I can understand the frustration of those who think that SAA is being unduly favoured by the government. The truth is that the aviation industry is witnessing another downturn everywhere except China and the middle east, and even these two regions are not completely immune from the wider effects of the global slowdown. The industry is not usually profitable business in a developing economy, not with the social imbalance that still exist in SA and the current unemployment rate of nearly 25%. However, it is too strategic to be allowed to driven by pure market economics. Those of us that are non- South African Africans are proud of the efforts SA has done to keep SAA in the top 80 airlines world-wide. There is need for a more sustainable strategy than just throwing money into the airline considering other pressing issues in the polity. It is quite possible to run profitably but much easier to make losses. The traffic growth forecast for Africa has exposed African carriers to increased competition and usually those with deep pockets win since it becomes a battle of attrition. Hence without increased funding SAA will not stand much of a chance. 5 years ago American Airlines was the biggest and most profitable airline in the world and it is fighting for it's survival. Though the USA denies it, chapter 11 "protection" is actually a "protectionist feature".
However, a winning strategy will be to have cross-border mergers among the airlines in the SADC region. But as we all know SAA is 98% government owned and the balancing of public service obligation and economic objective will make this strategy nearly impossible to pursue.
A country like Nigeria (with the second highest rpk in Africa) must force it's privatized local aviation industry to quickly consolidate through mergers and strong long term commercial agreements or face extinction in the next five years because the foreign competition is going to heat up.
Any takers on the alternative to government funding in this competing environment?