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1、OXFORDEC ONOM ICSAFRICATHE FUTUREECONOMIC IMPACT OF SOUTH AFRICAN AIRWAYSOCTOBER 20242OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysFOREWORDEXECUTIVE SUMMARY1.INTRODUCTION 1.1 Overview 1.2 Report Structure2.CORE ECONOMIC IMPACT 2.1 Direct Impact 2.2 Indirect Impact 2.3

2、 Induced Impact 2.4 Total Core Impact3.CATALYTIC AVIATION-FACILITATED IMPACTS4.TOTAL ECONOMIC IMPACT5.WIDER BENEFITS FROM INCREASED CONNECTIVITY6.CONCLUSIONAPPENDIXABOUT OXFORD ECONOMICS AFRICATABLE OF CONTENTS57101011131313141518212224253234OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of So

3、uth African AirwaysFOREWORDSouth African Airways(SAA)is more than just a commercial airline whose primary objective is to generate profits from its operations.It carefully balances commercial objectives with national imperatives such as furthering South Africas development agenda through air connect

4、ivity to boost economic growth,propel the tourism industry and facilitate South Africas trade with the rest of the world.With this dual mandate in mind,we commissioned this independent study to examine SAAs contribution to the South African economy since we relaunched operations in 2021.The South Af

5、rican Airways Act underscores the essential role of SAA in providing reliable and extensive air transport capacity crucial to South Africas developing economy.Recognizing the airline as a national carrier and strategic asset,the State emphasizes its broader developmental mandate and its contribution

6、s to key domestic,intra-regional,and international air linkages.With this legislative framework in mind,SAA continues to prioritize its commitment to supporting the nations economic objectives through comprehensive air transport services.We commissioned this study because we felt it was important to

7、 gauge the SAA Groups effectiveness since we came out of business rescue,and to understand the contribution made by what we call the“new”SAA,which relaunched in September 2021.The reports findings are insightful and significant.The reports findings,which show a substantial increase in SAAs future im

8、pact,clearly highlight that persisting on this path will be beneficial for both the SAA Group and South Africa.Professor John Lamola Interim Chief Executive Officer(CEO)South African Airways(SAA)Group5OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysFig.11.How air connect

9、ivity increases productivitySource:Oxford Economics Africa IncreasedtradeBigger marketsfor domesticproducersIncreaseddomesticinnovationIncreasedForeign DirectInvestment(FDI)Increasedcompetition fordomesticproducersIncreased transferof know-howand technologyLower-cost,higher-qualitygoods andservicesM

10、ore-skilledworkforceDirect effect.CONNECTIVITYPRODUCTIVITYINCREASES.creates newconditions.yieldingdynamic benefitsFUTURE ECONOMIC IMPACT OF SOUTH AFRICAN AIRWAYS2023/242029/30Contribution to GDPR9.1 billionGVA contribution to GDP R7.1bn|R1.7bn|R0.3bn R22.6bn|R8.9bn|R1.2bn16,000|8,100|1,100 48,900|34

11、,500|3,300R1.1bn|R0.3bn|R0.1bn R4.4bn|R1.8bn|R0.2bnR32.6 billionGVA contribution to GDP 25,200Jobs supported86,700Jobs supportedR1.5 billionFiscal revenue supportedR6.4 billionFiscal revenue supportedEmployment SupportedGovernment RevenueConnectivity Benefits A planned expansion of the SAA network w

12、ill increase global connections,stimulating skills transfer,trade,and investment,which together boost long-term productivity and growth.Total impactCore impactTourism impactTrade impact2029/302023/242029/302023/242029/302023/24Fig.11.How air connectivity increases productivitySource:Oxford Economics

13、 Africa IncreasedtradeBigger marketsfor domesticproducersIncreaseddomesticinnovationIncreasedForeign DirectInvestment(FDI)Increasedcompetition fordomesticproducersIncreased transferof know-howand technologyLower-cost,higher-qualitygoods andservicesMore-skilledworkforceDirect effect.CONNECTIVITYPRODU

14、CTIVITYINCREASES.creates newconditions.yieldingdynamic benefits6OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysThe South African Airways(SAA)Group is the parent company that oversees the operations of the countrys flag carrier along with its key subsidiary companies,SAA

