The Aviation Industry In South Africa: A Historical Overview

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African Journal of Hospitality, Tourism and Leisure Vol. 5 (4) - (2016)ISSN: 2223-814X Copyright: 2014 AJHTL - Open Access- Online @ http//: www.ajhtl.comThe aviation industry in South Africa:A historical overviewOswald Mhlanga*Hospitality Department, University of Mpumalanga, South Africa.osward.mhlanga@ump.ac.zaandJ.N. SteynDepartment of Tourism and Event Management, Cape Peninsula University of TechnologyCorresponding author*AbstractThe insatiable needs of man necessitated his movement from one place to another and one majormeans by which he has been doing this is by flying in the aeroplane. The article traces the history ofcivil aviation in South Africa, exploring the various phases of development which the industry has gonethrough. It concludes that the aviation industry is indispensable to the development of tourism in SouthAfrica and should therefore be given the proper attention it deserves.Keywords: Civil aviation, Flying, Tourism, South Africa, History.IntroductionThe main objective of the article is to trace the history of the civil aviation industry in SouthAfrica. It explores the genesis of the industry in the colonial period, the birth of South AfricanAirways, the apartheid period and the subsequent post 1992 growth of the industry, as well asthe economic impact on South Africa. Methodologically the article is based on a literaturereview supported by interviews with airline operators. Aviation practice began in South Africain 1929, barely twenty six years after the Wright brothers’ first flight in 1903 (Ssamula,2014:226). Though it started as an airmail operation when Major Allister Miller founded theUnion Airways in 1929, it gradually assumed the character of a passenger operation in thedecades that followed (Pirie, 2006:9).However, several forms of transportation had existed in South Africa before the advent ofaviation (Bennett & George, 2004:117). The earliest form of transport (that is, water transport)had been occurring in the coastal areas of South Africa and provided avenues for economicexchange (Goldstein, 2001:230). Trade had been conducted between South Africa and othercountries via the seas for centuries (Ssamula, 2014:226). Naturally, these goods needed tobe transported to various locations throughout South Africa, leading to the development ofroadways in 1854 (Brits, 2010:27).In 1860 the first tracks for steam powered locomotives were laid down by the National RailwayLocomotive (Pirie, 1990:237). This track was set to create a link between the city of Durbanand the Harbour particularly for the transportation of freight and shipments from the ocean(Brits, 2010:27). Later, the introduction of electric power presented new opportunities to adoptmechanical modes of transport by means of trolley buses as early as 1867 (Lunsche, 1997:9).It promoted ease of travel between residential suburbs and the city centre (Ndlovu, 2001:92).In 1872 Cape Rail construction built a 72km track between Cape Town and Wellington1

