Master of Business Administration

MASTER OF BUSINESS

ADMINISTRATION

CASE STUDY

The Anomaly of Airlink

Modules: Emotional and Spiritual Intelligence and Strategic Financial Management

INSTRUCTIONS

Please make very sure that you: • Print your case study on both sides of each page (ie no blank pages); • Make handwritten notes only in the margins from the point at which the case study text begins to the end of the printing; • Do not make any handwritten notes on this page or the next, or on any blank pages following the end of the case study text; and • Bring your annotated case study with you to your exam. Note that: • This case study presents the situation experienced at a social enterprise. • It will outline several real dilemmas, for which you need to offer practical solutions based on what you have learnt. • As in real life, you might not be given all relevant data, and will need to make and state the assumptions with which you are working.

Contact details: Regenesys Business School Tel: +27 (11) 669-5000 Fax: +27 (11) 669-5001 Email: [email protected] www.regenesys.co.za CONTENTS

1. INTRODUCTION ...... 1 2. LEADERSHIP ...... 2 3. OVERCOMING OBSTACLES ...... 3 4. POLITICAL INCIDENTS ...... 3 4.1 THE PRESIDENT’S WIFE ...... 3 4.2 THE MINISTER OF TRANSPORT ...... 5 4.3 THE PRESIDENT OF MADAGASCAR ...... 7 5. REGULATORY INCIDENTS ...... 9 5.1 THE CIVIL AVIATION AUTHORITY ...... 9 5.2 THE COMPETITION COMMISSION ...... 11 5.3 THE LABOUR APPEAL COURT ...... 14 5.4 POLICE SPECIAL FORCES AND THE “HIJACKING” ...... 17 6. NEW STRATEGIC ISSUES ...... 19 6.1 SOUTH AFRICAN EXPRESS ...... 19 6.2 DIRECT FLIGHTS TO BUSH CAMPS ...... 21 7. REGENESYS BUSINESS SCHOOL GRADUATION SPEECH (2016) ...... 22 8. ANNEXURE A ...... 26

List of Figures

FIGURE 1: COMPETITION TRIBUNAL OF SOUTH AFRICA ...... 12

Document Change History

Date of Publication: October 2016 Publisher: Regenesys Management Place of Publication: Sandton

Date Version Initials Description of Change September 2016 1 WS Document supplied 24 October 2016 2_e RT Case study edited 28 October 2016 3_e_f SK Formatted 28 September 2017 4_e_f SK Updated for new exams 1. INTRODUCTION

Mr Rodger Foster, the CEO and MD of SA Airlink (Pty) Ltd, is an anomaly. He bucks the trend in many ways. He has served in his top position for over two decades, surviving the numerous changes associated with the various political leaders who have come and gone during this time, as well as run-ins with various regulatory bodies, such as the Civil Aviation Authority and the Competition Commission, and even the courts.

But more than being a mere survivor, Mr Foster is a winner, and has somehow managed to keep his airline profitable in a difficult business environment, where the many industry-specific challenges have contributed to the demise of several of his former competitors, such as Nationwide Airlines, Interlink Airlines, Velvet Sky, and 1Time.

The airline industry has been extremely tough for the past decade around the world, not only in South Africa. In the United States, for example, Arrow Air (Florida), an established airline that had operated continuously since 1947, crashed out in 2010. It followed in the sad footsteps of Aloha Airlines (Hawaii), which operated from 1946 to 2008, and was in turn soon followed by AirNow (Vermont), which was in business from 1957 to 2011. One of the best- known collapses was Continental Airlines (Texas), which had survived the ups and downs of the airline industry since 1937, before going belly up 75 years later in 2012.

But when the going gets tough, then unprofitable national carriers sometimes get government bail- outs:

Treasury says … it has granted South African Airways’ (SAA) application for a bailout … Yesterday, “ Finance Minister Pravin Gordhan … announced the approval of a R5 billion going concern guarantee.

Reference: http://business.iafrica.com/news/1035667.html

Private airlines such as SA Airlink (Pty) Ltd do not qualify for government bail-outs. They have to sink or swim, based on nothing other than the quality of their leadership, strategy, operations, and client services. Airlink has been swimming very successfully for the past couple of decades. As Mr Foster summarised:

“Other competitors are struggling in a flat economy, and against this backdrop it is pleasing that “ Airlink continues growing its passenger volumes by 9%, its revenue by 13%, and returns on equity of more than 25%. Today, Airlink operates to more than 40 destinations in the region, and each year it offers more than 46,000 flights annually which together carry over 1,400,000 customers.”

2. LEADERSHIP

After school, Rodger Foster attended the University of the Witwatersrand, where he read for a bachelor of science (B.Sc.) degree in building in the Faculty of Architecture. During this time, he became the chairman of the Council of Architectural Students.

Mr Foster’s first job was as the store development project manager for the Metro Cash and Carry chain, where he worked for two years in the Johannesburg area, doing turnkey store development for the group.

However, searching for new challenges, Mr Foster then participated in forming the Foster Webb Group, of which he was the joint managing director for the next 10 years. The Foster Webb Group undertook diverse civil engineering and building construction projects, mostly in the commercial and industrial sectors, while also running a small air charter company from Lanseria Airport.

Finally, in May 1992, Mr Foster was appointed CEO and MD of SA Airlink, where he has remained until today. Straddling the divide between strategic leadership and operational management, one of Mr Foster’s former colleagues publicly commented that:

“Rodger was an exceptional leader, a strategic thinker, whilst at the same time always managing to “ stay in touch with the detailed day-to-day operations. Although I last worked with him many years ago, I still remember, and practise, some of the lessons learnt under his leadership at SA Airlink”.

Reference: https://za.linkedin.com/in/rodger-foster-837b382b

The combination of effective management and exceptional leadership is difficult to define and attain, as managers and leaders have different qualities and characteristics, and play different roles. A manager can, however, display leadership qualities and a leader can display management qualities. Very occasionally, one person can fulfil the roles of both manager and leader.

In South Africa, the home of SA Airlink, and elsewhere, the mainstream leadership literature has been dominated by the western paradigm of business. This paradigm has also been imprinted on other leadership cultures such as the African and eastern paradigms. The dominance, and some aspects of the universal appropriateness, of the western business leadership paradigm are now being challenged in some quarters.

3. OVERCOMING OBSTACLES

The question that many ask is:

How exactly has SA Airlink managed to stave off adversity throughout its history, and what has enabled SA Airlink to survive and flourish where many other airlines have failed?

