22 FlightCom Magazine
from the poor. Most passengers don’t mind, or even welcome a
chance stretch their legs, get cleaned up, and go into a lounge to use
the internet or their phones.Okay so let’s talk a whole lot more subjectively about
connectivity. The whole point is that South Africa is at
the end of the line. If to get to SA from Europe you have
to travel via Dubai, it puts further friction into the travel
equation and investors may choose to go somewhere
more convenient. Is there not a worthwhile cost for the
removal of that friction for the facilitation of trade and
connectivity?
I cannot imagine a business person or tourist walking into a
travel agent in say Brussels and saying, “I want to visit SA,” and the
travel agent saying, “You connect through Paris,” and the traveller
saying, “No, no! Is there a direct flight to Ouagadougou, perhaps?”
So no, I think that any claim that direct flights are ‘strategic’ or
necessary is nonsense Voodoo economics.What about the sound economic principle of making a
small investment for a large return? If SAA loses R400
million on the Beijing route but it helps make R2 billion
in trade possible, does it not justify the loss?
I think you are talking about so-called ‘trickle down’ effects.No, more like a multiplier benefit from the R400 million
investment.
That’s also voodoo economics of the phony kind that is used to
justify almost anything. There is no economic theory which allows
one to say an arbitrary misallocation of resources is better than
what would otherwise have happened – because no one knows what
greater ‘multiplier’ there might have been had the R400 million been
profitably invested.But conventional economics would say – invest R1 billion
in this route and you will get R10 billion back. It’s not
rocket science.
That’s just a direct return on investment. But if you say building
a soccer stadium in South Africa will be an investment because
tourists will come, and we will have national prestige, and feel good,
and love each other, and be proud, that’s voodoo. You could equally
say we can be proud of the fact that we have lions and elephants.
That is the ultimate skulduggery for justifying bad investments.
Pick ‘n Pay would never say we run branches at a loss in Pofadder
and Vergenoeg because, ‘they give us amorphous multipliers and
trickle downs’. They would not, like SAA, commission studies,
like the Oxford Economics study, to vindicate failed adventurism
at someone else’s expense. Producing on-demand sophistry to the
effect that imaginary benefits exceed real costs isn’t rocket science.What about SAA’s value to the country’s brand – to
‘Brand SA?’
What benefit? Name me a country which you think of more
highly because of its airline?Ethiopia.
Really? So you think Ethiopia is now a more appealing place to
visit or invest because it has an airline?Why not? It pushes it up the ladder in terms of
attractiveness.
On the contrary, like I said earlier, a country with a nationalised
airline is more likely than one with private airlines to be a banana
republic with an incompetent or corrupt government. Someone
in Australia will not think more of Ethiopia because it runs a
nationalised airline, especially if it makes perpetual losses. Only a
few people in the airline industry think the rest of the world cares if
a government runs an airline. If you tell them it does, they’re much
more likely to think less of the place, if they think about it at all.So the tax payer should not subside the airline at all?
Subsidising SAA is like the opera. I go to the State Opera andSubsidising SAA is
just like subsidising
opera
Leon Louw, CEO of the Free
Market Foundation, argues that
SAA should be privatised.