15、 Technical,and AirChefs.The airline is one of the oldest commercial operators in the world,commencing its service in February 1934.The Group also includes divisions SAA Cargo,and SAA Voyager.Financial and operational challenges during the previous decade resulted in the SAA Group being placed under

16、business rescue in 2019,with operations scaled down further in 2020 due to the COVID-19 pandemic.SAA emerged from business rescue in April 2021 after having been restructured into a smaller and more streamlined entity.In September 2021,SAAs operations were ramped up gradually and the airline has re-

17、established some of its regional and international routes.The airline is currently working towards rebuilding its operations and plans to bring online more domestic,regional,and international routes over the medium and long term.Against this backdrop,this study assesses both the current and potentia

18、l future contribution of the SAA Group to the South African economy.The economic impact results in this study are expressed through three metrics:gross value-added(GVA)contribution to GDP,jobs supported,and fiscal revenues supported.SAAs CORE IMPACTFirst,we examine the SAA Groups core economic contr

19、ibution by analysing the impact of the direct activity generated by SAA,the indirect activity stimulated by its procurement spending,and the induced impact that the wages of its workers and those in its supply chain support in the consumer economy.Our modelled economic impact results for the 2023/24

20、 baseline year and the projection for 2029/30 are shown below:GVA contribution:from R7.1 billion in 2023/24 to R22.6 billion in 2029/30 Jobs supported:from 16,000 in 2023/24 to 48,900 in 2029/30 Fiscal revenues:from R1.1 billion in 2023/24 to R4.4 billion in 2029/30 As SAA expands its operations ove

21、r the coming years by opening new routes,passenger and cargo volumes will rise,resulting in a substantially larger core economic footprint.AVIATION-FACILITATED TOURISM IMPACT The study also assesses the catalytic impact that the SAA Group supports by facilitating international tourist arrivals.These

22、 tourists spend their money on a variety of goods at local shops as well as on domestic services,such as accommodation,restaurants,and transport,boosting the tourism sector.48,900 jobsCore contribution to jobs supported by 2029/30,up from 16,000 in 2023/24.R4.4 billionCore contribution to fiscal rev

23、enue supported by 2029/30,up from R1.1 billion in 2023/24.Impact beyondSAAs impact extends beyond merely its core impact,and also includes the catalytic tourism and trade benefits supported by its activities.R22.6 billionCore contribution to GDP by 2029/30,up from R7.1 billion in 2023/24.EXECUTIVE S

24、UMMARY7OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysOur modelled SAA-facilitated tourism impact results are shown below:GVA contribution:from R1.7 billion in 2023/24 to R8.9 billion in 2029/30 Jobs supported:from 8,100 in 2023/24 to 34,500 in 2029/30 Fiscal revenues:f

25、rom R0.3 billion in 2023/24 to R1.8 billion in 2029/30 The results indicate a sharp increase in the Groups GVA contribution,as well as in the number of jobs and fiscal revenues supported through facilitating international tourist arrivals.This stems from SAAs plans to increase the frequency of its f

26、lights and expand its routes to include lucrative overseas markets such as China,the United States,and Europe.AVIATION-FACILITATED TRADE IMPACTSAA Cargos facilitation of international trade supports the activities of local wholesalers and logistics providers that are involved in transporting and dis

27、tributing internationally traded goods.These companies generate margins from the trade facilitated by SAA,inducing additional economic activity.Our modelled SAA-facilitated trade impact results are shown below:GVA contribution:from R0.3 billion in 2023/24 to R1.2 billion in 2029/30 Jobs supported:fr

28、om 1,100 in 2023/24 to 3,300 in 2029/30 Fiscal revenues:from R0.1 billion in 2023/24 to R0.2 billion in 2029/30 As SAA expands its flight frequency and routes,cargo volumes are expected to increase,which would enhance local logistics activities and allow SAAs trade impact to grow by 2029/30.TOTAL IM

29、PACTWhen adding up the results from the different channels of impact described above,it is clear that the SAA Groups contribution to South Africas economy will be substantially larger should its medium-term plans succeed.We estimate that the Groups total GVA contribution to GDP will increase from R9