To begin with, there has been some “universal adversity” that negatively affected all airlines everywhere, as Mr Foster notes:

“It is true that Airlink has been confronted by multiple adverse challenges in our history. The most 1 “ significant of these was 9/11 , which changed air travel especially as regards security, and decimated the global economy overnight causing many airlines throughout the world to fail.”

Financial performance, however, is not the only criterion of a company’s performance. The traditional business paradigm of performance is now also being challenged, since pure financial performance does not adequately address the changing context of global business. Social and environmental aspects must also inform performance measures in a 21st century organisation.

In addition to financial challenges, there have also been several other unique challenges in the history of SA Airlink in particular. A selection of these follows.

4. POLITICAL INCIDENTS

Mr Foster has obviously learned one or two secrets of success along the way. These secrets range from high-level business strategy to dealing with disgruntled political leaders and their close relatives.

4.1 THE PRESIDENT’S WIFE

There was an occasion when the wife of the president accused one or more employees of SA Airlink of stealing her valuable jewellery, an incident widely reported in the local and international media at the time:

1 On 11 September 2001, militants simultaneously hijacked four airliners, two of which were flown into the twin towers of the World Trade Center in New York, while a third plane hit the Pentagon just outside Washington, DC, and the fourth plane crashed in a field in Pennsylvania. Together, over 3000 people were killed. © Regenesys Business School 3

Jacob Zuma’s Wife Loses £36,000 Worth of Jewellery on a Flight “ Thobeka Madiba-Zuma, a former bank clerk who became the polygamous Mr Zuma’s third current wife when she married him in 2010, claims that 36 pieces of “exclusive” jewellery in a Clarins cosmetic case were stolen from her bag while in transit in December last year.

Among the items she listed as lost, according to a claim form obtained by Beeld newspaper, were £32,000-worth of diamonds including a diamond arm band, two diamond sets of earrings, bracelets, chains and pendants, two diamond rings and a diamond and gold ring in the shape of a snake.

An accompanying cover letter sent to the airline on presidential notepaper read: “Pls find Madam Zuma’s claim for processing as a matter of urgency”. The jewellery was transported in an unlocked suitcase and was not insured, according to Beeld, But the airline, SA Airlink, reportedly rejected the suggestion that Mrs Madiba-Zuma’s bag was tampered with after an investigation that included studying CCTV footage and polygraphing all its staff.

The jewellery loss occurred when Mrs Madiba-Zuma flew from Nelspruit to OR Tambo International Airport in Johannesburg before driving on to Bloemfontein to join her husband at the ANC’s elective conference before Christmas.

“I last saw my Clarins cosmetic (bag) containing the stolen jewellery inside my burnt orange Cellini Microlite suitcase at the hotel when packing & getting ready to leave for the airport (in Nelspruit),” she is quoted as saying by Beeld in the claim form sent to the airline.

“We arrived at the airport & the luggage (was) handled by my supports team.” She went on to say that her luggage was collected at OR Tambo by her personal assistant and a VIP lounge staff member before being put in her car.

“On arrival in Bloem the luggage was handled by my protectors. When getting ready for the dinner, I noticed that the creme (sic) Clarins cosmetic bag was missing from the suitcase,” she wrote.

Neither Mrs Madiba-Zuma nor SA Airlink responded to requests for comment.

Reference: http://www.telegraph.co.uk/news/worldnews/africaandindianocean/southafrica/10042993/Jacob- Zumas-wife-loses-36000-worth-of-jewellery-on-a-flight.html

The use of polygraph testing in itself is controversial, but the large-scale use of polygraph testing across multiple departments within a business, as SA Airlink did in response to Mrs Zuma’s claim for compensation, can be highly disruptive. Being an effective leader in today’s complex world means being conscious or aware of many things, both internal to ourselves, and in the external environment. Self-awareness is core to the development of emotional intelligence (EQ) and spiritual intelligence SQ in leaders, so, since EQ and SQ levels can be improved, they should be built into organisational change processes and leadership development plans.

Leaders need EQ and SQ need to understand what is most important to them in the long term (deep values) and how this aligns to what they believe about the purpose of their lives. These values and sense of purpose translate into the organisation through the construct of consciousness, whereby the organisation is aligned to a collective set of values (internal and external to the organisation), and has developed a clear and well-articulated sense of business purpose, which it pursues.

In this context, SA Airlink found itself in the very delicate position of having to balance the claim from Mrs Zuma, on the one hand, with the values it supported and the morale of its workforce on the other, and very carefully consider the emotional and psychological impact of requiring all staff to undergo polygraph testing.

4.2 THE MINISTER OF TRANSPORT

That wasn’t the first time that Mr Foster and SA Airlink had come to the attention of senior political leaders. Some years earlier, shortly before South Africa was due to host the 2010 FIFA World Cup, the then-minister of transport tackled Mr Foster and SA Airlink over their safety record after a series of crashes and mishaps grabbed media attention:

SA Airlink under fire “ SA Airlink has until Friday to provide Transport Minister Sbu Ndebele with proof that it is fit to continue operating following five serious accidents involving the airline in recent months.

Chief executive and part-owner of SA Airlink, Rodger Foster, told The Times last night he was “worried” by Ndebele’s announcement that he was considering shutting down the privately owned airline, a partner of the national carrier SAA, “following a string of aviation safety incidents involving the airline in the past few months”.

Ndebele said: “This is a concern also shared by the South African Civil Aviation Authority.” The minister convened an urgent meeting with CAA representatives yesterday. After the meeting, Ndebele said he had demanded that a report on all incidents and accidents involving Airlink in the past six months, and reports of audits on the airline by the CAA, be presented to him by the “close of business on Friday”.

Forster could not confirm if it was possible for the airline to comply with the instruction, saying the auditing process with the CAA was under way and would continue “as long as it takes” to find any gaps in operating, management or training procedure.

He said: “I am absolutely worried to the extent that I have this morning engaged an expert on aviation to do an external review on our flight operating and procedures.

“However, I am sure we have very good operations that meet and exceed international standards.” This despite there having been no fewer than five reported incidents involving Airlink this year. The most recent occurred on Monday.

SA Airlink flight SA8625, carrying 30 passengers, overshot the runway at George airport, crashing through a fence and coming to an abrupt halt in a ditch running alongside a road. Last month Zimbabwean Prime Minister Morgan Tsvangirai was reportedly aboard an SA Airlink flight that was forced to return to OR Tambo International Airport due to “a technical fault”.

Ndebele has also requested voice recordings from the cockpit of an Airlink plane involved in a crash in Durban two months ago, in which pilot Allister Freeman was fatally injured.

On September 24, Freeman was forced to make a landing on a school sports field in Merebank, south of the city, when the aircraft he was piloting lost power shortly after take off. Three others were injured.

