A lot of great points NLU.
I agree that there is some strategic importance to having a national carrier for the reasons you mentioned. But at what cost to a) the taxpayer, b) private airlines who compete against SAA in the local and regional market and do not have access to bail out funds and c) the free market system in general which in theory should allow efficient allocation of scarce resources?
When an uncompetitive state player is kept on artificial financial life support it skews the entire industry and everyone (except those benefiting directly from SAA) is worse off.
If SA's aviation industry does need to shrink, then so be it. However, I believe that our industry is actually being artificially limited by a state entity's over powering role in it.
A competitive and efficient SAA would take market share from other international operators like Emirates etc. and there is then no reason why SAA has to remain a small competitor against the larger airlines, rather than be a force to be reckoned with. However, to achieve this SAA would probably have to be privatised or allowed to fail in order for another airline to fill this role.
Yes should SAA fail there would be a flood of experienced pilots on the market, which would have very negative short-term consequences for the supply and demand dynamics, but these pilots would be absorbed into other airlines where they will likely be used more efficiently, including the private airlines which would be allowed to grow and flourish in the absence of SAA.
I believe the "complex answer" to growth and prosperity in the aviation industry in the face of the adverse factors that NLU mentions will be found by an innovative private sector when allowed to do so. SAA's and the governments' answer to the challenging business environment is merely the injection of more and more money, good money chasing bad.
The excuse that this is Africa and things don't work here like they should hold less water in SA than in the rest of Africa. We have strong, profitable, world-class private companies in other industries in this country, who compete on a square footing with international competitors. Why not in the aviation industry?