Share

Grounded investment

THE past few years have brought little relief for South Africa’s strained budget airline sector.

Several budget airlines have closed down during this period, leaving many people frustrated at the high cost of domestic travel.

However, earlier this week South Africa woke up to the news that London-based airline group Fastjet is pushing for a new business venture in South Africa.

This has brought hope to customers suffering under the pressure of expensive tickets from the national carriers.

It will also help revive the troubled sector, as an international company can bring new expertise and experience.

Fastjet said it will start selling tickets in the next few weeks for the first flight from Cape Town to Johannesburg on May 31. 

It will be competing with South African Airways and Comair/Kulula, which have been controlling the local market since the demise of 1time last year.

The most astounding thing about this good news is that it took an overseas outfit to see the gap 1time's collapse left in the market.

There are many cash-flush companies that could have capitalised on this opening, but they all overlooked the opportunity.

No wonder there is the ever-growing concern that South African companies are reluctant to invest in the country.

South African firms prefer to hold on to their money or invest it overseas. They are known to be investing in other countries in great numbers.

As local firms fail to show confidence by making domestic investments, overseas investors will be prompted to avoid South Africa at all costs.

One London-based fund manager was this week asked on Bloomberg TV which part of Africa he found attractive for investment. He insisted that Nigeria is a great investment destination.

The Bloomberg TV anchor unsuccessfully tried to cajole the fund manager to mention South Africa or any other African country.

Apart from the fact that they attract overseas investments because of their numbers, Nigerian businesses invest a lot in their country. And they take their businesses seriously.

This shows that they have confidence in their country, which in turn encourages global investment.

Because the South African government has failed to deal decisively with local companies that cannot adequately meet its employment equity policies, the least they can do now is to make sure that they encourage local companies to invest in the country.

Or virtually stop them from making international investments a priority.

It had to take an overseas company to take the risk of entering the South African aviation market, which has a history of failures. The sector currently has increasing consumer caution and a court action challenging the government’s funding of aviation.

The South African budget airline sector is being damaged by astronomical petrol expenses and airport levies.

There has been a reasonable number of budget airline letdowns in South Africa. It is believed that over the last 20 years, 10 of the 11 non-aligned airlines have buckled under pressure.

An overseas company is prepared to tackle these problems head on, rather than local companies which are closer to the risks.

And I have a feeling in the pit of my stomach that these newcomers are going to give local competitors a good run for their money.

We hear that there is a bunch of South African people planning to launch what will be known as Skywise.

We are told that the company founders are also the former founders of the now-defunct 1time.

If there is anything better they can do this time around, why they failed to do it at 1time beats me.
I personally believe the new airline might take off but will shortly collapse again. Or they might not even launch at all.

Back at the turn of the millennium, the upsurge in budget airlines in South Africa appeared to guarantee a dazzling and - critically - inexpensive era of travel.

This was in view of the fact that fledgling newcomers took on the reputable national carriers. This did not succeed as many budget airlines closed down shortly thereafter.

I think the possibility to revive this sector in South Africa is there, as long as there is concerted effort from local investors to put more money into the sector.

 - Fin24

*Mzwandile Jacks is a freelance journalist. Opinions expressed are his own.

 
We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.07
-0.9%
Rand - Pound
24.07
-0.7%
Rand - Euro
20.56
-0.5%
Rand - Aus dollar
12.37
-0.2%
Rand - Yen
0.13
-0.8%
Platinum
899.20
+0.3%
Palladium
999.25
-0.3%
Gold
2,210.66
+0.7%
Silver
24.56
-0.4%
Brent Crude
86.09
-0.2%
Top 40
68,080
+0.6%
All Share
74,278
+0.5%
Resource 10
56,967
+2.4%
Industrial 25
103,572
+0.3%
Financial 15
16,456
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders