Abstract
D.Comm.
Many studies on the topic of air transport deregulation have seen the light in the
past two decades, and only more recently (in the early 1990s) has this trend had
its impact on the South African domestic air transport industry.
For a period of almost 41 years (from 1949 until 1990), domestic air services on
major routes in South Africa were strictly regulated by Government through the
Air Services Act, No 51 of 1949. The above is the result of air transport policy
that came into being in the early days of air transport and remained in place until
the late 1980s. Only after the adoption of a policy of deregulation did air transport
policy adjust to allow for the entry of the private sector into the domestic air
transport market as from 1990 onwards.
In his study titled "Control Over Domestic Air Transportation in South Africa - A
Historic Perspective"(1996), Mr J Vermooten describes the history of air transport
in South Africa as follows:
In the period 1929 to 1934, the following airlines were responsible for establishing
scheduled domestic air services in South Africa:
- Union Airways;
South West African Airways (Junkers);
Imperial Airways; and
Rhodesian and Nyasaland Airways.
All of the above airlines, except the last-mentioned, relied heavily on air mail
subsidy agreements from Government enabling them to operate scheduled services
in South Africa.
Chapter 1 - 2
Over time, the South African Railways and Harbours Administration (SAR&H)
became concerned about the threat of intermodal competition from air services
and the possible diversionary effect on its first class rail passenger traffic. This
eventually resulted in the protection of railway services against competition from
air transport, similar - to the protection against competition from motor
transportation.
The provision of air transport services was fortunately not completely banned.
Instead, departmental air services were introduced through the purchase of Union
Airways by the South African Railways in February 1934. This was followed by
the purchase of South West African Airways a year later (February 1935).
At the start of the Second World War (1939/1940), aircraft employed for civil air
transport were transferred to military authorities and South Africa became totally
dependent on foreign airlines for the provision of domestic air transport services.
These services were provided by:
the British Overseas Airways Corporation (BOAC);
Society Anonyme Beige d'Esploration de la Navigation Aerienne (SABENA)
and
Southern Rhodesia Air Services (SRAS), which succeeded the old Rhodesia
and Nyasaland Airways (RANA).
Domestic Air Services by foreign airlines were provided at very reasonable prices
during the war, but fares were increased by between 25% and 38% when South
African Airways (SAA) resumed its domestic services after the war.
The economic conditions immediately after the Second World War could not
support the levels of fares and tariffs introduced with the resumption of services
by SAA. To rescue the situation, SAA's domestic fares, excess luggage and
freight rates were restored to 1941-levels on 1 March 1946.
Chapter 1 - 3
In response to the need of Municipalities to clarify their position with regard to
airports and feeder services, the South African Government introduced an air
transport policy that reserved the major domestic air transport services for SAA,
leaving it to the private sector to participate in the provision of feeder air services.
The policy also made provision for various categories of airports and degrees of
financial assistance by the Government, thereby limiting the demands by
Municipalities for the increased use of airports.
The National Transport Commission (NTC) was established in terms of the
Transport Co-ordination Act of 1948, in order to replace the Civil Aviation Council.
The Council was responsible for the technical issues related to air transport, such
as the competency of air personnel, airworthiness of aircraft, the provision of
facilities in the interest of safety, etc.
The Transport Co-ordination Act charged the NTC with the following tasks:
"... (to) promote and encourage the development of transport in the Union
and, where necessary, co-ordinate various phases of transport in order to
achieve the maximum benefit and economy of transport services to the
public."
The Act also led to the protection of SAA - similar to the protection of railway
services provided by the SAR&H.
The Air Services Act of 1949 formally introduced the concept of economic
regulation of air transport services in South Africa and in 1952 the NTC formulated
a comprehensive air transport policy which ensured the establishment of a
monopoly for SAA over the majority of air transport services in the domestic
market until 1991.
Following on what was said above, the Air Services Act (No 51 of 1949) provided
for the licensing and control of airlines and air services and stipulated that, subject
to certain exceptions, no one was allowed to use an aircraft for commercial
purposes, unless a licence to do so has been granted by the NTC (section 2 of the
Act).
In terms of section 10 of the Act, the NTC was prohibited from granting a licence
in competition with an existing licence, if the service provided by the existing
licensee was "satisfactory and sufficient" to meet the needs of the public at a
"reasonable charge".
To summarise, one can say that prior to the establishment of SAA a very liberal
air transport policy existed, whilst after its establishment air transport policy was
protectionist in nature.
The "interest of the public" in the provision of air transport services was generally
regarded as the interest of the SAR&H - rather than the users directly affected by
the air service.
It is also remarkable that foreign airlines played such an important role in the
development and maintenance of domestic air services in South Africa in the very
early days of air transport in this country, as well as during the Second World War
at which time the civil air services provided by SAA were terminated due to
support for military needs.
Since the establishment of the national carrier, SAA, by the SAR&H, air transport
in South Africa was subject to the protection of the Government and as a result,
SAA obtained a monopoly in the provision of domestic air transport services.
The SAR&H was succeeded by the South African Transport Services (SATS) and
in 1988, the South African transport industry moved a step closer towards the
deregulation and privatisation of State-owned transport enterprises, with the
restructuring of SATS and its predecessor, the SAR&H which has played the role
of "Big Brother" in the industry since South Africa became a Union in 1910.