After the crash in George on Monday, Ndebele said there was “no reason to panic”, but he was singing from a different song sheet after yesterday’s meeting with the CAA.

The meeting ended late yesterday evening, with the transport ministry calling on the CAA to urgently supply detailed information about Airlink’s operations “by close of business on Friday, in order to enable the minister to make a decision on the grounding”.

Should the airline be grounded, bookings for the festive season and transport during the 2010 World Cup will be affected.

Airlink carries 65,000 passengers a month to nearly 20 destinations in South Africa and others in Africa, including Mozambique, Zambia and Madagascar.

Reference: http://www.thekathrynreport.com/2009/12/sa-airlink-under-fire.html

On a very basic level, “intelligence” is the ability to acquire and apply knowledge and skills. Intelligence often comes to the fore in difficult times, when complex crises involving emotional people have to be handled with insight. However, what constitutes intelligence continues to be debated. Gardner proposed his theory of multiple intelligences, which originally excluded spiritual intelligence, although later he adapted his paradigm to include existential intelligence. Quantum physics – the study of the behaviour of subatomic particles – is now being used to explain spiritual intelligence. It essentially speaks to the interconnectedness of everything at subatomic levels.

Intellectual, physical, emotional and spiritual information is processed by our brains to build our knowledge of our experience of the world and inform our decisions and actions as leaders.

The year 2009 was the annus horribilis for SA Airlink, when Mr Foster had to cope with the competing demands of political leaders, the industry regulatory body, anxious passengers, grieving relatives, and demoralised staff, and it was only through the wise application of multiple intelligences that his leadership pulled the company through this dark time.

4.3 THE PRESIDENT OF MADAGASCAR

But apart from the president and the former minister of transport, Mr Foster has also had to deal with situations involving other heads of state, such as the turnaround, for safety reasons, involving the deposed president of Madagascar, whom SA Airlink was flying back to Antananarivo in accordance with a resolution of the Southern African Development Community (SADC).

Ravalomanana’s Malagasy Return up in the Air “ “This is Madagascar,” said Marc Ravalomanana, wistfully, pointing out the window of the flight intended to take the deposed president of Madagascar back home after three years of exile in South Africa.

Below were the brown sand and green hills of the Indian Ocean island’s shoreline. Or was it Mozambique? Such was the theatre of the absurd unfolding on Saturday morning’s South African Airlink flight 8252 to Antananarivo that nothing was certain.

At around noon, Ravalomanana was informed by the airline’s security chief, who was on board the flight and identified only as Heinrich, that the plane had turned around and was now heading back to Johannesburg. But information was scarce – unlike the anger and disappointment welling up inside Ravalomanana and his entourage, or the general chaos in mid-air.

Ravalomanana’s attempt to set foot on Malagasy soil was thwarted an hour before it was due to happen. According to the airline’s security chief, the pilot had been informed by ground control at Ivato International Airport that it had been closed due to “security concerns”.

News filtering through suggested that large crowds (estimated between 20 000 and 30 000) had gathered at Ivato in expectation of Ravalomanana. No one would say who had given the order to close the airport down, but Ravalomanana’s aides suggested that it must have been an executive order from someone in the government of Andry Rajoelina (who had deposed Ravalomanana’s democratically elected government in a 2009 coup).

Lockdown in paradise

Ivato would be closed for “between five to six hours”, apparently. Enquiries about landing at another airport on the island drew a response from the captain that suggested lockdown in paradise: all the airports in Madagascar were closed down.

On-board, arguments ensued: Ravalomanana’s aides questioned why the plane could not land in Mauritius or Mozambique and didn’t receive a satisfactory answer – allegations of collusion between the airline and Malagasy government swirled at 30 000 feet in the air.

One Ravalomanana aide confided that they had been approached by the SA Airlink brass at midnight on Friday in an attempt to convince Ravalomanana not to board the flight. “So when they boarded this flight, they knew they were going to turn back,” she said, outraged.

Ravalomanana was palpably disappointed: “This is proof that the Rajoelina government doesn’t respect the road map ... it is now up to the African Union and [the] SADC troika to take action. © Regenesys Business School 7

They must work this out,” he said, referring to the SADC road map finalised in September last year. The road map had outlined a path towards democratic elections within a year and also allowed for the unconditional return of exiles, including Ravalomanana.

Betrayal of agreement

That Rajoelina was refusing him entry to Madagascar was a betrayal of this agreement, said Ravalomanana, urging the African Union and SADC to show strength of leadership and decisiveness in responding to the incident.

Sending a message to the Malagasy people, Ravalomanana, said he was “saddened and disappointed” by the turn of events. It was not the first time that the exiled president had suffered such ignominy: emboldened by the Arab Spring early last year, he had tried to return to Madagascar, only to be prohibited from boarding his plane by SA Airlink.

By 2pm on Saturday, SA Airlink Flight 8252 had touched back down at OR Tambo International airport. The initial banality of checking in, boarding and buckling up, had, after an hour, given way to an increasing excitement and anticipation on board. Ravalomanana aides walked along the aisles giving the thumbs-up signal to journalists and ordinary travellers on-board. There were smiles and breezy political chats –until the pilot’s hand-brake turn.

‘Madagascar dreams’

At OR Tambo, Ravalomanana and his aides were adamant: they were “in transit” and would not leave the plane. Meanwhile, SA Airlink had cancelled the flight and according to the security officer, they would fly out again on Sunday. He said that Ravalomanana was welcome, but on one condition: they wanted “a written guarantee that they would be allowed to land” by the authorities in Madagascar.

Ravalomanana was by then getting word about what was happening back home: “The people in Madagascar have gathered all over there in their thousands and are not going anywhere, so we stay too,” he said.

There were huddles and phone calls, while strategising took place and confidential whispers filled the air. One aide could be heard on the phone to a South African government official: “I can’t stay in South Africa, I have rented my house out and I do not have South African rands, all I have are Madagascar dreams.”

Airport security came on board, wandered around and then walked off again. State protocol and the Department of International Relations tried to intervene. The SA Airlink security threatened to call in the police, telling Ravalomanana he had “overstayed your welcome”. The police came to the plane, hung around outside and started shooting ... the breeze, that is.

Reference: http://mg.co.za/article/2012-01-21-ravalomananas-return-to-madagascar-up-in-the-air

This incident highlights, once again, the depth of insight and balance required to lead an international airline. No business school prepares airline chiefs to act as midnight mediators in international political spats between ousted presidents and the coup leaders who replaced them, or many of the other curve balls that life throws.

5. REGULATORY INCIDENTS

But apart from the political leadership of various SADC countries, Mr Foster and SA Airlink are no strangers to the demands, and censure, of various regulatory bodies.

