2010 Airlift Strategy: Briefings by Department, SA Tourism Services & Tourism Business Council

Airlift Strategy to the Broader 2010 Context: Briefing by Department of Transport (DOT)
Mr Anwar Abdul Gany. Director Civil Aviation. Department of Transport (DoT) said that the DoT had devised an extensive strategy around the 2010 airlift strategy. He noted that the document had been sent to the committee.

The Chairperson said that he appreciated the challenges faced by the DoT. but it would be better if this could be distributed ahead of the meeting. The Committee had received the Airlift Strategy document some months previously.

Mr Gany said that the DoT supported growth in the airline industry. It was an industry with long lead times. An agreement could be signed now but would only come into use later, as it took time to plan new routes. There was a strategy to promote tourism. There was a window of opportunity with the approaching FIFA World Cup in 2010, and there was a clear indication that other countries were keen to operate new routes into South Africa. These discussions were reached not so much by dialogue as by bilateral agreements.

Before 1994 there had not been the same driving force in negotiating air links. The current airlift strategy was the result of continuing dialogue. The Tourism Board was included in the DoT’s planning committee. A mandate had been formulated. There were bilateral agreements, but these would fall away as the open skies policy came into effect. Issues to be discussed were traffic rights, entry points and flight frequencies. On the subject of entry points, the DoT could not allow the airlines to dictate their demands, nor allow too much pressure to be exerted on any particular point.

Mr Gany said that the DoT would plan the arrival points to spread the load during the World Cup. This would alleviate congestion. A snap shot survey showed that the majority of flights arrived in Johannesburg. In 2010 this amount of traffic would lead to inefficiency. Bilateral agreements and memorandums of understanding would influence airlines flying into other points. There was interest – a British airline wished to fly from Luton to Lanseria and other airlines wished to operate into Durban and Cape Town. Factors dictating the choice of entry points included airspace congestion, ground handling facilities, and inter-nodal transport at airports. Presently, interactive discussions were taking place. Government departments, with the cooperation of airlines and other structures were creating a regulatory environment. It was good to have tourism involved.

Mr Gany turned to the airlift strategy. The views of other departments had been considered. These had to be seen together with the views of the industry. The challenge was to stimulate growth. South African carriers were not playing their part. They had the capacity but tended to pick and choose the environment in which they operated. It was the DoT’s view that a balanced approach was needed. If an airline operated on 50 routes, then it was acceptable if two or three of these were loss-making. There were other benefits to the economy by maintaining these routes. Some restrictions diluted the frequency of flights. South African Airways (SAA) was the only carrier operating long-haul flights, with the exception of Nationwide’s sole long-haul route to London. Other carriers had to help, and must focus on the big picture. The DoT needed to contact all countries who would be part of the FIFA World Cup.

He said that an overview was needed to format the implementation plan. Existing bilateral agreements would be considered and cost analyses done. Many agreements were long standing and dated from a previous era of air travel. Some of the agreements dated back to 1959. There were several legs to the analysis of agreements, such as security. There were gaps, such as the agreed frequency of flights. These considerations could be seen from different perspectives. Route utilisation had to be discussed and questions asked as to why some parts of the globe were not covered. The role of the DoT had to be made clear. It was an enabler and a regulator, but did not take a commercial interest in the industry.

Mr Gany listed the objectives of the DoT. They wished to see accelerated growth. Mobility of the domestic market needed promotion. Safety and security needed to improve. The well being of the aviation community had to be ensured. There was an environmental responsibility issue as well. Noise might be a problem. Modern aircraft were quiet and could operate at any time. However, the DoT expected that some older aircraft would be used, which were much noisier. Their hours of operation would be limited to being between 06h00 and 18h00. The DoT had to think about this early, so it could use leverage now to enforce this regulation. If left too late, they might find themselves pushed into a corner.

Mr Gany said that airlines applied through the International Air Services Council for routes. They often then sat on the routes in order to pursue strategic advantages. The DoT would now insist on seeing business plans. There was a need to commit to routes. The Yamasukro agreement had not been fully implemented for the last twenty years. The open skies policy was to be introduced at some stage. This was the mandate given by the African Union (AU) to the African civil aviation authority. An open market would stimulate flights into Africa. Ethiopia. Kenya and Ghana had a special relationship with South Africa. They had good infrastructure and South Africa would be comfortable with these countries being used as stop-over points.