30、.1 billion in 2023/24 to R32.6 billion by 2029/30.The number of jobs supported by the Group is forecast to rise from 25,200 in 2023/24 to 86,700 by 2029/30,while the government revenue supported increases from R1.5 billion to R6.4 billion over the same period.CONNECTIVITY BENEFITSBesides the economi

31、c benefits that stem from SAAs core,tourism and trade-facilitated activities,there are additional future gains for the South African economy through the improvement in global connectivity provided by SAA.The planned expansion of the SAA network will increase global connections with highly productive

32、 markets,stimulating skills transfer,trade,and investment,which together boost long-term productivity and growth.ConnectivityLong-term boost to productivity from increase in connections to highly productive markets.R32.6 billionSAAs total contribution to GDP by 2029/30,up from R9.1 billion in 2023/2

33、4.86,700 jobsSAAs total contribution to jobs supported by 2029/30,up from 25,200 jobs in 2023/24.R6.4 billionSAAs total contribution to fiscal revenue supported by 2029/30,up from R1.5 billion in 2023/24.Fig.11.How air connectivity increases productivitySource:Oxford Economics Africa IncreasedtradeB

34、igger marketsfor domesticproducersIncreaseddomesticinnovationIncreasedForeign DirectInvestment(FDI)Increasedcompetition fordomesticproducersIncreased transferof know-howand technologyLower-cost,higher-qualitygoods andservicesMore-skilledworkforceDirect effect.CONNECTIVITYPRODUCTIVITYINCREASES.create

35、s newconditions.yieldingdynamic benefits89OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African Airways1.INTRODUCTION1.1 OVERVIEWThe South African Airways(SAA)Group is the parent company that oversees the operations of the countrys flag carrier along with its key subsidiary companies

36、,SAA Technical,and AirChefs.The airline is one of the oldest commercial operators in the world,commencing its service in February 1934.The Group also includes divisions SAA Cargo,and SAA Voyager.As the flag carrier,the airline along with its subsidiaries and divisions have for many decades played a

37、critical role in the local aviation sector.SAA Cargo operates as the air freight division of SAA and provides air transportation for goods both domestically and internationally.SAA Technical provides aircraft maintenance,repair and overhaul services for airlines operating in the country,playing a cr

38、itical role in ensuring airworthiness and enhancing safety in the local aviation sector.Meanwhile,AirChefs provides in-flight catering services for the airline industry.Despite 90 years of success,SAA has come under pressure over the past decade,partly due to significant financial and operational ch

39、allenges.These challenges resulted in the airline entering business rescue in 2019,with operations scaled down further the following year due to the COVID-19 pandemic.SAA emerged from business rescue in April 2021 after having been restructured into a smaller and more streamlined entity.In September

40、 2021,SAAs operations were ramped up gradually and the airline has re-established some of its regional and international routes,with multiple local and international flights being operational as of the Groups 2023/24 financial year.The airline is currently working towards rebuilding its operations a

41、nd plans to bring online a number of domestic,regional,and international routes over the medium and long term.The objectives of this study are to investigate the SAA Groups economic benefits during its latest full financial year(2023/24)and to assess how the Groups expansion plans could affect the S

42、outh African economy in future.For this study,we quantify the consolidated impact of the SAA Group(hereafter referred to as SAA or the SAA Group).The study will quantify the core economic impact that the SAA Group made by assessing the impact of its direct operations,supply chain spending,and consum

43、er spending impact from employee wages.Furthermore,the study considers the catalytic impact that the SAA Group supports by facilitating international tourist arrivals.These tourists spend their money in the local tourism sector and thus support additional economic activity.The catalytic benefit of t

44、he international trade facilitated by SAA Cargo is also evaluated.This trade supports the activities of local wholesalers and logistics operators involved in transporting and distributing internationally traded goods.These companies generate margins from the trade facilitated by SAA,stimulating addi

45、tional economic activity.10OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African Airways1.2 REPORT STRUCTUREWe present the projected economic contribution of the SAA Group in four chapters.Across all chapters we quantify the economic contribution for the baseline 2023/24 financial ye