5.1 THE CIVIL AVIATION AUTHORITY

The primary regulatory agency for private airlines in South Africa in the Civil Aviation Authority (CAA), who are not impressed, and tend to get involved very quickly, when they suspect that safety standards are impaired:

Four SA Airlink Incidents in Three Months “ The South African Civil Aviation Authority (SACAA) is increasing its supervision over regional airline SA Airlink following four incidents involving its aircraft in three months, while the transport ministry is mulling grounding the airline.

“The Commissioner for Civil Aviation [Captain Colin Jordaan] is concerned about the recent number of accidents/incidents involving this airline,” SACAA spokeswoman Phindiwe Gwebu said. This after a SA Airlink Embraer 135 Commuter Jet with 30 passengers and three crew members aquaplaned on a runway while landing in bad weather at George Airport in the Western Cape just after 11am yesterday.

The aircraft came to rest 200 metres past the runway just beyond the perimeter fence of the airport.

SA Airlink said all three crew members and seven passengers were sent to hospital for observation. All were discharged by mid-afternoon. None were injured save the first officer who suffered a sprained ankle, spokeswoman Karin Murray said. The transport ministry in comments carried by the state Bua news agency said five people suffered “minor injuries” …

A week before, on November 18, a BAE Systems Jetstream 41 with 29 passengers and three crew left the runway and ran on to the grassy verge at Port Elizabeth airport after aborting a take- off. The plane, bound for East London, veered off the runway at 1.30 pm and ended up 40 metres away from the runway. No passengers or crew were injured in that incident, the South African Press Association reported at the time.

On September 24 two pilots, a cabin attendant and a bystander were injured when another Jetstream 41 aircraft crashed into a schoolyard in Durban’s Bluff suburb soon after take-off from Durban International Airport.

The twin-engined aircraft was being flown back to Pietermaritzburg after a flight on Wednesday. There were no passengers. The pilot later died of his injuries. The other pilot and the flight attendant were seriously injured and a worker at the school was slightly injured …

The SACAA said it has already stepped up its audit programme “over and above the normal safety oversight programme that is conducted on all airlines operating in and into South Africa” for SA Airlink maintenance, operating procedures and pilot training after the Durban crash.

“This programme is ongoing with the full co-operation of the airline’s management. Corrective actions are instituted as and when deficiencies are identified,” Gwebu said in a statement. SACAA said the aircraft involved in yesterday’s incident fortunately missed the instrument landing system installation at George with the pilot apparently manoeuvring the aircraft to one side when it overshot the runway end. “This meant that the runway was able to be reopened for operations within a relatively short period of time.”

Gwebu said the Authority “is committed to ensuring that the South African air transport environment, which includes the airlines, airports and air traffic control, is as safe as possible at all times. This includes periods of high activity such as the coming holiday season and of course, in the lead-up to the FIFA World Cup 2010.

“The SACAA wishes to point out that contrary to prevalent misconceptions, the number of accidents has decreased if compared to statistics at the same time last year. The SACAA further wants to point out that, overall, as a country we generally do not experience problems in the airline operator sector as most accidents involve the general aviation sector – or privately owned aircraft.”

SA Airlink, meanwhile, said it has now appointed an independent expert to review the airline’s safety processes and procedures.

“Safety and the well-being of our passengers, crew and aircraft is our top priority and it is essential that we always operate professionally and safely, said CEO and MD Rodger Foster.

“While we are confident that Airlink complies with South African and international regulation and best practice, if there are gaps, then we want to know where they are and we will implement whatever measures are necessary to close them,” Foster added.

“For this reason, we have approached a recently retired senior SAA expert on airline flight safety to conduct a thorough and independent review of Airlink procedures and processes. I have called for the net to be cast wide.

“The review will examine numerous aspects including our leadership structure, cockpit resource management techniques, compliance with regulatory and standard operating procedures and training,” said Foster.

“At the same time, Airlink is also co-operating with the South African Civil Aviation Authority’s (SACAA) ongoing audit of the airline’s operational, maintenance, training and recruiting procedures and processes.

The airline is also assisting the SACAA’s air accident investigation unit, which is leading the probe into yesterday’s aquaplaning incident at George Airport. The investigation will consider all of the circumstances surrounding the incident, including the weather, condition of the runway surface, the pilots’ proficiency and the operational and service record of the aircraft.

Foster said a recovery team was on site at George Airport and would begin the recovery of the damaged airliner.

“On behalf of Airlink, I would like to offer my sincere thanks to all of the emergency rescue teams, medical personnel and trauma counsellors at George for their swift and professional action in attending to the passengers and crew,” added Mr Foster.

Reference: http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=5772

As a result of this spate of safety-related incidents during 2009, and even though it was shortly before the FIFA 2010 World Cup, the CAA grounded 60% of SA Airlink’s fleet on 23 December 2009.

Mr Foster described the CAA’s decision as a “decimating blow for Airlink”. With regard to how he pulled the airline back from the brink of business disaster, Mr Foster recalled that:

“Airlink was able to restore its integrity by focusing on a simple strategy of customer centricity and service delivery excellence, while constantly nurturing its financial hygiene. Airlink became the most punctual South African airline as measured by the Airports Company (ACSA) in 2014, and it has remained in the top two most punctual airlines since”.

5.2 THE COMPETITION COMMISSION

One of the defining events for SA Airlink as it is today was the strategic decision taken in 1994 to work closely with SAA. The first elements of this entailed:

• SA Airlink joining the Voyager loyalty programme in 1995; • SA Airlink taking on the “thinner” (less popular and less profitable) routes in which other airlines, including SAA and SA Express, had no interest; and • SA Airlink co-ordinating its flight schedule with those of SAA and other long-haul carriers so as to form departure and arrival banks for purposes of interline connectivity.

SA Airlink became a fully-fledged franchisee of SAA in 1997 in a relationship styled an “alliance”. SA Airlink operated as a network carrier component of a large composite airline network system dominated by SAA at the local and intra-Africa level, and where the SAA composite network system joined other competitive network systems to form the global Star Alliance.

This relationship had already been established when the Competition Act was promulgated in 1998:

The purpose of this Act is, inter alia, to promote and maintain competition in the Republic in order to promote:

a) The efficiency, adaptability and development of the economy; and b) Consumers with competitive prices and product choices.

The newly formed partnership between SAA and SA Airlink was under threat barely a year after it had begun. The new Competition Act influenced the alliance’s operational protocols to the extent that the franchise relationship, agreed in 1997, was subsequently varied by way of a suite of agreements signed in August 2000, in order to ensure compliance.

