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20 November 2007

As one of the fastest-growing regional airlines on the continent, South African Express Airways has proven to be a strong, capable airline, which has the potential to make regional air services more accessible in the Southern African region.

The airline is of strategic importance as its growth will add to the overall air services capacity. Our objective is to make air travel more accessible and to complement the national and international services of South African Airways (SAA) and other South African carriers. South African Express Airways (SAX) is able to operate on domestic routes where it is not economically viable to operate narrow-bodied jets such as those operated by South African Airways (SAA). SAX is essentially a regional airline operating where the main carriers do not or complementing their scheduled flights during the day. Because it acts as a feeder to other national and international networks via larger hubs it plays a vital role in air travel.

This is a specific function and we are looking to expand it both in the region and possibly into other regions of Africa. To have merged the airline into SAA would have lost its focus and to have sold it to other carriers at this stage would have lost us the opportunity for the strategic strengthening of South Africa's air transport system.

Although the aviation industry is a volatile and challenging one at the best of times, SAX has managed to remain profitable while also expanding its route network.

The airline currently flies to regional areas such as Walvis Bay in Namibia, Maputo, and Lubumbashi in the Democratic Republic of Congo. In August this year, the airline commenced its Johannesburg-Victoria Falls route. This is a great platform for the expansion of the airline's services to the rest of the continent. The airline is keen to increase frequency and capacity on the Johannesburg - Victoria Falls, Johannesburg - Lubumbashi, and the Cape Town - Maputo routes, due to the increased interest and economic impact that these routes have been able to realise.

Operating on routes such as Johannesburg – Maun route and the under-serviced Malawian domestic markets provide a platform for SAX to expand into the Southern African region. Such expansion will be very important in SAX's strategy to be the prime regional airline.

Members of the House, this Bill that we bring before you is one of the final steps towards making Transnet a freight transport company, focused wholly on rail, ports and pipelines, and is essential in ensuring that Transnet's four-point turnaround strategy is a success, and that as a stand-alone public enterprise, SAX can make a more meaningful contribution to South Africa's airline industry, and to the country's growth and development prospects.

Transnet's focus on its core activities has proven to be a success, as is evident from its recent financial results. The Accelerated and Shared Growth Initiative for South Africa (AsgiSA) has identified the tourism industry as a key driver for accelerating economic growth and job-creation. By retaining SAX in state hands, government can oversee that this growth and employment does occur, so that the lives of all South Africans can be improved.

SAX will be classified as a schedule two entity in the Public Finance Management Act (PFMA), giving it the commercial autonomy necessary in an industry such as the airline industry. Once we have a stable, affordable and effective air travel system in the country and the region it will be possible to reassess the precise role of the State in the ownership of SAX.

The board and management of SAX have done a good job in keeping the airline profitable in this competitive industry. I am confident that the new board chaired by Ms Lillian Boyle and the management under Ms Sizakela Mzimela will steer SAX to greater heights.

I would like to thank the Select Committee chaired by Ms Pricilla Temba for their hard work and I never cease to be amazed at how they handle such a collection of tough areas of governance.

I would urge the House to lend their support to the Bill so that we can move to the full establishment of SAX as a stand-alone State Owned Enterprise.

I thank you.

Issued by: Department of Public Enterprises
20 November 2007
Source: Department of Public Enterprises (http://www.dpe.gov.za)