Having a state subsidised domestic airline could jeopardise the future of the private industry, joint CEO of Comair and Kulula Gidon Novick said on Thursday.

"If the government puts money in a loss-making state owned airline it is not sustainable," he said at a seminar at the University of Johannesburg about low cost airlines.

"The entire private industry won't survive it."

If the government was going to provide subsidies they needed to be spread out. The global airline industry was "ridiculously volatile" at the moment.

"...and in the South African context you've got an environment where the state is a competitor... it's not fair.

"Government egos and privileges on long haul flights" also played a role in keeping a state domestic airline in existence.

"You get to have all these lovely privileges and perks... So to stand up there and say 'let's change this is', is not very easy."

SAA will be here 'until Jesus comes'

The problem was only exacerbated by the current economic downturn.

"The markets are down and yet (in South Africa 1time. Kulula, Mango and British Airways) are growing.

"There must be massive swings in business away from SAA, which is only going to make it more difficult (for it to exist without state subsidies)."

CEO of 1time Glen Orsmond believed SAA was here to stay.

"(SAA) are going to be here forever; as Jacob Zuma says 'until Jesus comes'."

He said in a "strange way" SAA actually helped the private industry.

"It actually helps us, because if you know that once a year you are going to get a check for one billion rand or three billion rand, you are never going to fix your business."

'Force us out of the market'

In any case, Orsmond said that for him the problem in the industry was not that the state wanted to own airlines, but that it was providing subsidies.

"If the subsidising allows them to sell (tickets) at lower than operating costs then they will force us out of the market."

Another problem with government policies was that they were blocking airline growth into the regional African market.

"It's a closed shop. There is no help from government to get into Africa.

If 1time was let into this market, Orsmond said: "we will drop fares by 50 percent".

Novick said he saw "sparks" that these budget airlines were beginning to make it into this market.

Certain governments had realised state airlines were a drain, becoming costly, unsafe and unreliable and were turning to the private sector for help. He said his company had been asked by the Malawian government to help fix their airlines.

Hold his breath the longest underwater

Mango chief operating officer Nic Vlok said airlines had to accept that they operated within the realm of government policy.

"At the end of the day you have to accept that government policy is formulated in a way that is different from the private sector".

Vlok said the survival of domestic budget airlines would come down to containing cost.

"The guy with the lowest cost is the guy who will be able to hold his breath the longest underwater."

Budget airlines needed to tap into the business sector to reduce their seasonal dependency on high volumes of people travelling over holidays.

Orsmond agreed, saying: "There is only one market up there. When we started business, you would not see a businessman (on 1time flights). He would be hiding behind his briefcase."

Now, Orsmond said, about 40 to 50 percent of their passengers were business people.

Overall, Novick said that figures from the International Air Transport Association indicated that the global airline industry would lose R9-billion this year, an estimate which they now said might even be too low.

Novick said if this did happen, the industry would experience its biggest loss in history.

"It's not a pretty picture in terms of what is happening in the airline industry."

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