African Journal of Hospitality, Tourism and Leisure Vol. 5 (4) - (2016)ISSN: 2223-814X Copyright: 2014 AJHTL - Open Access- Online @ http//: www.ajhtl.com(Bennett and George, 2004:117). In 1898 although many provinces had started to developtheir own tracks, all national networks linked up, creating a national transport network (Pirie,1990:237). In 1910 the merger of four provinces to form what is now known as South Africaand created a more modernised rail network that was managed by the South African Railwaysand Harbours’ Agency (Ssamula, 2008:11).Air transport was a late comer to the scene (Ssamula, 2014:226). It was a transport systemfor the elite and wealthy businessmen; and was not suitable for the carriage of goods andminerals from the hinterland to the coast like the railways (Ssamula, 2008:11). From its verybeginning therefore, air transport served as an exclusive preserve of the few (Ogbeidi,2006:141). Today aviation plays a major role in the tourism industry and makes a hugecontribution in South Africa’s GDP (StatsSA, 2016:7). Its contribution includes direct, indirectand induced impacts, which are related to the total revenues of the air transport industry (SSA,2015:20). It is against this background that this chapter seeks to discuss the development ofthe aviation industry in South Africa.Early aviation history in South Africa (1929-1949)In 1929 Major Allister Miller founded the Union Airways in Port Elizabeth after being awardeda government contract to fly airmail between Cape Town and the major centres in South Africa(Pirie, 1990:237). The airline was registered on 24 July 1929 and began airmail operations on26 August 1929. On 3 September 1929, the Union Airways started carrying passengers(Mutambirwa and Turton, 2000:71). As both mail and passenger traffic increased Miller boughtthree more aircrafts on 29 May 1930 (Gavin, 2013:9). However, in 1931 two of the UnionAirways’ aircrafts crashed and were written off (Pirie, 1990:237). This marked the beginningof the airlines’ struggles (Ndlovu, 2001:92). In 1932 the Union Airways struggled to make endsmeet and little help was forthcoming from the South African government (Pirie, 1990:237).The final nail in the Union Airways coffin came in 1933 when one of the Union Airways’ aircraftcrashed (Gavin, 2013:9). This was a major blow to the airline and forced Miller to approachthe South African government to take over the operation (Ndhlovu and Ricove, 2009:17). TheSouth African government took over the assets and liabilities of the Union Airways on 1February 1934 (Ndhlovu and Ricover, 2009:17). The airline was named South African Airways(SAA) and fell under the control of the South African Railways and Harbours Administration(SARHA) (Ssamula, 2008:11). Pirie (2006:9) posits that from 1934 the air transportenvironment in South Africa was lightly regulated, though the powerful South African Railwaysand Harbours Administration (SARHA) sought to protect railway services at the expense of airtravel. As a signatory (as part of the British Empire) to the Paris Convention of 1919, the SouthAfrican air transport regulatory environment was based on the principle of air sovereignty(Ssamula, 2008:11).Gavin (2013:9) avers that during the Second World War (1939-1945) all aircraft employed forcivil aviation transport purposes in South Africa were transferred to military authorities and thecountry became totally dependent on foreign airlines for the provision of domestic air transportservices. Pirie (1990:238) claims that foreign airlines provided domestic services at veryreasonable rates during the war, but fares increased quite substantially after the war. Theeconomic conditions that prevailed after the war could not support these fares and slightdecreases were announced in March 1946 (Ssamula, 2008:11).In 1946 a new private airline, Comair was established and started operations (Goldstein,2001:230). However, to protect SAA, (as the flag carrier) from private airlines such as Comair,the International Air Services Act Number 20 was promulgated in 1949. According to the Act,airlines that wished to compete against SAA on the main domestic routes had to prove,amongst other things, that a need existed and that the incumbent airline was not delivering an2

African Journal of Hospitality, Tourism and Leisure Vol. 5 (4) - (2016)ISSN: 2223-814X Copyright: 2014 AJHTL - Open Access- Online @ http//: www.ajhtl.comadequate service (Brits, 2010:27). These requirements were outlined in Section 20 of the Actand were virtually impossible to meet in the presence of the domination of SAA (Ssamula,2008:11). The result was that SAA had complete monopoly on the high-density routes andcontrolled airports and landing slots (Gavin, 2013:9). Consequently, Comair was relegated tofeeder routes (Goldstein, 2001:230).Bennett (2005:419) asserts that since 1948, economic regulation protected SAA’s position onthe main trunk routes (trunk routes are profitable routes with a high demand) in South Africasimilar to the protection of railway services provided by the South African Railways andHarbours (SAR&H). SAA was further left to develop the domestic air transport on its own.“SAA was part of South African Railways. The Railways was entrusted withthe development of a transport infrastructure for South Africa. As such, itwas an instrument to carry out Government policy. Its business objectivewas not profitability but meeting the growing transport needs of a fastdeveloping country. The Government protected this investment by shieldingit against competition and uneconomical overlapping of services. Thismeant that SAA was not a true business concern. Certain uneconomicalservices were maintained for strategic reasons and also for reasons ofnational economy. Private airlines were not willing to operate these routes,until they were subsidised. The principle of cross-subsidization wasaccepted and the major routes were required to subsidise the lessprofitable ones. Being the only scheduled domestic airline, SAA obtainedthe rights to most of the major routes automatically. The development of airtransport took place under these conditions and has led to SA Airways’domination in the domestic air travel market” (Vlok, 1992:20).The apartheid era (1949-1991)Domestic air services within South Africa were regulated in 1949 through the Air Services Act(Act No. 51 of 1949) (Pirie, 1990:238). As the flag carrier, SAA was protected from competitionfor over 40 years following the promulgation of the International Air Services Act, also knownas the Air Services Act (Act No. 51 of 1949). In 1978 and 1979, two airlines were established,namely Link Airways (later known as SA Airlink) and Bop Air (later known as Sun Air)respectively, with both airlines focusing on secondary routes, bringing the number to fourairlines that were active in the domestic market (Gavin, 2013:9). However, in the periodbetween 1978 and 1984, SAA experienced cost pressures as airports, airlines and air spacebecame part of a political strategy to cripple governments of the last minority white-ruled statesin South Africa and the Rand weakened against foreign currencies (Pirie, 1990:238).During this period South Africa was increasingly isolated as a result of the apartheid policiesand economic prospects were not good, and to make things worse, both domestic andinternational market perceptions were not that good either (Ryan, 1992:9). Due to internationalcondemnation of the apartheid regime during the 1980s, SAA itself faced hostility, with itsoffices being attacked; SAA's London office was daubed with red paint, while in Harare(Zimbabwe) its offices were badly damaged after protesters went on the rampage (Galli,1997:18). The US Comprehensive Anti-Apartheid Act of 1986 banned all flights by SouthAfrican owned carriers, including SAA (CAJ News, 2015:11). In November 1986, due toeconomic sanctions, flights to New York were suspended (Ryan, 1992:9). The following yearin 1987, the SAA services to Perth and Sydney in Australia were ended, in light of theAustralian Government's opposition to apartheid (Ndhlovu and Ricover, 2009:17). TheAustralian airline, Qantas, also stopped flying to South Africa, landing in Harare.3