Mr Gany discussed the strategic approach. An impact assessment was needed on the freedom of the air. There had been a lot of debate on the issue. The application of the freedoms was a key focus area. If foreign carriers were allowed free rein in South Africa,they could close down local companies. In the European Union (EU) any EU carrier could fly from any airport within the EU to any destination. This would increase their edge over South African carriers.

In terms of the tactical approach, the principle of reciprocity had to be applied. It was a myth that frequency of flights was used equally. Airlines entered into alliances and code share agreements. This could assist airlines where the market was insufficient for them to operate effectively, but this could also dilute the seating capacity. Some routes needed more capacity, but this was not being achieved. Special planning was needed for special events like the 2010 World Cup. There were a number of instruments to measure success and agreements could be bypassed if necessary.

Mr Gany said that the mandate of the DoT derived from the Constitution, the International Air Services Act (IASA), the Air Services Licensing Act (ASLA) and the role played by government in enabling and regulating.

He said that the IASA applied more to international routes. It promoted trade and tourism, and regulated competition. There was no compromise on safety. The DoT would deny access to any airlines that it felt were unsafe. The Act developed the local industry and promoted the needs of users.

He added that the Department of Environmental Affairs and Tourism requirements were that core markets should be identified. There had to be investment in the market. They monitored the primary market. A strategy was being developed for hubs and links.

He said that capacity on international routes was being underutilised. Of the foreign airlines operating into South Africa, only 211 of the 469 allocated weekly frequencies were used. On the route between Argentina and South Africa, neither country made use of the three weekly frequencies. Argentina was a very popular destination for South Africans. Airlines had to deliver, and the Malaysian airline had taken the initiative to operate on the route, but there was limited capacity. In the past, when South Americans had travelled to the World Cup, they had gone via Europe. This was costly and would be a deterrent to South Americans travelling to South Africa in 2010. A direct route was needed. SAA did fly to Brazil through Sao Paolo. Argentineans and other Spanish speaking South Americans were not keen to use Sao Paolo due to the language difference and hostility between the two language groups. There were also infrastructure limitations in Brazil, as witnessed by the consequences of the recent incident in Sao Paolo. This might negatively influence the frequency of flights to and from Brazil.

Among South African carriers, 232 of the 469 frequencies were unused. This was deceptive, as many frequencies were operated under code share agreements, and many of these routes were within the African region. With some 400 000 spectators expected from overseas and the average aircraft carrying 250 passengers, the enormity of the capacity challenge was illustrated.

Mr Gany said that air traffic rights stemmed from the Chicago Convention, which was held in the 1940’s. There were now nine Freedom of the Air rights. The third was that an airline could carry passengers from its country of registration to another country. The fourth was the reciprocal arrangement to that. The fifth was a continuation of the third with the addition that it could then uplift passengers in that country and take them to a third country. This was what Malaysian Airlines was doing on the Cape Town – Buenos Aires route. The sixth freedom was that an airline could carry passengers from another country to its own, and then take them onward to a third. This was the principle of using a hub. Airlines particularly good at exploiting this concept were Emirates, Lufthansa, Singapore Airways, Korean Airlines and British Airways. This gave them a good competitive advantage. There were also potential benefits for the hub country.

Mr Gany said that South Africa would have to compete. If the market was denied, then tourists would move on. South Africa had to tap into the hubs. There was an exiting model. The United Arab Emirates (UAE) provided connections to all parts of the globe. Emirates was the only airline which was a partner with SAA. There would be engagement with the UAE towards 2010. No other vehicle was available, and South Africa would have to make use of this opportunity.

He said that the UAE currently had 25 frequencies to South Africa. An additional three had been allocated on the route to Johannesburg during 2007. From January 2008, seven frequencies would be allocated into Durban and seven into Cape Town. In 2009, an additional seven frequencies into both Durban and Cape Town would be granted, and a further seven into Johannesburg in 2010. Supplementary frequencies would be considered. That amounted to an extra 38 frequencies. The strategic approach being taken was that the allocations for 2009 and 2010 would be reviewed in the light of results on the route in 2007 and 2008. This would force Emirates to utilise the route fully. The second clause of the agreement was that there had to be a commercial agreement reached with SAA within a six-month period. The DoT would not be involved in these negotiations. There was a window of opportunity, and South African carriers would have to make use of it. Possibilities were the distribution of domestic traffic brought in by Emirates, ,lease of aircraft and so on. It would be a difficult job.

