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SAA must adapt to ‘open skies’ — minister

LINDA ENSOR and JULIUS BAUMANN
CAPE TOWN — Further liberalisation of the airline industry is inevitable and will require South African Airways (SAA) to give up some of the "overprotection" it has enjoyed until now, says Tourism Minister Marthinus van Schalkwyk .His comments are likely to unsettle once again what has been at times a rocky relationship with the national airline, which may oppose any air service agreement that will put it at a disadvantage to its competitors. The minister said yesterday the movement towards an open skies policy was "inevitable", though it has been resisted by local airlines because of the intense competition it would bring. The insistence by Europe and the US that SA adopt an "open skies" policy would have to be dealt with in a phased approach which ensured the continued survival of SAA while providing more foreign airlines access to SA. Negotiations between the European Union (EU) and SA on a new air service agreement recognising the EU as a single aviation market remain stalled, with the local industry and the Department of Transport scrambling to find an agreement that would not compromise South African aviation. A new air service agreement with the EU will allow European carriers to take up unused flight frequencies available under any existing air service agreement — concluded in any of the 27 EU states — that allow an EU airline to fly from any EU country to SA.This will put SAA under great pressure from large European carriers, particularly as it is unlikely to add any new flights to EU countries due to its membership of the Star Alliance. "I have absolutely no doubt in my mind that we will see further liberalisation," Mr van Schalkwyk said in an interview after an address to a tourism summit in Parliament. The Cabinet’s approval of the airlift strategy in 2006 had seen the number of airlines flying to and from SA increase to 50, and further liberalisation would result in a further rise, even taking into account economic conditions."But our national airline must understand that competition will become fiercer and that the environment will continue to change, so there is no comfort zone," the minister said. SAA’s overprotection in the past had been to the detriment of the tourism sector and therefore to the detriment of the economy.Greater liberalisation of the airways would mean foreign airlines getting more slots and more better-timed slots in SA. In the longer term, seventh- generation rights would enable them to fly to SA, pick up passengers and then fly off to other destinations in the country or in the region. "The sooner that we have that discussion, the better," Mr van Schalkwyk said. Another issue of critical concern to the department was the "unfair and discriminatory" travel tax imposed unilaterally by the UK and other European countries, which Mr van Schalkwyk said was already having a negative effect on the number of people travelling to long-haul destinations.SA is to host a meeting of "like- minded destinations" — including Australia, Malaysia and Indonesia — in Germany this month to establish a co-ordinated response to these taxes. The World Tourism Organisation had also objected strongly, as such levies were usually agreed in a multilateral framework.Mr van Schalkwyk said the new travel tax had left him feeling "duped" as the UK had initially touted it as a dedicated environmental tax but it soon became clear that the levy would be paid directly to the fiscus. Germany and Austria then followed suit, and then the Netherlands, which reversed its decision because of the effect on tourism."Unilateral travel taxes are likely to become a bigger issue as European governments scramble for new sources of general revenue," he said. "It has become a means for European governments to deal with their budget deficits."We think it is very unfair because they are putting a tax on the non-voting public, a unilateral tax. It takes place outside any multilaterally agreed framework. It is starting to distort the market. We are saying it is wrong for us to foot the bill for their deficit. We are discriminated against and it is developing countries that are starting to feel the pinch."It might become necessary for SA’s government to warn travellers to avoid certain destinations because of the unfair taxes, he said. Mr van Schalkwyk, who will release last year’s tourist arrival figures today, said SA had seen a return to growth in global tourism arrivals last year "but there remain good reasons for caution as far as global travel expectations for 2011 are concerned. Inbound and outbound growth is especially robust in emerging markets but the rebound in SA’s traditional markets is weak.""Arrivals will in all likelihood continue to recover faster than income as a result of tougher competition, more value-conscious consumers and new travel patterns. The priority is to protect our share in traditional markets whilst recognising that long-term growth lies in China, India, Latin America and our continent. From a tourism perspective we stand to gain tremendously from our inclusion in the Bric (Brazil, Russia, India and China) partnership." 
 

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