Accessibility of air transport by the poor: briefing by Department of Transport and Standby Travel

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15 May 2012
Chairperson: Ms N Bhengu (ANC)
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Meeting Summary

The Chairperson noted the need for transformation within airline travel. The Department of Transport in its response spoke about national air transport services, the aviation regulatory framework, regional initiatives as well as the National Development Plan. It also touched on aviation career awareness.

Members complained about the lack of information in the presentation. Members asked about the gap in pilot licensing between black and white pilots and between black male and black female pilots; about career guidance and career awareness in rural schools and in the provinces; whether air shows had only been done at the bigger airports; how disadvantaged people would be identified; if airlines had a responsibility to passengers if they caused delays that caused them to miss a connecting flight; if there had been a state-driven undercutting of Airlink and if the various airlines really did fly to places outside of South Africa. They also complained about delays in processing applications by airports to receive international flights and how long this process took. Members asked about access to rural provinces by airlines which did as they pleased due to the lack of competition. The Chairperson said the Department needed clear cut, measurable goals.
She stepped down as chairperson for the next presentation, which was not on the agenda, as her daughter had shares in the company.

Standby Travel explained it operated two models, both of which offered a service from taxi rank to aircraft to taxi rank. Customers booked discounted flights, but were only informed if they were successful 48 hours before the flight. This was because Standby Travel passengers only got seats if there were some left if other airlines had space left over at this point. Standby Express Airline also had its planes and was used to fly to area like Mththa, which were not well covered by commercial airlines. It also looked at why there were no BEE airlines within South Africa, why low cost airlines failed and what factors excluded the previously disadvantaged from aviation travel in South Africa.

During the discussion members asked what StandBy wanted from the Committee. The response was that they wanted a blessing from Parliament and some finances, although not much, as it was an IT business. Other questions were why the model had not been used before if it was so viable; if company shares had been rolled out to black people; how StandBy would determine who qualified for a ticket, was it based on race or class; and there was a request for more clarity about the StandBy model.

Meeting report

The Chairperson noted there were four modes of transport in South Africa but air travel was reserved for the rich and not accessible to the poor. When one went to other countries you found that passengers in an airline reflected the demographics of the country. If you went to a country where the majority of the people were black, you found that passengers on the airline were majority black. When you saw passengers did not reflect the demographic of the country, this indicated there was a problem. When it came to South Africa, one understood why there was this situation. When travelling by air, one did not find that 87% of the people were black, reflecting the real demographic of the country. The government had identified three challenges, poverty, inequality and unemployment. Even the employment of black people by the national carrier was effected by the present government. Pre-1994 there was no black pilot on the national carrier. South African Airways had been forced to employ black people. She argued that even 18 years into democracy, the majority of passengers who flew did not reflect the demographics of the country. The Committee would hear what model StandBy had put in place to allow for the reflection of the demographic. She had also invited Velvet Sky but they had not honoured the invitation.

The Chairperson said the second issue was if one looked at the 2003 Public Transport National Household Survey, a factor raised in the report was that the transport system was not integrated. If one used a taxi there was no connection between the airport and taxi transport. People using public transport were then forced to use meter taxis. Also the cheapest airlines were furthest from the terminals. The report also talked about the cost of time. The Department should take this report as a point of departure for all four different modes. How does the Department respond to the report in an integrated fashion? How did its strategy speak to the integration of the four modes of transport? How did it speak to reducing travelling time? How was it working towards showing the true demographics on an airline? One needed to see if there was a strategy that spoke to that report. One could not ignore that utilities had been under-utilized in South Africa. This meeting was about what the strategy was and how it spoke to real issues on the ground and spoke to development of the country.

Department of Transport (DoT) on Air Transport
Mr Vuwani Ndwamato, DoT Director of Air Transport, apologised that the Acting DDG could not make it as he had been charged by the Minister to stand in for him at a summit on international civil aviation organisation and international air transportation in Sandton. It was safety summit in which he had been requested to make a keynote address on behalf of the Minister. Mr Ndwamato said he would try and speak to the issues raised by the Chairperson.