African Journal of Hospitality, Tourism and Leisure Vol. 5 (4) - (2016)ISSN: 2223-814X Copyright: 2014 AJHTL - Open Access- Online @ http//: www.ajhtl.comAfter SAA was banned from flying over Africa it made various strategic adjustments to reachcertain European destinations (Pirie, 1990:238). First of all, SAA bought Boeing 707’s whichcould fly around the west coast of Africa en route to London and other European destinations(Pirie, 2006:9). The airplanes made a refueling stop at Ilha do Sal in Cape Verde. These flightsmade SAA's routes to Europe longer than their competitors that were allowed to overfly Africa(CAJ News, 2015:11). Secondly, SAA made structural adjustments to reduce longer flyinghours by forming alliances with Luxembourg Air to establish Luxavia airline (Luxair), whichcould fly over Africa (Pirie, 2006:9). By forming an alliance with Luxembourg Air, SAA avoidedflying around the west coast of Africa and thereby reducing the flying hours and the fuel costs(Lunsche, 1997:9).Vlok (1992:8) asserts that in 1986 due to economic sanctions domestic fares were increasingfaster than the Consumer Price Index (CPI). Air travel was becoming an expensive mode oftransport and the possibility existed that market share could be lost to other cheaper modesof transport (Ndhlovu and Ricover, 2009:17). The contribution from domestic air services hadto be increased in order to achieve the financial objectives of the airline (SAA) as a whole(Federico, 2013:721). In the short term, a strategy had to be formulated to produce immediatefinancial results, with the long term perspective being the possible deregulation of the domesticair transport market (Galli, 1997:18).In order to improve the performance of SAA the following strategic objectives were identifiedin 1988: Other overseas airlines and their unique situations were studied carefully, in order tofind innovative ways of increasing market share in a market where no real competitionexisted. A new marketing strategy was developed, based on discounted fares to sellunderutilised capacity and revised operating schedules to improve utilisation of aircraft(the load factor used in timetable planning was increased from 65% to 75%). Thestrategic objectives behind the above was to increase revenues without fare increasesand where possible to decrease costs. Discounts were rationalised with two new discount fares being introduced, namely:-Flexi-fare, which was a 40% discount to travellers who reserved to travel on aparticular day, but allowed the airline to indicate the specific flight within 48hours before departure.-The “see South Africa” fare, which allowed 4 000 kilometres of air travel foronly R360 (Vlok, 1992:4). The airlines’ timetables were replanned, thus limiting the number of underutilised andnon-profitable flights. The popular late night or early morning flights were increased asthese had proved to be a new niche in the travel market. Business class services were introduced. The decision to adopt this travel class wasbased on the research which showed that a certain sector of the market was willing topay for an increased level of service above that of the Economy Class, and The Frequent Flyer Programme (FFP), now known as Voyager, started in 1984. Thiswas done to provide some form of individual recognition for frequent users of theairline, thereby creating loyalty and forming a database to communicate with thisimportant segment of the airline’s market. SAA’s FFP was officially launched to thepublic in July 1987.4