Mr Gany said that DoT had devised a strategy that all incoming traffic from the Americas should land in Cape Town. Traffic from the Far East and Australasia would be routed to Durban, and all traffic from Europe, Africa and the Middle East to Johannesburg. This would alleviate congestion and provide business opportunities in the two coastal cities.

Regarding the current routes, the DoT would be applying a “use it or lose it” approach. The IASC made provision for additional unused capacity. Unused airport slots would be taken away. Air Transport and Navigation Services managed this process. If slots were not used, then other traffic would be blocked. The procedure was that a Section 21 hearing was held in terms of the IASA. At present, airlines were given twelve months’ grace to start operating on a route once it had been allocated. He thought this was perhaps too long. It was a layman’s business, and airlines played tricks to delay starting their operations, citing lack of aircraft,crew and so forth. The DoT wanted to see this period reduced to 90 days. There were some routes that had been reallocated in this way, and other airlines were all too quick to take them over. Supplementary frequencies could be negotiated for the World Cup period. The DoT would take a liberal attitude to authorising charter flights but there were safety and security concerns with a number of charter companies.

Mr Trevor Teegler, Co-Ordinator, World Cup 2010 Aviation Task Team, DoT, said that one of the Department’s strategic objectives was to create a safe environment. Operations had to be efficient in order to deliver on the transport guarantees made to FIFA. It was a myth that simply putting more aircraft in the air would solve capacity problems. Ground support was also needed to make flights possible. Sustainability would be achieved by using all available resources at the minimum cost.

Mr Teegler said that the conceptual planning was to have primary airports, such as OR Tambo International, secondary airports like Lanseria and support airports like Grand Central. Slot co-ordination at the airports was crucial. He quoted the German experience. There had been no slot control at one airport, and this had caused chaos. Seat capacity was an issue. Extensive use would be made of the “Golden Triangle” which consisted of Johannesburg, Cape Town and Durban. The infrastructure at these airports was designed to exceed requirements. There was limited infrastructure at the smaller airports. The only airports that would be able to handle the Airbus A380 were OR Tambo International, Cape Town International, Durban International and the King Shaka International Airport being built in Durban. Other airports were limited in the size and type of aircraft that could be accommodated. Correct ground support was also only to be found at the major airports. The three primary airports were geared to handle heavy traffic, and the forthcoming Cricket Twenty20 World Championship would serve as a dry run.

Mr Teegler said that there would be three host venues in Gauteng during the World Cup. There would therefore be a huge demand on Johannesburg every day. Domestic and regional traffic would compete with long-haul traffic. Road transport also had a role.

He envisaged that the support airports would be used for general aviation. Hours of operation would be extended in order to handle unscheduled traffic. Commercial operators would increase their fleets temporarily. The current capacity on domestic routes was sufficient, and a 70% displacement could be accommodated. There was an additional requirement for the use of secondary airports. Their facilities would have to make provision for the extra demand, and various services such as electricity, customs and immigration would have to be improved.

Mr Gany said that there was no guarantee of future sustainability at the smaller airports. They had sufficient infrastructure at the moment. The Airports Company of South Africa (ACSA) was throwing money at airports rather than investing in them. There was a master plan for infrastructure for 2010 regarding airports. There was sufficient capacity on the master plan. At the smaller airports there were restrictions on the traffic movements on the ground. Expensive ground handling equipment was needed, and some vehicles were too sensitive to be used on anything other than good quality aprons. However, the narrow body aircraft were better suited to operate from airports with minimal ground handling facilities. The DoT was busy with an operational plan. A feasible solution would be found. Previous events had led to creative solutions. At Durban, hangar space had been used to set up terminals. A drop and go principle had been used to park aircraft, with South African Air Force bases being used for long-term parking. It was the DoT’s duty to fulfil and deliver on the airlift strategy.

Discussion
The Chairperson said the presentation was encouraging and thoughtful. However, it had not dealt with personnel issues. Baggage pilfering was a major issue that had been raised with ACSA. Equity was a baggage handling company that made extensive use of casual labour. Ticket access was also a problem. The service of SAA on weekends was dreadful. There were also long queues at security checkpoints at OR Tambo International. These could be ascribed to management issues, and he realised that this was not really DoT’s area. The Committee had gone to Buenos Aires on Malaysia Airlines, and had been lobbied by the Ambassador there. Sao Paolo was not a good airport, and there were also connection problems. He had also heard that SAA’s South American representative was a Brazilian, and that this might have influenced the choice. This did not make much sense.