Mr Ndwamato said the Department was a principal enabler and the regulator of the industry. They had as a Department since the early 90s deregulated the domestic market. Prior to that, there had been a great number of barriers for someone seeking to operate in the country.

Mr Ndwamato’s presentation covered the national air transport services, the aviation regulatory framework, regional initiatives as well as the National Development Plan. It also touched on aviation career awareness.


Issues with the Presentation
Mr I Ollis (DA) said the presentation lacked a lot of detail and was very general.

Mr L Suka (ANC) said the document needed to be enhanced with more information on almost every page. This was to provide a clearer picture of the civil aviation branch. The document did not speak to legislation and whether the Department had some challenges that inhibited the strategy.

Mr Ndwamato agreed the presentation had not been detailed to the level expected. He acknowledged there had been a communication problem that led to the Department getting to know of the call by the Committee very late. Some issues were background material. Some issues were from a base document with more detail, including statistics. The Department had tried to avoid putting too much detail in the presentation so as not to overwhelm or bore. The Department would improve the presentation to provide more information

Pilot Licensing
Ms D Dlakude (ANC) referred to pilot licensing and asked why there was such a huge gap between African males and white males and African female and white females? It had been 18 years since 1994 and it seemed it was too expensive to train pilots. But why was there such a huge gap? There were more black people as crew members. It also seemed like it was too expensive to train black people to be pilots. Lastly it seemed that many learners in rural areas had no resources but were doing well in maths and science. She asked why these learners were not being taken in.

Ms N Ngele (ANC) asked why in terms of African males and African females there was a huge gap?

Mr Ollis also referred to the licensing statistics and asked why there were few black candidates. He asked if the problem was with applying or were they struggling to get through the course as rural education was deficient, or was it a money issue. Where was the blockage? There was a need for detail as the report generalised a great deal.

Career Guidance
Ms Dlakude was concern about a programme for career guidance at school. The Department needed to go to rural provinces to assist poor learners who wanted to be part of the industry as captains and the like. Somewhere the comment had been made that there was a need for career guidance and it was the duty of the Department to do that.

Mr Ndwamato replied that in terms of an awareness programme it was true that Basic Education had taken away that guideline in terms of careers. The Department itself did not have the knowledge of what happened when an aircraft flew.

Rural Provinces
Ms Dlakude said when it came to the rural provinces there was no competition in terms of airlines and they did as they pleased. They did not treat customers like human beings. Why was there no competition. She was into the Proudly South African thing but people were not being treated as equals.

Ms Ngele asked who decided what flights went where? There were rural areas where cheaper airlines were needed. There was a demand for them.

Responsibility to delayed passengers
Ms Ngele asked what was the relationship like between the airlines? Sometimes people missed their flights due to delays by other airlines. There seemed to be no coherence between the various operators and passengers suffered. What happened in these cases?

Ms Ngele asked what if people did not have a choice of what airline to use?

Ms Dlakude asked why the various airlines did not have links.

Mr Ndwamato replied that the delaying airline became liable for the inconveniences of a passenger. The industry had what was called Consumer Protection Principles which were driven by the Department of Trade and Industry. They also had principles enshrined within the Department in licensing operators and taking liability for such mishaps. In cases where an airline delayed one’s travel, it was meant to provide either a comfortable place to stay if there was no alternative connection, and if there was, it was meant to provide alternative connecting travel. They were liable for onward movement of passengers. Airlines had often taken advantage of that knowledge not being known to the public. They had taken advantage of passengers. It was however the responsibility of the airline to explain to passengers that they were actually liable for that and needed to take responsibility. This also was the case in relation to Metrorail. Sometimes airlines entered into commercial contracts with other sectors or even within themselves. Airlines needed to be confronted about covering whatever losses passengers incurred in their travel.