African Journal of Hospitality, Tourism and Leisure Vol. 5 (4) - (2016)ISSN: 2223-814X Copyright: 2014 AJHTL - Open Access- Online @ http//: www.ajhtl.comOne year after the introduction of the above the results proved to be the following (Vlok,1992:4): Passenger numbers increased by 14% in the 1984/1985 book year, compared to the1983/1984 book year. Passenger revenues also increased by 16.5%. The targeted revenue was achieved and the airline made a profit of R2.2 million, and Due to the South African economy entering a severe slump, as well as political unrestinfluencing the tourism market during 1985, SAA’s timetables had to be drasticallyrevised, with flight frequencies being reduced dramatically to curtail costs (SAA isdependent on the SA economy and has had to cope with severe economic downturns,as well as exceptional growth in the past).In 1987, the White Paper on Privatisation and Deregulation advocated that the air travelindustry be deregulated, based on the American experience (Goldstein, 2001:230). Thethinking was that competition would lead to more efficient airlines and lower passenger fares,while also benefiting the country’s economy in the long term (Ssamula, 2009:7). Furthermore,airline sanctions against South Africa eased from 1990 when the country’s last minoritygovernment abolished statutory apartheid (Ndlovu, 2001:91). The step ended South Africa‘spolitical isolation and its status as a world pariah. International diplomatic, commercial, culturaland sporting links were resumed (Pirie, 2006:9). Pirie (2006:9) asserts that 1990 marked aperiod of political transition that featured withdrawal of bans on cross-border aviation betweenSouth Africa and her continental neighbours, and between South Africa and many overseascountries. Several African and international carriers landed in the Republic for the first time, orafter a long absence (Bennett and George, 2004:117). Re-equipment and maintenance ofnational flag-carrier aircraft became less problematic while South African orders for custombuilt sanctions busting ultra-long-range wide body jets ended (Ssamula, 2008:11), and airlinesales offices were reopened beyond the country’s borders (Pirie, 1992:345). Consequently,this period of political transition marked the beginning of liberalisation for both the domestic,and the South African intra-African markets (Bennett, 2005:419). This period coincided withthat of overseas airlines such as KLM, BA and so forth serving South Africa being confrontedwith deregulation, privatisation, mergers, alliances, technological shifts and routereconfiguration (Pirie, 2006:4). In 1991 South Africa's domestic aviation market wasderegulated, providing a level playing field for airlines to compete against SAA (Pirie,1992:345). There was to be free entry into markets, promotion of choice and competition, andthe encouragement of private airlines (Shaw, 2011:35).The first phase of deregulation saw the creation of several new start-up airlines (Ssamula,2008:11). The first airline to enter the market after deregulation was Flitestar in October 1991(Chingosho, 2005:17). Flitestar chose to challenge SAA and to price its services similar tothose of SAA and the airline targeted the business market and the upper end of the leisuremarket (Harris, 2001:32). Comair, nevertheless, held back and operated on the trunk routes,leaving it to Flitestar to challenge SAA on its home ground (Bennett, 2005:419).However, with a long-standing in the industry, strong existing relationships with airports andsuppliers, plus the unseen hand of Government ownership, SAA was somewhat insulated fromthe worst effects of deregulation on its bottom line (Ssamula, 2008:11). Therefore, SAAcontinued to ‘bully’ private airlines in services for which it had a monopoly over (Bennett,2005:419). According to Pirie (1992:345) SAA continued to control airports and allocatedlanding slots to other airlines which made it very difficult for new airlines entering the market.Ssamula (2014:22) concurs that access to air transport infrastructure and related facilities wasidentified as an advantage to SAA, due to the airlines’ dominant position in the domestic5

African Journal of Hospitality, Tourism and Leisure Vol. 5 (4) - (2016)ISSN: 2223-814X Copyright: 2014 AJHTL - Open Access- Online @ http//: www.ajhtl.commarket for so many years. New entrants had to be satisfied with less than ideal positions, forexample, the allocation of landing slots (Chalmers, 2001:11). Furthermore, SAA was also theonly airline that had a licence to operate the luggage conveyor belts at South African airports(Bennett, 2005:419). This meant that Flitestar’s luggage would not be handled quicker thanthat of SAA. Flitestar also shared the SAA Saafari central reservation system (Bennett,2005:9).Galli (1997:18) claims that in 1991 various allegations of unfair pricing were made by Flitestaragainst SAA. Lunsche (1997:9) posits that the provision of aviation infrastructure, for example,CRS and supporting services at airports (for example, ramp handling services) by SAA to newentrants was not done on the basis of cost-related pricing, but was rather seen as a way ofSAA providing an over-priced service to such airlines (when compared with pr

South African government took over the assets and liabilities of the Union Airways on 1 February 1934 (Ndhlovu and Ricover, 2009:17). The airline was named South African Airways (SAA) and fell under the control of the South African Railways and Harbours Administration (SARHA) (Ssamula, 2008:11).

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