The Chairperson took noted that the three primary South African airports would be tested during dry runs, but he pointed out that the King Shake airport at Durban did not exist yet. This issue had come up during a visit to the area. Land transport access was a problem and there were other uncertainties. There was some unhappiness by airlines at the thought of using King Shaka Airport. He asked what the business case was for this new airport. and if it would be ready on time, bearing in mind that dry runs would also have to be conducted there. Regarding Nelspruit, he said that there was uncertainty over the future ownership of the airport, and this was hampering development.

Mr Gany noted that the current Durban International and King Shaka Airports would operate in parallel. Traffic would be split between the two airports on an airline specific basis. Capacity in terms of road transport fell under the eThekwini municipality, and although he was not a road expert, he did feel that the road infrastructure could handle the load. King Shaka was well situated to the north of the city, and Durban International had easy access to the south. Durban was in an advantaged position. It had the best aviation skills and sufficient exposure.

The Chairperson concluded that both airports would be in use during 2010. He asked if the King Shaka Airport would be sustainable. He had heard that the Board of Airlines of South Africa were reluctant to use the new airport.

Mr Gany said that there was a cost reluctance. He felt that this was nonsense. Singapore Airways was the only airline to operate jumbo jets into Durban and this was a cause for excitement. However there were problems at Durban International. There was limited parking space on the apron. Durban had the advantage of being at sea level. This enabled aircraft to climb quickly and fuel was cheaper. Flights from the Far East could save about an hour’s flying time by landing in Durban. These would all present significant operating costs to airlines, both in terms of fuel savings as well as reducing aircraft fatigue. King Shaka would be a lucrative airport. Similarly. Cape Town would be a gateway to the west. He saw great potential to receive Spanish speaking tourists. Emirates had suggested that they fly to Durban. Other Middle East airlines were also interested.

Mr S Farrow (DA) was concerned about the level of traffic. During the World Cup business, normal tourism and social visits would continue. Given the current congestion both in terms of apron and terminal services conditions could be chaotic. He asked if the DoT had done a worst-case scenario, and if they thought it would work out. Customs and immigration clearance had also been a problem recently. He heard so many complaints while standing in queues at airports that he found it embarrassing. He had noticed an increasing number of flight delays, and wondered what the Department was planning in this aspect.

Mr L Mashile (ANC) wanted to know what the status of the Kruger-Mpumulanga International Airport (KMIA) at Nelspruit was, and what the plans were. He asked what DoT’s level of engagement with this airport was. Check-in facilities were a problem. There were only five tables to handle all airlines. Parking and road access were problematic and infrastructure improvements were needed.

Mr Gany replied that he had experience of airports. One of the major challenges was casual labour. He had written a paper on this issue while he still worked for ACSA. He was therefore aware of the new licensing system. Any document was only as good as its implementation. Stringent provisions were being made to penalise companies for below-par performance. The new licensing system would come into effect on 1 March 2008. This should improve the statistics on baggage pilfering. Casual workers were paid embarrassingly low wages, and this led to theft. The DoT wanted to see this rooted out. Contracted labour was used all over the world, but not all the workforce should be casuals. There was also a security issue with casual labour. He would discuss the matter soon with the Managing Director of ACSA.

On the question of ticket access, he felt that it was a staff morale issue. He hoped that the situation would be remedied by 2010 as the counter staff were the forefront of all airlines. In Germany task teams had been put in place at airports two years before the 2006 event. The language barrier was a particular problem. A similar mechanism was needed in South Africa.

The Chairperson said that the Committee would raise the matter. The rudeness of staff might be the result of poor morale, but he pointed out that long queues also led to travellers becoming frustrated and taking this out on the staff. This could become a vicious cycle. It seemed that business was booming for the airlines, and he thought this must mean that more money was available to cure understaffing problems. There was also confusion sometimes about which queue people should join and management could be more active.

Mr Gany said that the issue was operational management. There was also an issue of time responsiveness. He would take up the issue of the sparse manning of security check points. International check-ins were reacting to global threats and the process had become longer.

Mr Gany said that the DoT had experienced extensive lobbying from the Ambassador to Argentina. He asked why Aerolineas Argentina was not operating. He understood they had capacity constraints. South African carriers were losing out by not operating the route. The route was not a loss-maker, and they were being encouraged to take it up.

He added that the DoT was embracing other agencies. Customs control had been the subject of discussion with the Department of Home Affairs. There were a number of challenges. Smaller airports would also need services to handle international flights. There was a need to build capacity now. A fast-tracking process would be put in place to be ready before 2009. He felt the need for express queues at immigration control for first and business class passengers. There was a need to understand how the system worked. The baggage of these passengers was offloaded first, but various inefficiencies were delaying their departure from the airport unnecessarily.