Ms R Motsepe (ANC) wanted to highlight the issue of connection. She had heard her colleagues talking about their provinces. There were sometimes problems with connection between modes of transport.

Mr Ngele asked where were air shows held? Was it in certain provinces and areas? They did not know about these things in rural areas. They only happened in urban airports.

Mr Ndwamato replied that the issue of provinces had been indicated. It was also a matter of resources for rolling this out. The reason the Department had sought to do it provincially was because key sectors such as education and provincial transport departments would obviously form part of the initiative to roll this programme out. Other stakeholders such as the police, that were part of the joint Aviation Awareness programme, would form of a system. They had identified airports at which demonstrations had been done. The Department had been to a number of places including Polokwane, Nelspruit and Mafikeng. Every system was coordinated in a way that key government stakeholders were not left out and could take forward the ideals and the thinking of the Department.

Other Airlines
Mr Ollis agreed in terms of liberalisation of the local market, when you opened the market, the market would decide. He felt that it was not economically viable to every little town and some of the questions were misplaced. He did not agree with the statements about Africa. There had been made some statements that were not true. Sure there had been agreements on liberalisation but where was implementation? Mr Ndwamato talked about airlines flying all over but when the Committee had spoken to them they had struggled to get slots. They were not flying all over. They had not gotten slots and the reason they could not get slots was because SAA was squeezing other airlines out of routes in Africa. They were not making money on international routes and they were making their money in Africa. People in Africa were paying too much money and low cost airlines were battling to get slots. Mr Ndwamato said airlines like Kulula were flying all over but where were they flying to? The liberalisation of airlines was signed but not being implemented. Airlink seemed to be the only one able to get slots in Africa.

Mr Ndwamato replied that 1Time flew to Livingstone and Zanzibar. He had mentioned the gauge operated and the type of market being served. These were the determinants for an operator getting into a market. At times being a low cost airline did not mean that one flew everywhere. Some people did not like the inconvenience of the “no frills” aircraft and preferred flying with the normal ‘frilled’ aircraft. It also depended on the operator’s lifetime such as how long had they been in the service, their safety record and who maintained them.

Mr G Krumbock (DA) said Airlink had given a summary of its history and expansion and it would appear that they were too successful. They now faced a situation where the government had subsided a rival airline to undercut them. Was the Department subsidising a rival route to undercut them?

Mr Ndwamato replied that Airlink was 99% owned by private entities and government was only left with 1%. What happened and who decided who flew where, was up to the market as it was a free market system. The prices were determined by the prices and it determined who needed to do what. In terms of the licensing process in the airline business, the equipment you flew and the market were key in deciding who got what licences. When an airline placed their applications before the licensing council responsible for the operations, the criteria was it needed to be financially fit and able to provide a safe, reliable and sustainable service in that particular market. There were obviously competing applications wherein airlines applied to provide a service in a particular sector. It was the responsibility of the Department not to lead airlines to fail as operators. There was a need to use equipment that made an operator economically viable. Applications were scrutinised for such aspects as BEE compliance, level of rating, financial sustainability, equipment being used and age of aircraft.

Mr Ndwamato replied about Airlink, saying the Department did not have a deal with anybody and they were probably successful in their own right. Saying rivals were being funded to undermine them was not the correct assertion. What was being referred to were the two State Owned Enterprises. The state had decided to deal with SAA and SA Express as strategic assets to stimulate economic growth within the country. They knew there could be challenges in terms of the fiscals and operation budgets but the Department thought those were being addressed by the respective department.

Mr Krumbock asked, on a point of order, if this was really an answer to his question. He was unable to understand what that meant. He asked if the tax payers were funding a State Owned Enterprise via tourist subsidies or tourism incentives to undercut Airlink, or weren’t they? It was not his personal assertion but the assertion given to a Committee of Parliament. He had now heard the notion that there was a need to fund these airlines to stimulate something else. He argued that the presentation and the answers were all elliptical and he wanted a plain answer in plain English.