46、ar,the most recent year of full operations with accompanying financials,and the projected economic impact up to 2029/30.In Chapter 2,we present the core economic impact of SAA.In Chapter 3,we assess the catalytic impact of tourism and international trade facilitated by SAAs operations.In Chapter 4,w

47、e provide the total impact results across the core and catalytic tourism and trade channels.The figure below describes the channels through which SAA contributes to the South African economy,as well as how the Groups total economic impact is calculated.In Chapter 5,we describe the wider catalytic be

48、nefits associated with enhanced global connectivity that would be enabled through SAAs projected expanded aviation network.Finally,Chapter 6 then concludes with the summary findings.Core ImpactCatalytic ImpactsTotal ImpactCore impact of SAAs day-to-day operations,which:support employment,stimulate s

49、pending,contribute to GDP,generate payments to government.Aviation-facilitated tourism Spending by visitors on SAAs aviation-facilitated trips has wider impacts as additional GDP and jobs are sustained in the tourism sectors supply chains.Aviation-facilitated tradeBy facilitating the import and expo

50、rt of goods,SAA supports activity in the domestic logistics industry.The total impact each year can be expressed as the sum of the core,catalytic trade and tourism impacts:Core Impact+Catalytic Tourism Impact +Catalytic Trade Impact=Total ImpactFig.1.How SAA contributes to South Africas economy11Oxf

51、ord Economics Africa used a standard means of impact analysis to assess SAAs economic impact in South Africa.This entails estimating the Groups impact across three channels as follows:The direct impact arises from the operational activities that SAA undertakes through running its own business operat

52、ions.The indirect impact encompasses the activity that is stimulated by SAAs supply chain spending on goods and services from suppliers in South Africa.The induced impact arises from the economic activity stimulated in the consumer economy because of the wages that SAA pays to its employees,as well

53、as wages paid to those employed in its South African supply chain.These employees spend their earnings by shopping at retail outlets and paying for transport,medical,education,utilities,and other consumer servicesall of which support further activity in the economy.The sum of these channels represen

54、ts the total economic impact of SAA on the South African economy.The magnitude of the impact is measured using the following three metrics:Gross Value Added(GVA):this measures the contribution to the economy of each company,industry,or sector in South Africa.It is the sum of compensation of employee

55、s and earnings before interest,taxes,depreciation,and amortisation(EBITDA).It is also a measure of net output,most easily thought of as the value of goods or services produced,less the value of inputs used in that outputs production.Added up across all firms in an economy,and after adjusting for tax

56、es and subsidies,gross value added is equal to gross domestic product(GDP).Employment:this is measured on a headcount rather than a full-time equivalent basis.This is to facilitate comparison with official sources employment data for the relevant sectors.Tax:the government revenues generated through

57、 the economic activity that the company,industry,or sector supports or facilitates within South Africa,which flows to the government.All economic impacts expressed in this report are presented in constant 2023 prices.As our modelling explores the potential future impact of SAAs operations,it is impo

58、rtant to place these into the context of the projected performance of the South African economy.For this,all relevant macroeconomic data(GDP,employment,exchange rate,etc.)are obtained from Oxford Economics forecasts of the South African economy over the coming decade.These projections are generated

59、using Oxford Economics Global Economic Model.METHODOLOGICAL OUTLINEOXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African Airways2.CORE ECONOMIC IMPACT2.1 DIRECT IMPACT The direct core impact encompasses the direct operations of all the entities that make up the SAA Group.Through its

60、operations,the SAA Group makes a direct contribution to the South African economy in terms of its contribution to GDP,employment,and fiscal revenue.Using financial and other relevant data provided to Oxford Economics Africa by the SAA Group,we estimate that during 2023/24,the SAA Group contributed R

61、2.6 billion in GVA to South Africas GDP.Based on the forecast data provided by SAA and using our in-house modelling we project that the SAA Groups contribution to the South African economy will rise to around R4.3 billion by 2029/30,when measured in constant 2023 prices.Meanwhile,in the baseline yea

62、r,the SAA Group directly employed 2,800 workers across all its entities.As the Groups operations increase over the coming years,with new routes coming online and an associated increase in the number of flights operated by SAA,the airline expects that the number of employees directly employed by the