He said that heading towards 2010 a specialist team was needed to boost capacity. Volunteers and interns could be used to facilitate traffic flow. There was synergy at KMIA. The sale of the airport was a barrier. He would share the road issue with his colleagues. and would meet with the Chief Executive Officer (CEO) of the airport.

Mr Mashile said that the promotion of competition might lead to unsafe conditions. He asked how the DoT could ensure that there was no compromise on safety. Opening of South African airspace could lead to globalisation. He asked how local airlines could be protected and their growth potential enhanced. He asked what the extent of consultation was and about how aircraft would be diverted. He asked if there was a clear view of capacity and what the timing would be.

Mr Farrow said that he still wanted an answer on scenario plans. Mr Gany was Chairperson of the body. He said that the work was primarily regarding aircraft activities, but SAA was not included on the body. There was a feeling that the expense of building the King Shaka airport was resulting in increased tariffs as ACSA recovered their costs. The sustainability of the airport would depend on development. He asked if Durban International was not sufficient, and if an upgrade to the existing airport would not be enough. The world trend was to develop hubs, and he felt this was the way of the future. People wanted to get closer to their destinations and OR Tambo International was the right place. The mixture of cargo and passenger traffic had been missed. SAA’s cargo capacity had been reduced by changing the type of aircraft. Implementation of plans on the ground was difficult without control. He felt that the 06h00 to 18h00 restrictions on noisy aircraft was fine. The International Civil Aviation Organisation (ICAO) had plans to reduce noise emissions to international standards. Every aircraft landing in the country had to comply with the regulations.

Mr Gany said that the promotion of competition was part of the strategy. It was explicit in the Acts pertaining to licensing that safety was paramount. Aircraft had to be airworthy and maintained according to recognised standards. Airlines had to comply with this. Protectionism was not a nice word in the local market. A number of airlines were involved in alliances and code share arrangements. There was increased capacity in the market. Local airlines had to be competitive.

The Chairperson said that the airlift strategy acknowledged the importance of the national carriers. Mobility should not rest in foreign hands. The importance of the national airline industry was recognised. Other African countries were struggling with their national carriers. Routes had to have a balance of business and development criteria.

Mr Gany said this was the case at present. A balanced approach was being followed in ensuring the success of the market. Business decisions were taken in the long term. Alliances were reciprocal arrangements, and partners did not compete with each other. It took just six months to kill off a route, and there were long term connotations to this.

Mr Gany said that there had been consultations with small airports. An aviation task team had conducted a road show. Some airports were very vocal, and had the money to do the required work to upgrade. Others were more laid back. There was an instrumental role for them. The large airports would handle the commercial traffic, while general aviation would be routed to the smaller airports. Smaller aircraft would be used on the alternate routes. This was under discussion.

He said that there was a current approach regarding the scenario plan. A master plan had been drawn up regarding the occupancy rate of airports. There was capacity to manage the footprint of people using the airports. The International Air Transport Association had standards regarding the number of people waiting in queues. This capacity would have to be developed.

He said that the Durban International Airport had a shelf life. It was being pushed to the limits at present. The runways could be lengthened although the possibilities were limited due to space constraints. Another crucial limitation was on apron space, which limited the number of aircraft which could be handled. These factors posed limits on expansion. Income would offset the high tariffs. There would be long term benefits in the building of the King Shaka airport.

Mr Farrow asked about the agreements with the UAE. He asked which airport at Durban would be their destination.

Mr Gany said there would be one or two flights a day at first. The DoT was inclined to believe that there was a sustainable future for King Shaka Airport. There was also interest by British and New Zealand airlines to fly to this airport. There were many challenges. Apron constraints would set a limit of three to five wide body aircraft.

He agreed on the hub concept, but disagreed on the remarks concerning cargo capacity. The 6am to 6pm issue was an ICAO regulation to balance noise emissions. Most aircraft used for international traffic were new generation and complied with regulations. Existing fleets fell within the framework. Licences to operate on domestic routes would not be denied except for safety considerations. Slots were managed at airport level, and the allocation was very technical in nature.