Mr Ndwamato replied they were not funding any rivals through either the Department or via tourism incentives. They were running their own promotions.

Rand Airport International Delegation
Mr Ollis asked where was the application for Rand airport for international delegations? Rand Airport had requested to be able to deal with small planes and cargo but at the moment, they had not been able to do that. They currently had to go through Lanseria. He did not understand why they could not license Rand Airport to take the load off Lanseria as going through there led to higher costs. If you licensed Rand Airport, it would create jobs and development in the East Rand that was not there.

Mr Ndwamato replied that the applications for Rand Airport had been received and was receiving due consideration. There were technical issues that needed to be addressed. There was a restriction on the number of international airports per province. Each was allowed one international airport with the exception of Gauteng which had two. This had been to streamline resources and ensure that the specific services were able to be provided at a particular point as well as taking into account state security issues. There was also the issue of air space in a small geographical area. This was however being considered and there were issues that needed to be addressed

Mr Ollis asked how long the application had been there.

Ms Phodisho Kganyogo, Deputy Director of Airports for the Department of Transport, replied that it had been around a month and it was receiving attention.

The Chairperson asked how much longer the process would take.

Ms Kganyogo replied the designation of international status was not the responsibility of the Department. It was a national government issue whereby different government departments had to sit in and assess the application. It also had to be approved by Cabinet.

The Chairperson said this did not answer the question. She said under normal circumstances she wanted to know how long the process took. She remembers when there was toi toiying before the people came into power and they said they would get rid of the ‘red tape government’. When the process was started, had a decision been taken to complete the task within a specific time period or was it open ended?

Ms Kganyogo replied that as soon as the responsible structure reached an agreement that was when the Department responded to the applicant.

The Chairperson asked when the Department started the process, was it open ended? It seemed that no time constraints were put in place.

Ms Kganyogo replied that it was something that needed to be looked at.

Mr Ollis said it had been in the system for a long time and they were appealing as a Committee that the process be speeded up. He understood that Cabinet needed to make a decision but they needed a document to do that. There was a need for inter-departmental cohesion. It had been in the system a long time and jobs could be created by freeing the process up. He understood the security issue but apart from that it was paper work. He also understood that the decision was taken to have two international airports in Gauteng and it was time to review that. Cabinet had the power to do that. If they said no, then he would be silent on the issue but there needed to be speed.

Ms Kganyogo replied perhaps she needed to retract her previous statement and say instead the application had been with them for a couple of months.

Disadvantaged people and transformation
Mr Ollis said the Chairperson had gone on about under privileged people getting air flight tickets. Was there the intention to help previously disadvantaged people get air flight tickets or were we just talking about jobs? Was there an arrangement like that being hinted at?

Mr Ndwamato replied the Department had not dealt with issues relating to legislation and policy matters. This probably could have caused a hindrance that caused the discrepancy. The issue was due to the system not being fully transformed. There was still that element of trying to exclude others. There were probably some unwritten rules that popped up in terms of selection criteria. It was not about there being a deficiency in the learners or the education system per se. It was more about the person who was there and was said to be an expert in that particular area. The Department was trying to deal with these issues in a manner that would vigorously open up things so that everyone had access to these services.

Mr Suka said about transformation targets, the Departments had not been specific on targets especially about the disadvantaged. What the Chairperson had talked about was about the legacy of the history of the country. He knew transformation would take some time but surely there had to be targets. At the moment the Department’s goals were too broad and too vague.

Mr Suka said that there was a need to step to public education in terms of career pathing so that learners across the broad could know about a career in aviation. This included white learners who were not affluent.  He wanted to demystify the notion of whites as ‘an elite’ as only a few benefited during apartheid and not all. Thus there was a need for the learners across the board to know you were there.

Security Risks
Mr Suka said that in terms of disaster management, one did not open up the country to security risks when the Department signed all these regional agreements and treaties.

