Sources of financial turbulence for private airlines in South Africa : an empirical study.

Abstract

Despite an increase in tourist arrivals in South Africa the potential of tourism in South Africa has not been realised due to the poor performance and high failure rate of private airlines. This article focuses on factors negatively impacting on the performance of private airlines in South Africa. The research involved an extensive literature search of the factors negatively impacting on the performance of private airlines in South Africa, followed by several interviews with former executives in defunct private airlines in South Africa. From the study, it is clear that the performance of private carriers is negatively impacted by inefficient management, use of an aged fleet, bad landing slots, lack of fuel and labour efficient strategies. The fact that the state is competing with privately-owned airlines in a deregulated market presents the conundrum of the state wearing two hats, acting as both a “referee and a player in the market”. Therefore, partial and selective deregulation designed to maintain the protection of national carriers represents a considerable threat to private operators thereby rendering the aviation business unprofitable, something that stifles the country’s tourism prospects.