Zondo Inquiry: How tensions over Mumbai-Joburg route pushed SAA into agreement | Fin24
 
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Zondo Inquiry: How tensions over Mumbai-Joburg route pushed SAA into agreement

Jun 26 2019 19:57
Azarrah Karrim, Fin24

Former South African Airways (SAA) CEO, Sizakele Mzimela, told the state capture commission of inquiry on Wednesday of the tension caused by the proposal to terminate the Mumbai-Johannesburg route, specifically between SAA, former Public Enterprises Minister Malusi Gigaba and Gupta-linked company Jet Airways. 

Back and forth meetings between the two companies eventually culminated into a code-sharing agreement where both parties benefited. The agreement, however, was not struck before SAA got an opinion from the Competitions Commission, she said.

Mzimela told the commission that after an initial meeting was held at the Department of Public Enterprises with Gigaba as well as Jet Airways CEO, Naresh Goyal, a second meeting was held at SAA. 

The meeting, Mzimela said, was called abruptly by Gigaba and Mzimela made her way to Cape Town without knowledge of what was to be discussed. Once she got there, Gigaba told the gathering that he had a few issues to discuss but first wanted an update on the Mumbai-Johannesburg route. 

“At no point did we imagine that the discussion would be about the India route… it was really the least of our priorities,” Mzimela said. She nevertheless provided feedback, however, Mzimela said before she could finish, Siyabonga Mahlangu, who was at the time the special legal adviser to Gigaba interrupted her angrily. 

He raised his voice, saying he is tired of SAA wasting time and tax payer money. He added that SAA failed "to understand that these are issues of national importance and we should just get off the route,” according to Mzimela. “I got to a point where I got really angry and upset because it was getting quite personal… I felt that he was being quite disrespectful,” she said.

Gigaba did not intervene in any meaningful way, according to Mzimela, and the meeting ended without anything else being discussed. 

“It puzzled me the amount of time and effort the department spent [on this],” Mzimela said. A few days later, however, Mzimela said she received a call from Mahlangu and agreed to meet with him. Mzimela said he took the opportunity to apologise to her for his behavior saying, “he [went] on to say that I need understand though that he was only doing his job”.

“I didn’t want to get into a further discussion as to what does he mean that he was doing his job,” she added.

Despite this, Mzimela said that in 2011 Jet Airways conceded to SAA's proposal and both parties signed an MOU entering into a code-share agreement. She said it was "relevant" that, at this point, Jet Airways had taken the decision to terminate operations on the Mumbai-Joburg route.

"By the time the actual code-share agreement was being concluded with Jet Airways, what has happened [is that Jet Airways] indicated to us as part of the discussions that they are looking to possibly reconsider their position on operating on Johannesburg-Mumbai and in fact... they initially announced it as a suspension of their service for a period of time but we knew they were withdrawing from the route completely.”

Mzimela said this changed the dynamics between the companies and they needed to get an opinion from the Competitions Commission before entering into the agreement.

“We have competition rules that actually stipulate that if there is one carrier on the route and we are both going to code-share, in order to make sure that it is not seen as collusion, especially because they had operated and were pulling out in order to code-share with us, [we felt there was a need] as the SAA team to get an opinion [from the Competition Commission]," she said, adding that SAA was hoping to avoid a fine if they were found to have broken the rules.

Following this, the agreement was struck with Jet Airways.

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