Mr Suka asked for clarification and more information on the budget. There was the question of a bursary for the learners. He asked which learners had benefited from the scheme and in which provinces were these learners? He did not want to see a situation as in the case of the Civil Aviation programme in Port Alfred which had been flooded by foreigners and locals could not access it. It was a very serious matter and more documents and more information was needed. If the Department claimed that the laws needed to be adjusted according to the White Paper that was coming, then the Committee would need more information.

Economy driven skills
The Chairperson said she wanted to remind the Department of the State Of Nation Address in 2001 when the then President said that South Africans needed to develop the types of skills that would drive the economy. The presentation only referred to pilots. She did not believe that in the civil aviation industry the only skill needed was that of pilots. She argued that there were a large number of other skills that should be developed. Aircraft needed to be serviced. The youth had been saying there were no job opportunities which meant that they graduated and sat at home. One needed to question whether there was the development of the types of skills that would drive the economy. The fact that only pilots were discussed, showed that there was no communication within the Department as earlier the Committee had asked for another section of the Department to present on skills development. One needed a complete picture of the skills needed. How many were required and how many the Department was short of. The Department sections (roads, rail, aviation, sea) had been called in one by one and they were not giving this information. It was not right that the information on the skills needed to drive the economy, was not being presented.

Mr Ndwamato replied that DOT, in its strategy, had identified skills, education and training in key priority areas to ensure there was access to air services. This was because without knowledge, skills and know how, there could not be transformation in the industry. The Department was working with Basic and Higher Education in order to ensure that the curriculum had been identified for the various areas such as SAA, SA Civil Aviation Authority, Air Traffic and Navigation Services and Airports Company to name a few. Particular skills related to airports management and operations, navigation and avionics, piloting, engineering and safety inspection. The Department had tried to ensure that all the curricula had been packaged to fill the skills gaps that needed to be addressed.

Goals of Department
The Chairperson said the Department needed to read the Auditor General’s audit report for 2009/10 and 2010/11 which stated DOT did not follow the S.M.A.R.T principles in planning its strategic plan. SMART stood for Specific, Measurable, Achievable, Realistic, Time bound. This was key. Members were saying the presentation was too general. The Committee was not able to see the objectives of the Department and have a follow up meeting and hold them accountable to these objectives. There was nothing that was measurable. The Committee wanted to see the aviation transportation industry transformed. When one looked at the presentation, few people from the majority were making it into the industry. This was not only as pilots but also as passengers. In order for the economy to grow, there needed to be an increase in access of transport.

Ms Motsepe asked for clarity on page 7 that spoke about the National Airport Development Plan. The information given on this page was for all provinces and was not disaggregated. He asked how many did the Department achieve and how many did they not.

The Chairperson said there were nine provinces in the country and they were not the same. Some were poor, some were not and even within affluent provinces there were poorer areas. If those present agreed that they were addressing issues of poverty and inequality, then the aviation programme for learners needed to look at the presidential poverty nodal points within provinces. The President had said all municipalities needed to develop a household profile so one could see what were the issues in those areas and address them.

The Chairperson stated that the Department needed to work with communities as well.

Measurable Goals
The Chairperson referred to point 1 on the Civil Aviation Awareness slide and said it was not measurable as it did not state what provinces, how many learners and which school. It was not the volume of information that allowed the Committee to measure and track the progress, but the depth of it.

Mr Ndwamato said this had been noted.

The Chairperson said that the approach of the Committee was to work with the Department to find solutions. They did not just sit back and ask questions and not provide solutions. They were all in the boat together and if it sank, they all sank. So when they asked tough questions, they did that to understand the nature and source of the problem. The Committee made inputs to show the blind spots and what the common perspective was. The Committee expected the DOT to give input and point out the blind spots and in this case it was the laws and how relevant they were. If there was no congruence with the law to allow for the vision to be realised and problems on the ground to be addressed, then there was a need to fix this. The Committee did not expect DOT to come and present, saying they were succeeding when they were not. This was the first meeting and DOT would be given time to arrange the presentation to provide more information.