But competitors do not always compete, and, when they collude instead, the Competition Commission steps in. The Competition Commission investigated airline collusion regarding fare increases during the 2010 FIFA World Cup, but allegations regarding that type of collusion had been investigated before. The following extract describes a Competition Tribunal decision of March 2005 that cost Airlink R10-million:

FIGURE 1: COMPETITION TRIBUNAL OF SOUTH AFRICA

5.3 THE LABOUR APPEAL COURT

From time to time employers find themselves in court dealing with labour issues. SA Airlink is not immune to this, once being taken to the Labour Appeal Court by a pilot who claimed “automatically unfair dismissal” when he was sacked, in effect for being a trade union shop steward. The court found in favour of the pilot, and ordered he be reinstated.

Kroukam v SA Airlink (Pty) Limited (JA3/2003) [2005] ZALAC 5 (26 September 2005) http://www.saflii.org/za/cases/ZALAC/2005/5.html

IN THE LABOUR APPEAL COURT OF SOUTH AFRICA HELD IN JOHANNESBURG

Case No: JA3/2003

In the matter between Ignatius Petrus Kroukam Appellant

and

SA Airlink (Pty) Limited Respondent

JUDGMENT

ZONDO JP Introduction

[2] The appellant was employed by the respondent as a pilot in 1994. He was dismissed from the respondent’s employment with effect from the 11th May 2001 after he had been found guilty of two alleged acts of misconduct in a disciplinary inquiry. For some time before his dismissal and at the time of dismissal, the appellant was chairman of the Airlink Pilots’ Association which was the branch based at the respondent’s operations of a registered trade union called Airline Pilots’ Association. In this judgment I shall refer to the branch as “the union”.

The appellant took the view that his dismissal was automatically unfair as contemplated in sec 187(1) (d) of the Act in that, as far as he was concerned, he had been dismissed for the active role © Regenesys Business School 14 that he had played as chairman of the union in the union’s dealings with the respondent and the role he played in the litigation that he had brought against the company on behalf of the union in March 2001.

The respondent disputed this and maintained that the reason for the appellant’s dismissal was that he had committed two acts of misconduct of which he had been found guilty. These were that he had been grossly insubordinate to the respondent and had been disruptive influence to the orderly operation of the respondent. A dispute then arose between the parties concerning whether or not the dismissal was automatically unfair.

Factual background

[4] There are certain incidents which feature prominently in the factual background to the dismissal of the appellant which, it seems to me, would be helpful to set out because the charges brought against the appellant were either based on some or all of those incidents or those incidents may throw light on the reason(s) for the appellant’s dismissal. These are the:

a) Swazi cabin attendant incident; b) Interdict proceedings; c) Memorandum titled: the blessing that became the curse; d) Lunch incident and the contempt of court proceedings; e) Threat letter; f) Psychologist’s report incident; g) Failure to meet flying target; h) CEO’s lecture to the appellant; i) Disciplinary inquiry and appeal; j) Captain Van Schalkwyk’s memorandum of the 17th April 2001.

The CEO’s lecture to the appellant

[16] On the 12th April 2001 the appellant was called and told that he was going to be charged with misconduct. The appellant was accompanied by a Captain Paul Smith, a colleague of his, to the office where he was going to be handed a notice calling him to a disciplinary inquiry to face certain allegations of misconduct. Such notice would be an equivalent of a charge sheet in a criminal matter.

When the appellant arrived, Captain Foster gave him a long lecture before giving him the notice to attend a disciplinary inquiry. The appellant testified thus about that lecture: “The CEO presented us with information pertaining to the vision and the goals of the company also pointing out what damage the litigation and the contempt of court proceedings and that, this was lack of respect for the CEO and that this forced them to take, the words he used, his eye off the ball.” (Underlining supplied).

The appellant was then asked whether those were the CEO’s exact words. He answered in the positive and went on to add the following as part of what the CEO had said on that occasion: “And thereby losing crucial deadlines pertaining to the license application for certain routes.” The appellant stated that, after the CEO had completed the presentation, he was then served with the “charge sheet”. He said that the presentation went on for about 30 or 40 minutes, or even longer.

What were the reasons for the appellant’s dismissal?

[65] Another matter that must be considered in the determination of the reason for the dismissal of the appellant is the presentation that Captain Foster made to the appellant on the occasion of the handing over to the appellant of the notice calling him to the disciplinary inquiry. It is clear from Captain Foster’s own evidence about the content of that presentation that he was very unhappy about the fact that there had been the litigation that there had been between the union and the respondent.

That litigation included the contempt of Court application. Captain Foster felt that the litigation had interfered very significantly with the management’s work. He felt that the respondent’s management or its business had been severely compromised. It is also clear from his evidence and that of the appellant that in that presentation Captain Foster was expressing to the appellant his disapproval of the litigation.

[66] With regard to the presentation by Captain Foster to the appellant, Captain Foster was asked under cross-examination why he considered the occasion of the handing over of the disciplinary notice to the appellant an appropriate forum to make a presentation to him about how much damage the litigation had caused to the respondent. Capt Foster replied that “we”, by which he might have meant the respondent’s management or both the respondent’s management and the union, “had been in a process which from a strategic point of view compromised the company.

This was seen as on-going difficulties from a labour point of view not related, but obviously following on and still causing the company difficulties.” He went on to say: “And we wanted to high-light you know what harm gets done when industrial disputes are at play in the form that it had taken through that dispute, and try and discourage this type of taken (sic) the law into their own hands.”

[67] What emerges quite clearly from Capt Foster’s answer to the question is that one of the things he sought to do by making the presentation that he made to the appellant was to convey to the appellant his disapproval of the litigation and, in his words to “discourage it.” In my view what Captain Foster was doing through making that presentation to the appellant was in effect to say to the appellant: You have hurt us very badly through this litigation. Now it is our turn!

[92] In this case there is, in my view, no doubt that the reasons that would render the appellant’s dismissal automatically unfair, such as that he was challenging and questioning the management’s decisions, that he was expressing a vote of no confidence in certain personnel and certain members of the management of the respondent, the role he played in the litigation including the contempt of court application and his calling for the resignation of certain personnel of the respondent constituted the dominant or principal reasons for the appellant’s dismissal.

Relief

[110] The next question that needs to be dealt with is the relief that should be granted, if any should be granted at all. The appellant seeks an order of reinstatement. The respondent opposed the request for an order of reinstatement. In this regard, even before I consider the basis upon

which the respondent opposes the appellant’s reinstatement, it is necessary to bear in mind that in our law reinstatement is the preferred remedy where there has been an unfair dismissal.

