Navyjet,
Herewith my opinion with regard to the airline industry in SA:
SAA's continual 'recapitalisation' or bailout by its owner (the SA government) has more to do with SAA's inefficiencies and high costs than its ability to generate revenue.
As a government entity, SAA has an overweight management structure, bloated administrative staff and inefficient labour practises thanks to the demands of the respective unions. Couple these with the fact that while revenue is generated primarily in (a depreciating) ZAR, fuel and leasing costs are paid in USD.
SAA's ability to generate revenue is not in question - consider that the JHB/CPT route is one of the most profitable and popular commercial routes in the world.
As far as the private airlines are concerned, those which have failed have done so for a number of reasons. The first is their inability to compete with a state-owned airline which receives unlimited assistance from the government. The second is that operating cheaply acquired, old generation airliners in today's industry is not sustainable as 1Time and Nationwide discovered.
Third, in the case of 1Time, the principles of BEE (Black Economic Empowerment) saw to it that executives who had little knowledge of the industry were brought in to steer the airline with disastrous results.
Fourth, the industry is all about capacity and an airline cannot survive with one or two aircraft flying just a few times between city pairs as was the case with Velvet Sky.
The success story in SA of course has been Comair - operating as a British Airways franchise and as the low cost kulula brands. Conservative management, investment in new equipment and frequency has been a sustainable business model.
One could write a thesis on the airline industry in South Africa but I hope this has helped in scratching the surface of a complex and interesting industry.