Once The ‘Pride Of Africa’, A Restructured And Reborn South Africa Airways Is On A Journey Back To Profitability
As he outlines the national carrier’s own development, South African Airways Group CEO Vuyani Jarana believes the limitations of transport services in Africa are continuing to hold the continent back in terms of trade and connectivity. In a market where the geographic scale of Africa represents a challenge, and effectively can be viewed as a “continent of continents” he suggests new business and commercial models must be developed to suit Africa. He says revolution in air transport will require more than just regulatory change and governments must appreciate the economics of the aviation sector and the impact of excessive charges and taxes. But, such reform policies are not easy for governments to implement unless they are provided with clear economic models of the benefits of air travel.
Transcript
Vuyani Jarana:Well, I think we're making great progress in terms of implementing the strategy. We've done most of the route network optimization. We're seeing good results coming through. Obviously, our big focus now is around fleet. It's also around taking out some of the procurement costs to to actually improve margins. That's where the big focus is going. We've just completed the architecture of the organizational design. We want to build a truly international business so that we can actually make sure that there's a greater P&L accountability. Where we are, great progress, but there's still a lot of work to be done. OD implementation, procurement benefits realization, evolving the IT stack for the organisation so that we can actually fully embrace digital and be able to actually do private pricing and opportunities to build product sets that will increase revenue. So a lot of work still to be done. I think it's been great progress in the year that we've been implementing the plan. I think it gives me the ability to question and challenge the process, especially that I come from an industry that's highly retail orientated and very customer-centric, if you like, with digital. So it gives me the opportunity to ask why things can't be done differently. And I must be honest that I've found that a lot of my colleagues who are aviation aspects are very open to ideas of taking a very retail, pro-retail approach to business and evolve the traditional aviation methodologies that tend to be a little rigid traditionally. So I'm finding the good combination of chemistry. My job is to evolve, to push for the customer advocacy, to push for opportunities to build products, product stacks that can actually increase revenue and optimize our performance overall. So I'm finding it quite a good experience and the colleagues are quite accepting open to the challenge that I'm putting on the table always. I think it will be actually the Single African Air Transport Market policy framework is a very, very good policy framework because what it does, it creates a platform for business to engage. It creates a regulatory framework for us or a platform for us to engage. But policy alone is not going to move the needle. We need business leaders now to evolve from policy to strategy to execution. That's what, for example, in the panel here I was raising to say new business and commercial models must evolve at the back of the policy that is SATAM. Now, if you look at the continent, for example, it's 54 countries. If you look at what the US has done, has managed to build a strong aviation sector with consolidation. Now imagine if the US, each was, or every state had its own airline and its own policy. You would not achieve those kind of scale. I think the policy, the Single African Air Transport Market policy, seeks to create an alignment and an aggregate effect. We need to move beyond that and say, what models then can we build that are still pro-competition, but at the same time distributing benefits across their geographical footprint so as to have a much more sustainable aviation sector in the continent. That's what strategically, as leaders of the industry, we need to be seized with. We should have gone past breakeven point. We should be able to have built a very strong company, truly international, with rich skills in the commercial area, in the aircraft maintenance area. Once you have built that, we believe that the challenges of geography and being at the end of the hemisphere are those that can be resolved through commercial engagement, whether you do better network planning where you start to push more regional footprint to allow you to actually better utilize the aircraft. Those are commercial issues, challenges we can resolve. But I think the big thing is to build a capable organization that is self-sustainable. We think in 5 years' time, we should have gone past breakeven point and built a much more stronger airline that's able to challenge the market a lot more aggressively.
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