OPINION: SAA is only a small slice of the long term pie

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When reading about South African Airways, it’s clearly stuck. Stuck in politics, problems, narratives, articles and misaligned ideas of what progress is derived from. A sensible leadership style today is one that argues that their income is a derivative of the progress they make in leading an organisation. If an entity is operating at a negative base, and your role is to leverage on building a new sense of trust between the entity, state and employees then clearly a leader comes last in terms of income. Returns on investment are derivatives of a system of activities, positions and implemented processes used to activate and asset such that it brings value. Serving a state entity, I suppose should feel like a patriotic state of action–being sleeplessly driven by the battle to satisfy clients from consumers to businesses.

Focusing on your customer base, the service design, interaction and systems-people that support the entire experience is the most important ingredient today. A big lesson from the impact of customer oriented logistics companies like Amazon, is that really bringing tactile value is uber important. To be honest, high quality customer service is not really expensive, it is well designed, pleasant and politely self-reinforcing–especially in the contact sport of moving people and cargo.

Retaining a competitive edge is nothing compared to building competitive traction– that momentum is unbeatable in the long-run as it builds high quality and diversified stamina. A service contraction strategy is the easiest way out for any company afraid for truly down-sizing, instead of doing the hard work of allocating assets along lucrative service-lines. At the same time, nipping costs where one really needs to. Institutional arrangements are also crucial– this mutlifaceted behemoth requires very dynamic energy to coordinate its strengths, and identify true weaknesses.

But things are so abstract in the travel economy that trade unions are willing to sacrifice employees in the short-term, just so that a deep review of the business is performed. Symptomatic of the desperation, urgency and deep betrayal some players feel–while the beneficiaries seem silent. Employees who are in actuality also the core customer base of the airline and the source of much of the complaints–passengers are not complaining about the salaries of executives aloud.

Towns and developing regions that truly benefit from SA-Express services can not complain because the importance of market access outweighs the short-term value of intimidating subsidy figures. By comparison, other transport entities are not perceived in the same light when receiving subsidies because well, it’s assumed that it is an elite market and cost basis are not commensurate to the value add. Perhaps a differentiation between the common carrier side and the free market side of SAA is necessary so that in the process of grappling with this entity emerging towns do not endure the same regulatory regimes as urban areas.

Where should the ear truly be focused? What exactly is the noise about? What is really important?

South African Airways is an entity the entire South Africa has a share in. It represents a source of value, and should be a symbol of excellence and globalisation, advanced business, finance and regional development. It should be one of those aggressive companies, evolving their business model, getting ahead of the game in terms of systems, techniques and tools– while keeping costs lean and hyper-optimised: with a focus on retaining a DNA of quality.

My view of the aviation business is that it is a representation of some type of sovereignty and soar nations toward higher moral standing in competence, development and engagement. Countries, citizens and employees become shareholders and are treated as such, through transparency, diligence and short-long term reporting. What is clear however, is that the complexity of the problem remains hidden from the shareholders and sooner than later the market will change, new entrants will kick in and the behemoth will wonder why it wandered to the wayward cloud. While stuck between all the scrutiny, I see more opportunity in the volatility of SAA than ever before.

In the face of the African Union Agenda 2063, a new dawn is here and the leaders, pioneers and visionaries of a new continent will emerge– juxtaposed with the incumbents. Political value will not succeed competence, passion and commitment to a vision. Power struggles don’t succeed authority in a world where industrialist Africa is the core, most valuable asset being nurtured. SAA is only a small slice of the long term pie, some players have already started building pastry factories. The potential doubling of the passenger market in Africa is not a surprise, especially coupled with contracting price elasticities (increasing income elasticities) for air travel along regional routes. Leadership is one thing, market access is another– interpretations of government intervention in the African airspace should for now be observed in a more heterogenious fashion. The one size fits all observation, obscures the storyline and most stakeholders could truly struggle to see the benefits, costs and value of the entity especially in our emerging towns.

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