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JSE-listed aviation company Comair says it will challenge Treasury's latest R5b guarantee to South African Airways.
Treasury said on Tuesday that the guarantee would allow the national carrier to borrow from the financial markets, thus ensuring that the airline continues to operate as a going concern.
But, Comair's Erik Venter, says they have an obligation to challenge further government support that would benefit SAA's domestic operation.
"We understand that SAA has to rely on its shareholder to the extent that it is required to deliver a public service, in this case servicing routes that are not commercially viable for private airlines," he said.
However, Venter says this does not apply in the domestic market or even on many routes into Africa where South African based airlines are attempting to compete against SAA.
"The losses incurred by SAA and Mango in the domestic market could not be sustained by a private airline, and have been incurred to protect SAA's market share at the expense of its competitors and the taxpayer. We do not see any controls in place that will prevent this from happening again," says Venter.
He says the aviation industry is capital intensive and it is, therefore, necessary for airlines to behave in such a way as to make adequate profits and cash flow for reinvestment in aircraft.
"SAA's latest request for government funding for new planes is largely a result of SAA and Mango fighting their domestic competitors for market share at the expense of generating sufficient profits for sustainability," says Venter.
"As a matter of industry survival, and maintaining competition in the market for domestic air travel, Comair has an obligation to challenge further government support that will benefit SAA's domestic operation," he said.