South African Tourism Services Association (SATSA) Briefing
Mr Michael Tatalias, CEO. South African Tourism Services Association, said that he had had to rework the document which he was about to present. SATSA had had interaction with the DoT. He would try to keep the presentation to 2010 issues, but there were other matters to discuss. He was glad that Cabinet had agreed on the airlift strategy. A problem in negotiating with the DoT was the constant staff turn-over. The strategy was fine. As the private sector, SATSA wished to know what the progress was with bilateral agreements. The DoT had linkages with other departments. A time frame was needed for planning. There were many positive plans, but he warned that there was an insufficient budget. This was not just in monetary terms but also in terms of time and personnel. If this was not addressed members would move on.

He said that there was a need to settle air access. He referred to two documents: the ComMark and Intervista reports. Copies of both of these were included in the presentation. He said that SAA was restructuring. There had been a lot of tax investment in the airline. In many other countries there had been a liberalised structure implemented. National carriers, which had formerly been protected, often managed to survive and thrive. In Uganda the national carrier had been allowed to go bankrupt, but the country had benefited. Political and operational issues should be seen separately, and they could be offset against each other. SAA was following a withdrawal strategy. Many flights to popular destinations had been cancelled. It was very hard to reopen routes. He presented figures on targeted areas from which to attract tourists where SAA routes had been closed. He asked how tourism could be promoted if the national carrier was not acting in the national interest. He asked to whom SAA reported.

The Chairperson replied that SAA reported to the Department of Public Enterprises, which looked at SAA as a business. On some other issues the airline reported to the DoT. A silo approach was followed.

Mr Tatalias said that there had been a drop-off in tourism from Germany. SAA had closed three routes to that country. Routes should be assessed on a case-by-case basis. Primary core markets should be considered. SATSA had concerns about ACSA. They were not the only player in the airport business, but had strong links. A hub approach strangled development. ACSA made money from the three major airports but this was not in the best interests of the entire industry.

His next topic was the liberalising of air access to remedy the structural difference with tourism. It was important to measure more than simply the number of tourists arriving during a year. Distribution during the year was important. The “boom and bust” seasonal fluctuations were not good for the industry. Hospitality industries cashed in during the season, and there were often negative effects such as exorbitant prices. The sector liked stability. It was hard to retain staff during the lean periods. The Western Cape found itself in a bad position with the change of seasons. Operators had to understand the patters. Capital investment was diminished by the fluctuations. Charter flights would be a method of bringing in tourists, and the best time for this was outside of the normal season. Access should be easy then. When Cape Town was at the peak of its season other venues such as game parks were below capacity. The industry should work with the authorities to plan optimal usage of tourist facilities.

Mr Tatalias said that one of the problems with the inbound industry was the long and unique lead times. The annual indaba in Durban was used to market packages. However, prices had to be determined eighteen months in advance so that foreign operators had time to market the packages. Opportunities could be lost. The liberated air access process had dragged on for too long.

He said there were worrying capacity issues. He was happy that some areas were in full swing, but in others there was insufficient capacity. There were not enough rooms or luxury coaches. MATCH, the accommodation booking agent for FIFA, was now moving away from its insistence on arranging accommodation in formal hotels. This was good but there would still be shortages. At present South Africa received approximately 250 000 tourists each month and investments were based on this figure. In 2010. between 400 000 and 450 000 tourists were expected for the World Cup, with specific needs. There was a shortage of a thousand luxury coaches. The legacy of the tournament should be an upgraded land transport system. There were similar fears that hotels would not be able to cope and it would not be sustainable to build many new hotels. FIFA and the Local Organising Committee had different ideas on what the legacy should be. The tournament should be an opportunity to build the industry.

Mr Tatalias said that bilateral air service agreements were a long process. A temporary process would be to arrange charter flights for incoming tourists. There would be organic growth in the economy and a growth in jobs. These comments should be seen in the light of the development framework. Where liberalisation occurred there would be a rapid increase in gross domestic product and job creation. This could be achieved at a relatively low cost. He asked why government did not consider a dry run for the industry over the next few years. Tourism would suffer if the plans failed.

His next topic was the liberalisation of regional air services. International and regional services into neighbouring countries were governed by the same legal processes. However there was a lack of capacity on regional services. This had a negative impact. The foreign tourist tended to see Southern Africa as a single country, and that was how tourism models were structured. If this approach was not adopted the whole destination would become less attractive. There were problems dealing with neighbouring states. Some were positive towards a more seamless approach but others not so. Southern Africa was losing tourism business as a result to west and east Africa and to Egypt. This regional strategy seemed to be working for them. There was not enough transport in Southern Africa and prices were high. Air travel was the best option given the distances involved. The question was how to encourage regional partners. Neighbouring states talked about an African World Cup. The region must be liberalised soon. There was the potential for neighbouring states to sue SAA for anti-competitive practices.

