We are living in an era of interconnectivity at a scale and rate we’ve never seen before. The transport industry, is literally a system of interconnected sectors tied together by legislation, the exchequer, and the public. But politics, vested interests, unclear cycles of information, all interact with each other in an attempt to achieve some multi-dimensional equilibrium. An elusive equilibrium. Hence the tensions between sociological positions, economic doctrines of thought, and political theories all find themselves tangled up in a national carrier, as the lowest hanging fruit.
Without the appropriate economic regulation, it is cesspool for rent-seeking behaviour, capture and eroding confidence. This, unfortunately came at the cost of the tax payer: the cost of reluctance, indecisions and policy uncertainty. A clear position from the National Department of Transport about how the aviation economy should work by the 2000s would have sufficed to cut the airline to size before it gained weight. Instead, a clear policy position existed, but appropriate actions did not follow.
Using airline regulation symbolically
SAA’s situation is truly unsettling. Not only are the sunk-costs of perpetually reinvesting in a leaking entity inefficient, but it perpetuates a cyclical trap that would be difficult to escape. There is no linear exit. All the conveniently compounded bail-outs are added up and they cannot be recovered. They created a systematic scenario in which the corporate political environment was of greater importance than incentivising reform.
It is confusing in SA, to see that aviation is a competency of the National Department of Transport, while SAA is in the Department of Public Enterprises. This is probably a good thing, not to have the referee and the player in the same room. Who regulates the aviation economy? Who should be making a clear statement about the direction toward liberalising African Skies? The inefficiency was inherent, but it could have been avoided if the incentives for the national carrier were oriented toward making sure that it pays for its growing pains. In this scenario, there is such a thing as “spoiling” an airline rotten. This was a choice in how policy principles are acted upon.
Little regard in the public discourse has been in place for the broader aviation economy partly as a result of government’s stake in SAA. It is an important topic, like Alitalia, the Italian National carrier’s slippery slope to the bottom, but endless support from the Italian government. Such a cycle in future can be avoided. The NDoT has a stake in the economic regulation of the national aviation economy. The national aviation economy which involves airports some run by the Airports Company South Africa, others by provinces, and private individuals; and airlines of all shapes and sizes. They interact with various value chains embedded in service sectors, tourism and industry.
In principle we are supposed to be in a liberalised market, which refers to “the abolition of monopolies and the entry of more providers delivering a given service” and “marketisation”, which refers to creating an airline market with government as a stakeholder but within the same dynamics of a traditional open market. With the right market incentives on a national level, small airline firms may emerge and serve the neglected airports; competing with the broader long-distance markets along highways, railways and bus services. It is not the entry of new airlines which should be our focus, but instead, the stimulation of an aviation economy— a launchpad for Africa’s airline industry, not Africa’s travel and tourism sectors.
The edge of policy certainty
This is what policy certainty means, at least to me. It means, we know what a government’s policy position is. Under all circumstances, this principle holds SA into a different type of future. A future with advance skills, transferrable to other industrial and service sectors; labour mobility; and attracting continental and international investment. But this requires a policy position that goes beyond simply the transportation, public enterprise or trade and industry. It is a multi-sectoral effort, that would need genuine direction, but little investment: only incentives. Regulatory incentives that would signal to a state-owned enterprise, that if it overcapitalises, it will bear the brunt: no moves are made without an effective market assessment.
Questions carve debates. Was Comair right to say that the bail-outs distorted the market? Well, a question should be how will regional airports be stimulated, investment attracted, and socio-economic activity and spin-offs be harnessed? Should the aviation industry be a priority over the long-distance passenger and freight economy? Who needs to travel, what are they willing to pay (are these the questions which will guide the future generations of projects?)?
Using SAA as a symbolic icebreaker for inquiring about the state of policy and practice is intriguing. It opens a can of worms for all network industry enterprises, and what government intervention really looks like. Have the returns of government involvement in markets begun to diminish? Certainly not because of public sector, but probably because of competence, passion, commitment to truly serve in a viable manner. How long will the opportunity costs of management failure, outweigh the value of a rise in opportunities for new entrants in management, governance and enterprise? As digitisation takes a greater central stage, will “government” as we know it exist in 20 years? How will public decisions be made? Will regulatory inefficiencies be tolerated, or voted out by citizens with a device? These questions are not about expecting a ‘radical’ change, but perhaps anticipating the incremental and unexpected shifts in ‘the order of things’. It is through this effort to enquire, that maybe there are pieces that we can use to orientate policy narratives to a better place, a different path, a series of destinations.
These are important questions because they are an input into the outcomes of a post-COVID-19 injection. I suppose they would have surfaced even without this immediate existential tension dialogue we’re in with nature. In Judi Krishnamurti’s words, an ‘urgency for change’ mounts taller the longer we stall. With stark trade-offs in the short-run becoming blurred the further down the line we look, this might me the time. Just as industry published the Green Jobs report, new industries can be leveraged upon for an economy 20-30 years down the line. This economy could not possibly suffer from the ailments leading to SAA’s current predicament. We might need to set the scene for the generation we expect to serve 2050, that requires efforts now. If not, then the structural inequalities will perpetuate themselves. The cycle may be so intrenched that only an extreme shock could resolve them. Just as Naomi Klein puts in the ‘Shock Doctrine’, we’re unfortunately still tied to its embedded systems, barely escaping and being shocked back in once more. An urgent turn to rewrite the future of the transport economy is much closer to the bend than our speed permits. We seem too close to the edges of our past, and too far from our destiny. What could that be?