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8-point plan for new CEO to turn around SAA

Aug 04 2017 10:04
Daniel Silke

SOUTH African Airways (SAA) at last has a new CEO - Vuyani Jarana. Just as with Mark Barnes at the Post Office, this represents another move away from cadre deployment to appointing someone with genuine business skills, acumen and proven experience.

It can only be beneficial to the ailing national carrier, as it attempts its ninth turnaround strategy in a little over a decade.

Mr Jarana inherits a massive debt and maturing loans of almost R20bn over the next five years. His appointment is likely to coincide with yet another cash injection by Finance Minister Malusi Gigaba to keep the airline flying by providing salaries and urgent debt repayment due within weeks.

The fundamental issues for the national airline remain – notwithstanding the new appointment of a respected new CEO. Critical choices will have to be made.

Staff may need to be culled

The airline needs an audit of its entire staff component and a brutal analysis of its worker/aircraft personnel ratio. While not wishing to make a judgement on this, global best practice combined with local service and maintenance issues need to combine to establish a true employee base.

And if staff need to be culled, Mr Jarana needs the political space to undertake a realistic yet ruthless retrenchment exercise. From a political standpoint, this might be his toughest task due to ideological intransigence from his political masters.

Update the fleet

Although SAA has been incrementally updating its fleet, this has been done piecemeal and without any larger strategy. The five new A330-300 aircraft acquired recently have a range of 6 350 nautical miles which, given the high fuel thresholds out of OR Tambo, can limit their usage into key European or Asian markets.

SAA still flies an outdated fleet of gas-guzzling older Airbus aircraft which will continue to hamper their bottom line. Although hugely expensive, the airline will need to look at the prevailing best sellers of the A350-900 or B787 variant to enable it to compete in a cost-effective and comfort-driven long-haul market.

With Gulf carriers and the likes of Ethiopian Airlines eating into the African long-haul market, SAA needs equipment of comfort to match.

Sensible routes

SAA has a catch-22 situation when it comes to routes. Without the right equipment, it simply cannot service new routes in financially prudent way. The airline needs to re-discover some traditional markets like Europe, where market share and passengers have been shed over the years.

Bringing back Paris or another continental European destination might help a process of brand revival in a market with visitors well-inclined to South Africa and showing distinct signs of economic resilience. With new aircraft, new direct routes are enabled – not laborious and exhausting connections via Dubai or Doha.

A more city-to-city direct approach to connectivity needs to eventually be stablished - but only if suitable new equipment is procured.

International services from Cape Town

Ditching the Cape Town to Heathrow route angered many and also contributed to the erosion of support for SAA from South Africa’s most popular tourist city.

With a population of 4 million and an increasing business hub as well, Cape Town deserves to be better treated as a core component of the airline’s global route network. Some more creative routes out of the city, perhaps to Florida in the USA, might be worthy of research.

Better liaison with South African tourism

The national airline should be a key part of promotional activity that the national tourism board undertakes. It needs to identify strategic points across all relevant continents and build into group/incentive packages the use of the national carrier.

Package tours, multi-city stops and the integration of regional destinations through their various tourism boards need to be honed. Now that Cape Town has new air links to Victoria Falls, joint marketing options by way of two-centre packages could make this axis very attractive and boost tourism in both SA and struggling Zimbabwe.

Provide some extras

Many airlines - not only the Gulf carriers - now allow greater weight allowances for travellers. Make SAA more competitive, particularly on routes where limitations of one piece of 23kg luggage apply.

Make South Africans feel proud of the brand again by giving them something for their patronage.

Service levels

There is much resistance against SAA among local consumers. Some of it is well justified but much of it is prejudiced. A commitment to outstanding service needs to be part of this product if it is to succeed.

With so much competition from very efficient providers elsewhere, any turnaround can flounder on lacklustre or uninspiring service. And service levels are not just about what the public experience – it’s about staff morale and their own confidence in being treated fairly and without prejudice within the company.

Once achieved, this will impact all aspects of service direct to the flying public.

De-politicise the airline

No more shady tenders or contracts. A ruthless, independent assessment of all business linkages needs to be immediately established to rid the airline of the bad habits of graft and patronage which have largely contributed to its perilous state.

Clearly, this wish list is not new. Much of it has been at the root cause of the virtual liquidation of the airline. The remaining 'elephant-in-the-room' issue remains whether South Africa can really afford a national carrier, or whether some degree of part-privatisation is necessary.

Ultimately, the new CEO will be faced with the task of showing results to avoid the pressures of privatisation rearing its head. This may be the last chance for the airline to survive as a state-owned-entity and the real question will be whether government can employ best practice to get it back on its feet or continue to interfere and manipulate for the advantage of a few. We live in hope.

* Daniel Silke is director of the Political Futures Consultancy and is a noted keynote speaker and commentator. Views expressed are his own. Follow him on Twitter at @DanielSilke or visit his website.


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saa  |  daniel silke  |  opinion  |  state-owned enterprises
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