Photo: Unsplash
Photo: Unsplash
The South African Civil Aviation Authority (SACAA) isn’t ruling out the worst-case scenario this year, after the regulatory body reported a near-total wipeout in revenue over the past 12 months. Their latest financial report weighs-up the possibility of a ‘collapse’ for the flight industry, expressing ‘significant doubt’ about SACAA’s ability to survive the pandemic.
Flightless? SA’s aviation industry under severe pressure
The latest report also confirms that shareholders will be asked to provide ‘financial assistance’. SACCA’s revenue is down by an eye-watering 98%, due to the huge drop-off in passenger numbers. More than seven-tenths of their profits are generated by things like user fees and fuel levies: With aircrafts grounded, the impact has been devastating.
Another massive problem rearing its head is the dire state of South Africa’s state carriers. Both South African Airways (SAA) and SA Express are in financial meltdown, despite attempts to rescue both businesses. With two domestic airline giants now rendered wholly unreliable, the collapse of our aviation structure isn’t just an empty threat – it’s a real possibility.
Struggles at SACAA revealed
SACAA, as a self-funded public entity, now finds itself on the brink of the abyss:
“Over 70% of SACAA’s total revenue is derived from Passenger Safety Charges. Cumulative revenue in the first three months of the 2020/21 financial year was approximately 98% lower than our 2019/20 revenue during the same period. Also, our liquidity has been impacted, which required us to engage with our shareholders for financial assistance.”
“The lockdown and its effect on the aviation industry is a disastrous reality on its own. With this reality, conjoined with the news of the possible closures of three key South African airlines, the situation’s turned into a distressing calamity. A material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern.”
“As previously stated, the main sources of revenue of the entity are the passenger safety charges, such as user fees, and fuel levies generated from the airline industry. The pandemic has caused a significant reduction of air travel both locally and globally, hence the impact on the revenue of the entity.”
SACAA’s annual report for 2020/21