[Chairperson asked to step down for Standby presentation]
The Chairperson said that she had declared that one of her daughters had shares in Standby and according to Rule 12 should she recluse herself or continue as chair? The Committee were the ones to decide.

Mr Ollis wanted to confirm that the Chairperson did not personally have any shares in Standby Travel or any contractual arrangements with any of the airlines.

The Chairperson confirmed she did not.

Mr Suka said he heard what was being asked. As the Committee was not on a selection panel and this was only about information, the Chair should continue as Chair. She had no contractual obligations or shares herself.

Mr Mbhele aligned himself with Mr Suka’s position.

Mr Ollis asked if it was not possible for Mr Suka to Chair the meeting. This was a request from the DA. The Chairperson did not have to leave the room but could Mr Suka as the chief whip chair the meeting.

Mr Suka became Acting Chairperson.

Standby presentation
Mr Alan Dickson, Original Stakeholder Standby Travel Ltd, explained that th
e idea was for Standby Travel to operate two models, both of which offered a service from taxi rank to aircraft to taxi rank. Customers booked discounted flights, but were only informed if they were successful 48 hours before the flight. This was because Standby Travel passengers only got seats if there were some left if other airlines had space left over at this point. Standby Express Airline had its planes and was used to fly to area like Mththa, which were not well covered by commercial airlines.

Mr Dickson spoke about why there were no BEE airlines within South Africa, why low cost airlines failed and what it was that continually excluded previously disadvantaged from aviation travel in South Africa. The Standby Travel existed specifically to address these issues . Not a great deal of transformation had taken place in SAA post 1991. Speaking about Low Cost Carriers (LCC) in South Africa, he said only five million passengers had been on an airline and the low cost airlines were all vying for the same target market.

Mr Dickson asked what was being done to support these airlines so that they could embrace the market share. The shares of LCC carrier 1Time had dropped a great deal. If one looked at the aviation equipment, SAA had 737-800s which were highly effective and had “green” machines. Other LCCs had older carriers with fewer passengers and they burned more fuel. It was a ‘no brainer’ that they could not compete and that was why BEE carriers could not compete with SAA. These were efficient and were funded by government programmes.

Mr Dickson said the SANTACO Express had been designed for the previously disadvantaged. The whole system was cost effective for the people, efficient for the people and most importantly owned by the people. The company was a public company and an enormous chunk of shares had been made available so that people could buy shares. Not mlungus (white people) but people on the ground. StandBy’s objective was to be the largest broad based black economic organisation in terms of transportation on the JSE.

Competition with SAA
Mr Krumbock said this was an intriguing presentation as he was not sure why they were having it at all. However the explanations that had been given as to why the previous LCCs competing with SAA fell by the wayside, were interesting. Presumably these LCCs went into the marketplace with their eyes open and did not want to waste shareholders’ money – knowing they were at a disadvantage. He found it strange that somebody would want to compete under those circumstances. He had, however, understood the playing fields were not level. He wondered if it had something to do with having to buy older aircraft as they were so much cheaper and one knew SAA could undercut these operators at any time. He found it bizarre that a private entity would have to compete with a state carrier. Whenever the private entity lost money, they eventually went bankrupt. However when SAA lost hundreds of millions, it was always bailed out by the tax payer. SAA could also undercut the low cost carriers. The solution it seemed - in some of the arguments - was to intervene in the private market but why did government not intervene on the other side, namely make SAA compete with everyone else? This would mean SAA would had to take responsibility for its losses and would not undercut everyone else. It would then be more profitable for the low costs carriers and consumers would get a better product and there would be more competition.