Mr Tatalias said that the next topic was improved statistics. Most of the information gathering fell within the Home Affairs silo. This influenced decisions on air access, liberalisation, and freedom of the air rights. Statistics were not up to standard. He hoped that the transfer of Mr Mavuso Msimang to the Department of Home Affairs would improve the situation. South Africa should strive to achieve first world standards. Airline safety standards were first-world already. Germany was excellent in maintaining statistics of the arrival and departure of tourists. Peripheral players like ACSA should also be accountable.

He said that a recent problem had been the “follow home hijackings”. The National Key Points Act had been invoked, and measures had been taken to counter this problem. He suggested that there should be more accountability in the airport business. Some permanent structures were needed, such as an ombudsman.

Mr Tatalias said that there was an anecdotal perception that South Africa was an unsafe destination. In fact the crime figures involving tourists were low. However, tourists arrived with this concern but at the same time looking forward to a fantastic holiday. They were confronted with poor treatment by staff at immigration control and then a fair number found that their baggage had been tampered with. They would immediately have their fears confirmed, and feel that they had made the wrong decision. However, the tourist industry was generally good. Tourists would be well received by the hospitality industry and hopefully they would have a wonderful, crime-free holiday, only for them to stand a good chance of having their baggage pilfered again on departure. This sort of theft was not a major crime, but still had a massive effect on the country’s reputation.

He felt that baggage handlers should be permanent workers, not contract staff. There should be a forum for accountability. There was no big case for the airlines to answer as passenger handling was undertaken by ACSA and companies contracted to them. The situation here could be seen in contrast to Dubai, which used clever technologies to combat baggage theft. South Africa was not the only country with a problem. Tourism in the United States had declined due to unpleasant experiences on arrival. Often safety was used as an excuse to cover up the incompetence of staff.

Mr Tatalias said that Germany had commenced with a training programme two years before the 2006 World Cup. There had been massive events in South Africa, which had been handled well, such as the World Summit for Sustainable Development held recently in Johannesburg. All airport staff should undergo the South African Host programme. A pilot programme had been held in the North West with the intention of making the local police more tourist-friendly. It was all about willingness to help foreigners.

He could not understand the Argentinean issue. It was a unique situation that the national carriers of neither country were prepared to operate on a lucrative route. This led to a reduced frequency. There was an eight-month waiting period for group bookings on Malaysian Airlines.

Tourism Business Council of SA (TBCSA) Comments
Ms Mmatsatsi Marobe, CEO. Tourism Business Council of South Africa (TBCSA), had been invited by Mr Tatalias to attend the meeting. She had attended a recent regional meeting in Victoria Falls. She had several concerns, and she hoped that the government could support the industry. She asked what the Committee could do to mediate with Minister of Transport. There was a time frame within the Southern African Development Corporation (SADC). Tourism and Home Affairs Ministers held joint planning meetings in other SADC countries. This was also needed in South Africa, as it made for easier movement of tourists by air and land.

Ms Marobe said that on the hub concept, the size of the country was a challenge. There were four key delivery areas for tourists in three key areas, namely Gauteng, KwaZulu-Natal and Cape Town. Poverty stricken areas did not benefit. Government was an enabler. There was a sense of entrepreneurship in the industry, and that would jump at opportunities if the environment was right.

Ms Marobe said that there were core markets. There were core areas for tourism, but she thought it looked as if the strategy was based on tourism alone. There were trading cores as well, and she had the impression that airlift capability should address both trade and tourism. Tourism bodies needed to know how the airlines saw their business plans. While tourism was a major factor, there was also business tourism, homecoming traffic and freight. She asked what dictated the strategy.

She said that charter flights could really help. This strategy had been used successfully in KwaZulu-Natal with a charter from Hungary. It had been hectic work to organise this, but it could drive the industry. There were limited opportunities for BEE in the aviation sector. This was a difficult issue.

Ms Marobe then addressed the question of displaced tourists during 2010. She asked how SADC could be involved. The industry wanted to plan and gear up its infrastructure. These were the people that kept the industry going. The geographical spread of airports could be utilised to get tourists to increase their stay. Legacy issues should include the creation of a better life for all. The airlift strategy model should not erode local companies, but should enhance them. She commended the DoT for their efforts thus far. The strategy document was in place, but some factors still needed to be understood.