In terms of sec 193(2) of the Act the Labour Court, and, therefore, this Court as well, sitting in judgment of the Labour Court in an appeal from that Court, “must require the employer to reinstate or re-employ the employee” unless one or more of the situations set out in paragraphs (a) to (d) of sec 193(2) exists. Those situations are where:

a) The employee does not wish to be reinstated or re-employed; b) The circumstances surrounding the dismissal are such that continued employment relationship would be intolerable; c) It is not reasonably practicable for the employer to reinstate or re-employ the employee; or d) The dismissal is unfair only because the employer did not follow a fair procedure.”

[111] Paragraph (a) does not apply because the appellant does wish to be reinstated nor does par (e) because procedural fairness was not an issue in this matter. In my judgement paragraphs (b) and (c) also do not apply because there is no evidence upon which it could properly be said that a continued employment relationship between the appellant and the respondent would be intolerable or that it is not reasonably practicable to reinstate the appellant.

[137] In the premises the order that I would make would be the following:

1. The appeal is upheld with costs. 2. The order of the Labour Court is hereby set aside and replaced with the following order: a) The applicant’s dismissal by the respondent is hereby declared to have been automatically unfair as contemplated by sec 187(1)(d) of the Labour Relations Act, 1995; b) The respondent is ordered to reinstate the applicant to the position he held in its employment immediately before his dismissal on the 11th May 2001. c) The order in (b) above is to operate with retrospective effect to the 17th March 2002. d) The respondent is ordered to pay the applicant’s costs.”

ZONDO JP Date of Judgement: 16 September 2005

5.4 POLICE SPECIAL FORCES AND THE “HIJACKING”

Recently, another incident involving SA Airlink caught the media’s attention, when an unconfirmed but sensational story went viral on social media that one of SA Airlink’s flights, en route to Wonderboom airport in Pretoria, had been hijacked:

Special Task Forces Surrounded Plane in Pretoria “ Pretoria – An eyewitness at Wonderboom Airport in Pretoria said that a large number of the

police's Special Task Force vehicles surrounded an Airlink plane that was reported as hijacked on Monday.

SA Airlink spokesperson Karin Murray confirmed that the hijack alert for flight SA8678 from Cape Town to Wonderboom appeared to be an anomaly. “Seventy-two passengers and four crew members are safe. Operations are back to normal,” she said.

A statement on the website said the aircraft “emitted an anomalous hijack alert through its transponder”.

An eyewitness, who was at the airport for work and asked not to be named, said he and a colleague noticed a large police presence on the runway.

He noted about 14 vehicles, three of which were from special forces. He also saw bomb unit, medical emergency and fire vehicles.

Passengers, crew safe

“Special forces is basically now driving to the back of the runway trying to surround the plane. They are driving past quite frenetically. There are a lot of lights flashing,” he told News24 on Monday afternoon.

“One of our guys has a radio that can pick up all the frequencies. We heard surrounding aircraft were being diverted to Lanseria. They are saying it is a technical error on the radar system or towers communication.”

The online statement said passengers and crew were safe on the ground “where authorities have held the aircraft as a prescribed precautionary measure while they verify that all is in good order”. Airlink said it would assist authorities with their inquiry, a mandatory step following such incidents. “Airlink has also initiated an internal investigation into the erroneous transmission.”

Reference: http://www.news24.com/SouthAfrica/News/special-task-forces-surrounded-plane-in- pretoria-eyewitness-20160711

Once the investigations were completed, Mr Foster later confirmed that:

“The recent hijack false alarm at the hand of Air Traffic Control had nothing to do with SA Airlink. “ There was no fault on our part and our on-board equipment has been found fault-free and exonerated”.

6. NEW STRATEGIC ISSUES

The strategic direction of SA Airlink has been stable for many years. The company identified a niche market and have steadily built up profitable revenue from its business model.

6.1 SOUTH AFRICAN EXPRESS

However, this can change at any time, especially when other less profitable airlines eye SA Airlink’s impressive balance sheet with envy:

SA Express Takes On Airlink “ Johannesburg – The gloves are off and SA Express is now taking on Airlink on its money-spinner routes.

SA Express announced that from 1 November 2013 they are launching flights from Cape Town to George, Johannesburg to Nelspruit/Kruger and Johannesburg to Pietermaritzburg.

These are all routes on which Airlink at the moment has a monopoly, and it’s sure to hurt.

Reference: http://www.fin24.com/companies/travelandleisure/sa-express-takes-on-airlink- 20130927

Mini Price War Between Airlink and SA Express

Johannesburg – For many years there hasn’t been much to say about the Cape Town to George flight route, other than that Airlink was the only airline flying it.

All of this changed at the end of September, when SA Express shocked the industry by announcing flights from Cape Town to George in direct competition with Airlink. Before the SA Express announcement, a one-way flight from Cape Town to George with Airlink cost R570 (excluding taxes/fuel surcharges).

SA Express then had an opening special of R300 (excluding taxes/fuel surcharges) on the route, and Airlink has now responded with an astonishingly low R40 (excluding taxes/fuel surcharges) one-way fee from Cape Town to George.

Before you rush off to buy your ticket, please note that this translates into a total one-way fee of R918 (after taxes and fuel surcharges have been added to the R40).

The situation is not as bad as it seems considering that fuel surcharges comprise R716 of the R918 fare, but current fares are probably below the break-even point for the carriers, and it will be

interesting to see how long they are prepared to run losses on the route.

Airlink has expressed unhappiness at SA Express going into competition with them: “While Airlink welcomes competition on any of its routes on a fair and equal basis, we feel strongly about being taken on by a technically insolvent state-owned airline2 using the taxpayer’s funds to compete with us unequally.

“Airlink is in its own right a taxpayer contributing more than R400m in taxes (VAT, PAYE, and Corporate Tax) annually to the Fiscus, and it is ironic that the State sees it fit to use taxpayer’s funds to compete with its bona fide taxpayers,” it said in a statement.

Reference: http://www.fin24.com/companies/travelandleisure/mini-price-war-between-airlink-and- sa-express-20131008

Now Airlink Takes On Sa Express Routes

Johannesburg – Never a dull moment in the airline industry – now Airlink is taking the fight to SA Express by flying their routes. Airlink has loaded up flights from Johannesburg to Richards Bay and from Johannesburg to Kimberley on the GDS booking system. Up to now SA Express has been enjoying a monopoly on these routes. Passengers flying these previously quiet routes will be rejoicing, but this is sure to hurt SA Express financially.

They have up to now been enjoying monopoly profits on the routes and will from November have to compete with Airlink to win passengers over. The skirmish started at the end of September, when SA Express announced they were launching flights on Airlink monopoly routes, namely from Cape Town to George, Johannesburg to Nelspruit and Johannesburg to Pietermaritzburg.

