Paper presented at the 26th Annual Southern African Transport Conference 9 - 12 July 2007 "The challenges of implementing policy?", CSIR International Convention Centre, Pretoria, South Africa. ABSTRACT:This paper discusses the airline policy that needs to be introduced for the airline industry to cope with the growing demand and be ready for 2010.
The paper argues that, for the airline industry to become more responsive to market forces, SAA should be privatised. This will create a more stable environment and encourage more airlines to enter the market. The management of a privatised SAA and the private airlines will be able to focus on running their airlines rather than be concerned with political issues or spend senior management time dealing with matters such as the Competition Commission. The Government will become the referee and not be an operator and regulator at the same time. The paper draws lessons from the international trend towards privatising of state owned airlines. Unfair competition will be eliminated as SAA, unlike the private sector, is allowed to make losses. The paper discusses the cost of subsidizing SAA and question whether this is a sound policy.
The policy should also allow more competition from international airlines. This would benefit all passengers, the tourism industry and increase employment in the tourism industry. It will be argued that, just as passengers have benefited from deregulation of domestic air transport, so will international passengers benefit from more competition from international airlines.
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