Discussion
The Chairperson said that it was good to see the strategic thinking. He shared the concern that this might be a nice policy but would not be implementable. Staff turnover was a concern. The Director-General of the DoT had recently reported that there was a 41% vacancy rate in the Department. He understood that there were only two staff members dedicated towards 2010 planning and they were overstressed. He agreed that there was a need to watch SAA. The airline must be nurtured as the national carrier but at the same time it must be exposed to competition. Government could not accept its withdrawal strategy. There was a balanced approach to ACSA. It was an important public asset. Revenue was being ploughed back into the country rather than going to some foreign company, but this did not give them a right to ignore other airports. Charters were a way of addressing seasonal fluctuations, and could be used to bring tourists to underdeveloped areas. He agreed absolutely on SADC. There were many reasons, but things were not working well. The tourist industry should use 2010 leverage as an entry point and establish a legacy. The South African Minister of Transport did interact with his counterparts in the region. The statistics should be correct. Hubs were part of the trade and tourism phenomenon.

Ms D Nxumalo (ANC) said that not much had been said about road transport.

The Chairperson replied that he was anxious to pursue this matter.

Mr Farrow noted that an aspect of the airlift strategy was how to get people from the airports to the towns. The Airbus A380 would be carrying between 500 and 600 passengers. It would need twelve coaches to move a single load of passengers, and there would be congestion at the airports. He had seen the effects of a late bus at the airport the previous day. There were only 350 coaches in the country now. There would be further implications when the transport needs of the FIFA family were addressed.

The Chairperson said that this issue should be flagged for later discussions.

Mr Gany said there were several aspects to be noted regarding charter flights. The DoT processed applications for charter flights. It had to consider the intention of the travel company. The Department could only react on application, and there were few of these. The type of aircraft to be used had to be considered together with safety, insurance and route factors. The industry had to be given a chance to comment as well. Charters being brought in at peak period could be seen as taking the cream off the top of the market. If there was no negative impact then the application was likely to be approved. Charters were a vehicle of opportunity.

The Chairperson surmised that this was a long winded and complicated procedure.

Mr Gany disagreed. The process only took three days, and local airlines only had two days of consultation.

Mr Tatalias said that charters should not be seen as a threat to SAA but as an opportunity. Idle aircraft could be wet leased for this purpose. In the early 1990’s SAA had run a very successful operation from London to South Africa on a charter basis. The ComMark report had been the result of conservative research. It had found that liberalised access to SADC countries could boost the trade by 500 000 tourists per year. This would add R1.5 billion to the SADC gross domestic product, create 35 000 jobs directly and another 35 000 jobs in the wider economy. The big picture had to be seen. It was fine to protect airlines, but an increase of 20% in volume would outweigh negative consequences of competition. There would be more internal benefits as well. Airlines had to import most of the needs such as aircraft, components and fuel. SATSA wished to work with the national carrier to the benefit of the region.

The Chairperson noted that much of the discussion had related to SAA. He presumed that the tourism industry had negotiated with them.

Mr Tatalias replied that SAA had not even taken their calls.

The Chairperson responded that there was a need to look at charters.

Ms Marobe said that in other SADC countries the Ministers of Tourism sat with their Home Affairs counterparts. The Minister of Transport should meet with his Tourism counterpart. There seemed to be a lack of mutual understanding. Charter flights could be used to travel on routes where there were no scheduled flights, or on normal routes in the low season.

The Chairperson said that charters need not undermine the high / low season balance of scheduled carriers. SAA need not see their presence as a threat. He understood the concerns of the Minister and it was difficult to schedule meetings. ACSA and the DoT would submit annual reports by the end of September. The issues would be raised when they presented their reports to the Committee. There were many issues still to be finalised.

Mr Mashile encouraged the presenters not to lose hope. Consultation and discussions might influence future decisions.

The Chairperson confirmed that not all hope was lost as the airlines were making lots of money. This was encouraging. The presentations had been informative. He stressed that 2010 would be a wonderful opportunity for business.

Other Business
The Chairperson made an announcement about the Peoples’ Assembly in Mbizana. Due to an appropriation vote in Parliament, it would not be possible to carry out an oversight visit before the People’s Assembly. The Committee would therefore travel there between 17 and 19 September. The programme was still not clear. but would be clarified at a Chairpersons’ meeting. They would drive the programme themselves. Issues to be discussed were the N2 toll road, the community programme in terms of road maintenance, the challenge of student mobility, bus rank upgrades and interaction relevant to local officials.

The meeting was adjourned.