A little price war broke out, particularly on the Cape Town to George route, where prices have dropped below economically sustainable levels. SA Express reported an operating loss of R25m in the previous financial year, which they are hoping to turn around. These price wars won’t help. Where all this ends is anybody’s guess – somebody’s got to burn out at some stage.

Reference: http://www.fin24.com/companies/travelandleisure/now-airlink-takes-on-sa-express- routes-20131017

Mr Foster has described SA Express’ actions as a “challenge”, a “hijacking”, and an attempted “take-over” of SA Airlink’s long-standing routes. He notes that, even though SA Airlink actually gained from this conflict:

The SA Express offensive was undoubtedly a value destructive setback to both SA Express and “ Airlink.

2 See extracts from SA Express’s 2015 Annual Financial Statements and Audit Report in Appendix for further details of its financial standing about 18 months later. © Regenesys Business School 20

6.2 DIRECT FLIGHTS TO BUSH CAMPS

In his usual entrepreneurial spirit, Mr Foster is still managing to keep his eye on the ball, by looking for, and exploiting, new opportunities:

SA Airlink to Fly Tourists directly to Luxury Safari Lodges “ WELL-HEELED holidaymakers can now fly from almost anywhere in the world straight to luxury lodges in Mpumalanga, allowing SA to compete with destinations in East Africa and Botswana. This follows the signing of a finance deal between SA Airlink — a feeder airline for South African Airways (SAA) — and Nedbank Capital. The transaction provides for the acquisition of four new Cessna Grand Caravan aircraft to fly passengers to upmarket lodges in the Sabi Sands Private Game Reserve.

SA Airlink CEO Roger Foster said on Monday the airline had been involved in building up Skukuza Airport near Kruger National Park, which had created awareness among international travellers of the options when travelling to Sabi Sands.

Skukuza Airport resumed commercial service last year after a break of 13 years. Its reopening had been facilitated by SA Airlink as part of a broader plan to introduce seamless connectivity and convenience for national and international tourists wanting to visit the Kruger National Park area, the airline said.

More than 80% of tourists travelling to the game lodges went by road, said Mr Foster. “We saw we needed to attract more road users into the scheduled flights.”

Last month, the airline said it was investigating new market opportunities driven by economic growth, population and business concentration in those areas. In addition to Johannesburg – Skukuza, SA Airlink had recently added two other “strategic markets” — Johannesburg to Sishen, and Cape Town to Windhoek in Namibia.

The new service to luxury game lodges in Mpumalanga would allow SA to compete in the international market against similar lodges in East Africa and Botswana, Mr Foster said. The service would initially connect visitors from Skukuza and Nelspruit airports directly to Ulusaba, Singita, Arathusa and Londolozi safari lodges.

Through an integrated flight reservations system, travellers would be able to use a single booking platform to arrange flights all the way to the lodges. SA Airlink’s code-sharing with SAA would enable tourists to travel directly to the lodges from cities such as London and Singapore.

However, the airline said the South African economy was not conducive to growth in air travel, which, in turn, had impaired tourism activity. The domestic air travel market had contracted year on year, according to statistics from the Airports Company SA.

Head of aircraft finance at Nedbank Capital, James Geldenhuys, said air passenger numbers were down but SA Airlink had gone out and found passengers, particularly in the international market.

“With this service in place, it will channel more passengers and get more passengers flying from Johannesburg to Nelspruit.” Tourists visiting lodges would also spend on other activities in SA.

Reference: http://www.bdlive.co.za/business/transport/2015/05/05/sa-airlink-to-fly-tourists-directly- to-luxury-safari-lodges

One of the valuable lessons learned by SA Airlink from its original foray into Botswana, and applied successfully in its latest bush camp initiative, is that organisations cannot be separated from the society and environment in which they operate, or from the people they serve. The recognition of this embedded interdependence may require a change in business model, whereby doing good means doing good for everyone, which brings positive results for everyone, including the economy in general as well as the company in particular.

Not focusing only on their seat occupancy, but also on the broader impact of the tourists they carry to geographically remote and economically isolated areas, SA Airlink is ultimately integrating corporate social responsibility into the values that inform its strategic planning. This challenges classical economic theory, and opens up opportunities to genuinely shift how business operates to ensure sustainability in the long term of society, the environment, and the business itself.

7. REGENESYS BUSINESS SCHOOL GRADUATION SPEECH (2016)

With his proven record of successful business leadership, combined with the many lessons he has learned in his career conquering one challenge after another, Mr Foster was invited to deliver the keynote address at the Regenesys Business School graduation ceremony in April 2016, which he accepted:

“Good evening ladies and gentlemen, graduates and your families, friends of Regenesys. It is an “ honour and a privilege to address you this evening. Tonight is a special celebration. It is about conferring degrees on graduates who have attained their Master’s degrees and Postgraduate Diplomas.

As you may have heard, I am in the airline space. I have been here for almost 24 years, a very short time indeed. I too am in the learning business – I am a student of service delivery and customer centricity. I am going to illustrate what I perceive to be the elements that contribute to business success.

I am one of the fortunate few who really love what I do. I have found the balance between enjoyment and making a living from it. What I do gets me out of bed, it keeps me productively at my

My passionate enthusiasm may well have something to do with the fact that my business is a survivor, and that it continues delivering equity growth in excess of 25%, which it has done uninterruptedly since the aftermath of 9/11.

It is difficult to make sense of the airline business here in South Africa today.

Our country has been plagued by challenges ranging from poor economic growth, to political instability. Our currency has weakened by almost 30% over the past year and at one stage quite recently when the ZAR hit a low of ZAR17.80/USD on 11 January 2016, the degradation was 52%.

And this is significant, as our revenues are mostly received in South African rands (ZAR), but most of our expenses in terms of our input costs are denominated in hard currency. Since our revenues are mainly in ZAR, it has proved exceedingly difficult to shift our customers into a mind-set that as the rand value of our dollar-denominated input costs increases, so too fares need to increase.

But we can’t blame the consumer entirely, as the airlines set the scene. There are competing services on most of our routes, as is the case on the trunk routes, which are the “bloodbath” where we do not operate.

Market forces within a competitive environment are the determinant of fare increase constraint, and in this regard the playing field is not level. Not all competitors are driven by profit imperatives, and as long as some participants take from the fiscus that which others provide and more, the airline business will remain unstable and unattractive to investors and financiers.