Mr Danie Coetzee, Standby Travel Executive Chairman, replied that 1time started its low cost airline in 2003 and at that stage it was only Kulula flying. Mango came in 2005 with brand new aircraft from SAA. Aircraft operated on an Aircraft Crew Maintenance and Insurance system (ACMI) and they used this to work out the cost per hour. There was a vast difference in the hourly rate of the different generations of aircraft. About 60 per cent of the cost of the airline came from the fuel usage of the aircraft. That was why new generation aircraft could operate low costs carriers better than the older generation aircraft.

Mr Krumbock said there was also what was unstated which was the issue of race. He asked what would be the case if a white person who was from a poorer economic standing applied for the cheaper tickets, would he get it? And if an affluent black person applied for the ticket, would they get it? How was it determined who qualified for a ticket and who did not? Was it to be based on race? He argued that in that case, there was the possibility of ending up with a situation where very rich people from one group got cheap tickets and poor people from another had to pay for the expensive ones. This was an outcome that no one wanted. Often when people flew they found the majority of the economy class had white people and the business class/first class had the very rich black people. This was a principle that was mirrored in BEE. There was a big problem of inequality in the black group so how was a scenario such as this to be prevented? How was it to be ensured that it was poor people who benefited and not have this based on race?

Mr Krumbock asked how one defined the Previously Disadvantaged Individuals (PDIs). Was it race based or was it towards class?

Mr Coetzee said the knowledge out there was so limited to the PDIs. That was why it was two old white men giving this presentation to the Committee and asking them to lend a hand.

StandBy Model
Mr Krumbock said he understood what the StandBy Travel BBBEE company was trying to do and it was an elegant solution to break into a new market. He understood the logic of the business model; he just did not understand why it had not been done before? If it was so successful then why had it not been done? No one could argue SAA wanted to make those losses as it was embarrassing for them and the government when this happened. The private companies themselves could not make a loss. One could then argue that it was against profit-maximising behaviour, if they had not adopted this model. There had been no reasons given as to why this had happened. One could give the argument that they were afraid of losing their current customer base and thus did not tap into the new market.

Mr Ollis said his colleague had noted the two missing factors on your page reasons. One was that the tax payer was funding SAA and the other was that 1time and the other airlines bought cheap second-hand planes and that was how they made this model work. Until the cash was cut from SAA, this was how the model would continue to operate. He had a few questions about the Standby model. One of the problems was if a person found out they were paying R2500 to fly from Johannesburg to Cape Town and StandBy was selling tickets for R700 unless the person was excluded the on the basis of race, they would not buy the other ticket they would come and buy the R700 one. So the Standby theory was that they could block off the previously disadvantaged people somehow. The Gautrain had found that this model did not work and someone always managed to cheat the system. He did not understand how when this market equalised, there was still going to be a benefit. He wanted to reiterate that it had been pointed out, how would one define who was previously disadvantaged? There were all sorts of problems with this notion.

Mr Coetzee replied that R700 was just a figure, it was not saying what it was definitely going to be. The price had not been important. What was important was that people who did business in Johannesburg would not want to travel with this carrier, as for a period of time you were on StandBy as the name suggested.

Mr Dickson replied that the operators had asked how Standby would create a model so the airlines they worked with were not competing with themselves. The model was a standby model. He emphasised that it was a 48 hour model. The current market base was not one in which people would be prepared to wait till 48 hours before to find out whether they were to fly or not. They understood some would wait but the majority would not. The most significant thing that they had discussed with the airlines was if they could create a club mentality (which meant not just anyone out there could buy a ticket, they had to be part of the club) then StandBy could say join it if you wanted the privileges that we offered. They could then make the economic assumption that they would be able to define the market base within the region of 65 to 70%. The system was being marketed within the previous disadvantaged environment that was were it was going to be effective.

Mr Ollis asked for clarification as it seemed that what StandBy was offering was a package deal. There was a need to buy a taxi ticket either side of the flight and not just the flight. This was a way of keeping the average customer out. He did not understand how was this going to work? What would stop people simply buying the entire package but taking private transport? This seemed to be the one opportunity that StandBy was trying to beat its competitors through, was this package deal. The second was by operating in 300 remote stations so people did not have to use credit cards and internet and the like. Mr Dickson had then spoken about the masses of people who were a new market and how StandBy wanted to target people who used long distance taxis and buses. This meant they would be competing with these modes of transport. This would eventually end up in a taxi war. He wished them good luck.

