These political actions by the SA government was damaging the country’s airline industry by making it more costly and inefficient to do business. SA air carriers are not able to compete with regional or the large international carriers.

It came as no surprise that resignations at SAA came on the heels of the announcement of the bailout. First Cheryl Carolus and seven board members tendered their resignations. Six weeks later Ms. Mzimela tendered her resignation. All of the people resigned for basically the same reason; governmental interference in the operations of the company and their desire not be made into scapegoats.

The disarray and infighting at the top of SAA is as troublesome as it is embarrassing. Former SAA CEO Khaya Nygula recently expressed his indignation with comments made by former Chairwoman Carolus about his tenure at the helm of the forever struggling airlines. In a comment made on or about September 30, 2012 to a reporter for the Business Times Ms. Carolus stated that her board had made significant progress in addressing grave problems that it inherited from the previous management. It does not seem that she specifically mentioned any names of persons who did not do their jobs. No one would have expected her to say that SAA’s woeful performance and problems were the result of her incompetency. Still, Mr. Nygula took exception to her remarks and threatened to sue her for defamation of character. Through his attorney he forwarded a letter to Carolus and demanded that she issue a retraction of the comment and apologized to him for the remarks. We must not forget that the board of SAA has pending against its former CEO Nygula a lawsuit to recover of R252 million that it believes” mysteriously disappeared” while he was CEO. A man who is being charged with incompetency in causing SAA great financial harm or, at worst, with embezzlement, has no reason to worry about his reputation being damaged by Carolus’ comment. These accounting and fiscal irregularities came to light by a whistle-blower that had the courage to show what Nygula tried so desperately to hide. With all of this infighting and lack of any internal control it is no wonder that the airlines is about to crash into a fiscal cliff.

The idea of the privatization of SAA is not new. It seems to be the most logical solution. Many believe that the concept of a state-owned airlines has become outdated and somewhat of an embarrassment for most of the remaining affected governments. At the beginning of this year two of Europe’s state-owned  airlines faced their financial difficulties without additional governmental money. Spain’s Spanair and Hungary’s Malev floundered as their purse strings were cut. In the wings for further cut-backs in their financing is SAS, AERL, TAP and the flag carriers of Poland and the Czech Republic. Europe’s airline industry is moving towards consolidation and new investors while the continent wrestles with its debt problem and biting austerity programs.

Qatar Airways and Ethiopia Airways are examples of state-owned carriers that are financial viable. They do not receive constant injections of governmental funds. China Airlines is very successful, especially within country, because of the country’s economic power and its ability to control all privately owned carriers from challenging the state’s airline line’s market share.

I think Areolinas Argentina best represents the problems facing state-owned airlines in today’s difficult economic times.  In 2008 the airlines was again nationalized. The government has done a worst job in managing the company than its private owners. Furthermore, it appears from reviews that most passengers book with any other carrier in order to avoid flying the nationalized Argentine airline.

With the trend definitely calling for the privatization of national airlines it is difficult to understand why SAA remains it the government’s hands.  SAA and SA Express (SAX) suffer from the same problems of chronic mismanagement and fiscal irregularities. It makes sense that the two operations were merged which would eliminate inefficient segmentation of routes. Yet, this exact solution was discussed in 2008 with upper management of both airlines who traveled to Germany to meet with Lufthansa management. Clearly the meeting which was sanctioned by the SA government was to see how things are done properly. Then CEO of SAA, Khaya Ngqula, and Siza Mzimela who was then CEO of SAX and other high-ranking SA airline executives were in attendance. Recent events clearly indicate that SA did not carry out the necessary changes discussed at the brain-storming Frankfurt meeting.

I believe that the SAA’s fiscal problems are due to the fact that its management is smothered by politics. Ethiopian Airlines is successful because it is free of political interference. The SA government exercises veto power of the SAA’s decisions that pertain to route network, fleet acquisition and more importantly the reduction of labor costs. It is impossible for the airline to become more cost efficient because the government wants resources to support a non-existent standard of living that the ruling ANC party has promised for years.

The government’s attempt to macro-manage all of SAA’s decisions has lead the carrier losing is dominate presence in the southern African market. Other smaller carriers are more nimble and managed with profit motive as the principal concern. These competitors are able to react fast to changes in the market and fluctuating costs. Poor decision making has led to higher fares while maintaining a fleet of airplanes with over capacity for the thin routes that it services. The airline is unable to cut fares to be more competitive because that would deepen its fiscal crisis and mean the layoff of workers. New routes are opening yet SAA is unable to partner with other carriers to exploit the emerging markets.

It appears that many of SA’s airlines executives and meddling governmental bureaucrats seem to have forgotten a lesson that was learned during apartheid and the accompanying sanctions. Because of the country’s geographic location it is poor hub for international and connecting travel. It is considered to “the end of the line” in terms of airline travel on the continent. SA is not going to cater to passengers who are passing through or stopping over in Johannesburg. There is simply no place further to go.

SA is facing industrial unrest in many sectors. Workers are disgruntled with their economic stations which have not substantially improved under black rule. Though the workers might be directing their frustrations towards large corporations or whites the reality is that the ANC party has not moved the country forward after 20 years of one party rule. Because the governmental leaders, along with their party cohorts, fear for their political futures it is unlikely that the new board at SAA will have any more freedom to manage prudently then their predecessors. I think it is only a matter of time before for the SA government’s interference forces SAA into irrelevancy as a competitive force in the African and international airline business. Time is running out for the government and the airline.