, I dont believe SAA should be run as a profitable business, importantly at the onset let me clearly state I do think it should be run soundly to good financial principles, but not driven by profit.

So over inflated salaries, stupid fleet renewals, etc etc should not be allowed. Accountability is key.

I think SAA is a tool, to serve South Africans and a South African agenda. Yes in my perfect world CPT should be better served. Further to this perfect world SAA should serve the African destinations that it does, but should also serve a ton more other foreign destinations ex JNB.

I think at least 3, but probably 4 US cities (add ATL, and ORD), add Shanghai, a few more EU destinations, Sydney, Auckland, and Rio.

SA is at the arse end of the continent and we need to make doing business in SA attractive, one of the ways we do this is with efficient and where possible direct air links.

Its kind of like building a Las Vegas somewhere between Upington and Port Nolloth, and then refusing to build a road or an airport to the resort town. If you want people to come you need to make it easy. That road in itself will never be profitable, but the value of the people it carries in terms of the towns overall success, easily covers its cost.

Whether we like it or not South Africa is between no where and no where, we will never be a major hub and thus we need to dig into our pockets to fund this road, ie SAA.

When Cape Town was 'canned' we immediately heard from various bodies that by dropping this one route it would cost South Africa over 600 million in lost opportunity.

Now if one route brings SA that much value, imagine what value all the routes combined bring? Surely then 6 billion or whatever is not that much ??

Further if SAA takes 6 billion or 10 billion or whatever, what goes back to government in direct taxation?

There must be at least 1000 pilots, each earning close on a bar (at least), that in itself brings half a billion back to the coffers. Now factor in management, admin staff, air hostesses errr.... I mean safety officers and the money given comes back directly just in direct taxes. That is before taxes generated from companies and staff who provide services to SAA, fuel levies etc etc.

So it looks like the road can effectively be had free of charge, albeit that it doesn't generate its own profit.

We must assume all the Cape Town evangelists are in fact telling the truth and that the value brought, as per the estimates on the their route being axed are indeed pure profit towards South Africa (Pty)Ltd.

How much then are we loosing as a country by not flying the routes we should?

Under the current status quo though.

Everytime there is any talk of a bailout, the media jump on the bandwagon, uninformed oxygen thieves cry foul without grasping some of the basics.

Point is South Africa (Pty)Ltd is the only shareholder in SAA, and its asset is heavily under capitalised. SAA needs a bigger fleet, and within the constraints of a small fleet, you cannot serve some routes which would be profitable, so you have to choose the most profitable, and operate those routes. Yes even giving up on some profitable routes.

This however is the theory,

enter government who dictates PEK.... and says its in the best interest of SA.... Now what happens to the more than R1million lost per return flight who knows, SAA must ma make a plan..... Just dont dare come ask for money.... You must operate profitably

Are you confused? I am! So what chance does SAA management have?



I dont know on the exact numbers for Cape Town LHR, and whether it was profitable or not.... but I do agree if you look at the entire value proposition, and not the flight in isolation, the CPT - LHR should be flying.

With the mixed signals by SA PTY and its citizens i think SAA has taken the approach we can use the plane elsewhere and make more money and thats what SA wants... They have not been holistic.

I disagree on that basis.

But I do think government and public have being driving the wrong agenda. And based purely on the agenda of SAA must be profitable, ya, axe Cape Town LHR, but then be fair please and axe JNB - PEK too.

Lastly re BA, AND VS (LH, KL, AF, TK) it is a completely different equation. I do not doubt the routes profitability at all (I honestly dont know).

BUT I will say base those airlines in SA and fly ex SA only to wherever they want, and they WOULD NOT be able to operate as they do. Being based in the EU and close to other major hubs and not a million miles from everything has many advantages (not only in crew and aircraft rotations and movements), which if we are being fair we need to equate for.

Like you I agree SAA J is a great product, and I love nothing more than having our tail plane at airports around the world. I may be weird, but it makes me feel warm and fuzzy.

Likewise, after being overseas, simply boarding a ZS plane I immediately feel at home.

Personally, I would rather have SA (PTY) dump money into our airline (which actually brings value), than painting the flag on London cabs, or putting up a row of flags on the Champs Elysees, which is a dead loss venture.

Money inputted IMO should be spent on fleet EXPANSION and not RENEWAL.