I was alarmed to note per our most recent “cost to customer” benchmarking assessment that SA Airlink’s average achieved fare is presently only 22% of that of the global basket of “like for like”. Yet our input costs, including aviation fuel and aircraft spares and components, are the same if not more than those of our global counterparts. This is incomprehensible and a cause for concern. Not even our local Big Mac sells at such a deep discount relative to the global proxy when measured in USD.

Our local issues are not unique. Some countries within SA Airlink’s operating domain are far worse off. The Zambian economy has almost collapsed because of the weak copper price. The Malagasy economy has never recovered from the political trauma of the 2009 coup d’état and economic growth is constrained by weak commodity prices exacerbated by inaccessibility.

While a fillip to airline survival, the low oil price has decimated the oil and gas business activity in Mozambique, and the political instability brought by an agitating Renamo, where convoys headed towards key destinations have been halted and attacked, has been a further deterrent to economic activity.

Despite the difficult environment, SA Airlink’s business continues performing admirably in the circumstances. Our performance for the year to date practically equals our budget. We are well on track in our financial year to 31 August to achieve 46,000 departures, carry 9% more traffic than last year (almost 1,400,000 customers), generate turnover of around R3 billion (10% more than last

Today, SA Airlink serves over 38 destinations throughout the SADC subregion. We operate to 18 domestic smaller community destinations and we provide services to Swaziland, Lesotho, Mozambique, Madagascar, Zambia, Zimbabwe, Botswana and Namibia using our fleet of 43 aircraft.

So what stands SA Airlink apart from the so many airlines that have failed?

We are a stable, united, and highly motivated workforce of like-minded ordinary people sharing a common vision and a clear strategy, with absolute objectives and sheer determination and commitment, unequalled passion and the will to succeed, whom I refer to as the “fire in our belly”.

We suffer attrition in some high skill areas such as pilots where, proudly, South African pilots are amongst the most sought-after in the world, but we are geared for succession. While SA Airlink has had a single CEO/MD for the past 24 years, Comair has had three, and SAA has had 17 leadership changes in the same period.

We understand the importance of growing capital; we have nurtured our balance sheet and ensured unparalleled return on equity. We have adequate cash reserves recognizing that a business can be operated at a loss for a while whilst feeding off its equity, but that no business can run without cash.

We are fastidious about our financial covenants, our integrity as an upstanding corporate citizen, and our credibility. Unknowingly, our business has become premised on the principles of agility and absorption. We have a “lazy” balance sheet with spare capacity for debt, lots of cash, and low gearing. Some would argue that we are not optimised, but we are robust, and our “war chest” is standing ready for new opportunities.

SA Airlink is often referred to as entrepreneurial. It has a propensity for adventure and growth within a mainly capitalist environment. We have an affinity for sniffing out destinations to include within our network and an ability to formulate a solution to supply and demand, and to stimulate and grow the market by delivering reliable services that accord with our customer’s requirements. We are not business risk averse, but we understand the need for risk mitigation and we are allergic to failure. We engender mobility through stimulating local economic activity by delivering access. To highlight the significance of this, prior to SA Airlink commencing its daily Okavango services four years ago, tourism was floundering because of unreliable access. Bed occupancies at hospitality properties throughout the delta were in the low 50%. Within three months of competing on the route SA Airlink, had garnered 60% of the market. Today we have 80% market share, and the market has grown significantly, bed factors are high and capacity is being increased where possible.

Similarly, the Skukuza airport lay fallow for years. SA Airlink invested in the airport, created a new terminal, and installed comprehensive scheduled air services, which have operated for almost two years. In that time, throughput at the new Skukuza airport has increased from 1 750 customers per month to 4 750 per month, an incredible growth of 271%! Flights and lodges have run out of capacity and the local economy is in great shape with many lodges adding capacity and upgrading their facilities.

We enjoyed the same experience at Vilanculos, in Mozambique, a few years back, where

With our economy in tatters for a variety of considerations, including the commodity down cycle, and given the weak state of our rand, the future is in tourism and SA Airlink is fortunate to be living it.

On reflection, perhaps there are some lessons that the University of Life has taught, and maybe I find it easy to learn.

The most important lesson I have learned is that a business is its people. A successful business comprises a stable team of ordinary, empowered people who enjoy a common sense of belonging and share a vision and see themselves as a close knit unit, who collectively deliver the extraordinary.

There is good in every person, and each has value to contribute. Leadership is the ability to empower and exact performance from the team.

You graduates are the future leaders of business, the next generation of our Captains of Industry. Your hard work over many years has positioned you as exceptional, the rare talent that will rise through the echelons. Be ready to accept every challenge, to roll up your sleeves, to stand empowered, to take on responsibility, and to be held accountable.

There are abundant opportunities. Be ready for adventure, for taking risks and for making mistakes, as long as you learn from them and don’t repeat them. And remember that the world owes you nothing, there is no such thing as entitlement or “I deserve it”.

And, as food for thought, quoting from The Mystery of Capital by Hernando de Soto:

“The hour of Capitalism’s greatest triumph is its hour of crisis. Capitalism stands alone as the only feasible way to rationally organize a modern economy. The major stumbling block that keeps the rest of the world from benefitting from Capitalism is its inability to produce capital.

Capitalism is the force that raises the productivity of labour and creates the wealth of nations. It is the lifeblood of the capitalist system and the one thing that the poor countries of the world cannot seem to produce for themselves, no matter how eagerly their people engage in all the other activities that characterise a capitalist economy”.

In closing, I thought I would share with you an interesting but true experience in the life and times of SA Airlink’s Chief Cabin Attendant, who was still a junior back at the time. Her name is Claire. Early one crisp winter morning, Claire was rostered to attend on the SA Airlink flight 8747 to PZB. The flight was almost full, with barely a spare seat. Claire’s work was cut out for her, as, whilst she was meticulously professional, she had to expedite the service, as the flying time of 45 minutes is quite short and inadequate to engage meaningfully with each passenger.

Claire worked her way efficiently through the cabin serving hot coffee and savoury croissants, but she had reason to pause when she attended upon our customer in seat 11A. Pressed for time, Claire delivered the service and moved on, systematically and methodically calling each and every passenger by name off pat. Before commencing the disposal collection, young Claire ventured

shyly back to seat 11A.

“Mr Lubner”, she whispered, “are you aware that your garage door is open?” “No”, responded Mr Lubner with surprise. “So did you have a peek at my bright red Ferrari?” he enquired. “No” said Claire spontaneously. “No Ferrari. But I did catch a glimpse at your Mini with two flat wheels!”

I congratulate all graduates on your magnificent achievement! I wish you every success in making use of your new qualifications to enhance your performance and thrust you along your career paths. Thank you.

8. ANNEXURE A

Extracts from SA Express’s 2015 Annual Financial Statements and Audit Report (see next page):