Mr Ollis asked what Standby Travel wanted from Parliament as they had come here with some cost and expense. Was it a legislation issue or funding or something else?

Mr Cootzee replied that they wanted a blessing from Parliament and some finances, although not much, as it was an IT business.

Mr Coetzee replied that there were 25 000 commuters going from the Eastern Cape to the Western Cape alone and there were too many consumers for a taxi war. There was also the fact that when the Santaco model came into the picture the taxis said they liked the model but wanted to own the company. They wanted to embrace the flying business and wanted to own the airline. The taxi people were interested in it as they would own their own airline and allow them to give the option to their customers to fly and they could take them to the airport.

Informative presentation
Ms Dlakude said the presentation was good for those who understood from where the country had come. It had come from the legacy of apartheid and what they had done to us as a people. It was good that it gave the previously disadvantaged the option of flying rather than being relegated to road transport only. It also reminded the Committee that the subsidized companies in the country were owned by individuals and there was a need for poor people with poor backgrounds to engage in this sector as well as transfer skills to previously disadvantaged persons. As a representative of those in the rural areas and the previously disadvantaged, she understood this very well. There was a need for government to look into the subsidy model. At the moment it was a few with the right connections who got subsidies. This model was good as it allowed for the people of South Africa to fly. As a person who understood the history of the country, the presenters had her support.

BEE Company
Mr Mbhele said what was interesting was the representation was too wide. He asked how far StandBy was in terms of shareholding of black people. If they were serious about being the biggest BEE company, then being serious should have started by now.

Mr Mbhele referred to the slide that dealt with solutions. It stated that 1000s were employed countrywide and a lot of research had been done. However, the presentation was too general. How many jobs were being created?

Problems of Velvet Sky
Ms Motsepe said there needed to be a lot of women in this endeavour. They were the ones who carried everything. What worried her was how many people had gone to Velvet Sky because it was cheaper but when they went to the airport, there was no Velvet Sky. How were the people of South Africa going to get where they needed as everyone wanted to see themselves in the air?

Mr Coetzee replied that in the Velvet Sky model, when you booked a seat with them then it was only with Velvet Sky. The same was true with Mango and the other carriers. When one booked a flight with StandBy, then the flight could be with any operator. Their scope was all the airlines. StandBy was also now entering what was termed a ‘Global Distribution System’ which meant one could fly from Los Angeles to Hawaii if they were part of the system. Their airline system was not limited to one airline but included all operators.

The Chairperson said at the Committee level for the past 18 years, they had been looking an inequalities from a racial perspective and had not looked at issues of race and class. To her a disabled person who depended on a government social grant would forever be excluded from travelling by air if there was no intervention that identified such a person. She also thought when one spoke of class in society, there were also elderly people/pensioners. It would be a grievous mistake not to discuss the issue that these people may not be able to fly. There was also the issue of being a pensioner across various racial groups. There were various class issues that needed to be addressed. There were the lower income earners, domestic workers, factory workers and even gardeners. There was a need to use PDIs in relation to class as there were people who were PDIs pre-1994 that were not now. There were people who could not see and enjoy the country because of the cost of travelling. There was a particular class of people. It was not Standby who wanted something from the Committee, but they were learning from Standby.

The Acting Chairperson said there was a need for a country that brought new ideas. There was a need for a country that was knowledgeable, shared ideas and was proactive. One had not seen other parliamentary committees invite stakeholders from diverse places in society. This presentation helped as it was not the Committee’s position to make decisions, but to learn more in order to guide and conduct oversight.

The Acting Chairperson closed the debate but said he was not closing bilateral talks that could be held after the meeting.


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