kulula expresses outrage at yet another bailout of SAA/Mango

Jo'burg – Thursday 17 July 2008 Following the release of yet another disastrous set of results from parastatal South African Airways/Mango, kulula has once again called on government to call it a day and keep its promise (made by Minister Alec Erwin last year) that South African taxpayers will stop filling the begging bowl for ailing state-owned businesses.

In recent years government has poured over R15 billion into South African Airways (SAA) and now they are asking for a further R6 billion. It's time to say, "No, we have more pressing concerns in our country that desperately need funding including education, health, safety and security." The South African airline industry is well serviced by private local airlines and efficient international airline businesses that need to make profits in order to survive. The South African aviation industry is also littered with failed airlines that could not compete with state-funded SAA; Flitestar, SunAir and Nationwide to name just three examples, and state re-nationalisation of the industry will continue to be destructive to free and fair competition. This view is supported by the recent report of the Organisation for Economic Co-operation and Development (OECD) that highlighted excessive state involvement in the South African economy, and its constraining effect on the growth of the economy.

It is bizarre that a private business like Comair, which runs kulula, pays hundreds of millions of rands a year in income tax, fuel taxes, VAT, import duties and other government levies, only to have this paid over to a state-owned competitor in order to compensate for their inefficiencies and keep them afloat.

Around the world governments have divested from the constant financial drain of national airlines, yet in South Africa our government has recently invested in yet another one (Mango) that is losing millions in taxpayers' money. (It is interesting to note that Mango's bottom line was not mentioned in SAA's results and yet as a public entity the taxpayers who have funded it so far have a right to know how their funds have been used/misused to date.) Even other African countries like Malawi, Uganda and Botswana have decided to discontinue state funding of their national airlines.

Enough is enough and in these tough economic times that we are going through, this is the last thing that South African taxpayers need. Surely our government should be focusing its efforts on an ailing nation rather than an ailing airline?

Ends.

Issued on behalf of the South African taxpayer by kulula.com

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