63、Group will rise to around 3,900 individuals.During the 2023/24 financial year,the SAA Group collected and paid about R330 million in taxes to the government.This contribution included standard company taxes such as CIT,PAYE,and UIF,as well as passenger-related taxes collected on behalf of the South

64、African Revenue Service(SARS)and the South African Civil Aviation Authority(SACAA).Based on SAAs passenger projections and financial outlook,we estimate that by 2029/30,the SAA Groups direct contribution to the fiscus will rise to approximately R1.1 billion.2.2 INDIRECT IMPACTThe SAA Groups economic

65、 impact extends beyond the direct impact of its operations.The entities within the Group require substantial operational expenditures,resulting in an extensive supply chain which ranges from fuel suppliers and aircraft manufacturers to food and beverage suppliers.All of this spending supports furthe

66、r economic contributions to the South African economy.Using procurement data provided by the SAA Group,we estimate that the largest share was spent on fuel purchases,constituting around 33%of total procurement spending.The second largest share went to the transport,storage&communication sector,which

67、 covers expenditure on goods and services such as IT and other information services,telecommunications,and transport support services.Overall,SAAs operational expenditure supports a range of supply chain activities.Our modelling suggests that the Groups procurement supported an additional GVA contri

68、bution of R2.7 billion to South Africas GDP during 2023/24.We estimate that this contribution will rise significantly to about R13.3 billion by 2029/30,when measured in constant 2023 prices.This rise reflects the increased demand for goods and services that the Group will have to support its expandi

69、ng operations.13OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysOur modelling indicates that during 2023/24,this procurement spending supported around 8,100 jobs in South Africa.As its spending rises,the number of jobs that SAAs procurement will support within the local

70、economy will also increase.We project that by 2029/30,the number of jobs in South Africa that are supported by SAAs procurement spending will increase to about 33,200 jobs.This economic activity driven by procurement spending is estimated to have supported R470 million in tax revenue for the governm

71、ent during 2023/24.Our modelling projections suggest that this contribution to the fiscus will rise to about R2.4 billion by 2029/30,when measured in 2023 prices.2.3 INDUCED IMPACTEmployees working for the SAA Group and employees in its supply chain that are supported by its procurement spending rec

72、eive wages.The employees spend these wages within the South African consumer economy,stimulating further economic activity.We estimate that this consumer spending contributed R1.8 billion to South Africas GDP in 2023/24.As more individuals are employed at the SAA Group and its procurement spending i

73、ncreases to facilitate its expanded operations,we project that this consumer spending contribution will rise to R4.9 billion by 2029/30,when measured in 2023 prices.This consumer spending supported around 5,100 jobs in the consumer economy in 2023/24.This is projected to increase to 11,800 jobs by 2

74、029/30 as an increased number of employees spend their wages in the consumer economy.Government revenue supported by this consumer spending is estimated at R320 million in 2023/24.Our modelling projects that this will rise to around R910 million by 2029/30,when measured in constant 2023 prices.5%9%1

75、5%17%21%33%Coke and refined petroleum productsOther services and activitiesTransport,storage and communicationWholesale and retail trade,catering and accommodationManufacturingOther0%5%10%15%20%25%30%35%of procurementFig.2.SAA Groups purchases of inputs and services by industry,2023/24Sources:SAA,Ox

76、ford Economics Africa 14OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African Airways2.4 TOTAL CORE IMPACT Combining all three core impact channels,we estimate that the SAA Group contributed R7.1 billion to South Africas GDP during 2023/24,equivalent to about 0.1%of South Africas GDP

77、 that year.Based on the data supplied to Oxford Economics Africa and using our in-house economic forecast,we predict that SAAs core economic contribution will rise to around R22.6 billion by 2029/30,when measured in constant 2023 prices.This would equal 0.3%of South Africas GDP over the same period.

78、The indirect channel will drive most of the rise in the total core economic impact as SAAs operational expansion leads to increased procurement of goods and services to support its increased operational capacity.As the SAA Group expands its operations the number of jobs that it will support across t

79、he three impact channels will rise accordingly.Our modelling shows that the total number of jobs supported across all impact channels will increase from around 16,000 in the baseline year to about 48,900 by 2029/30.This would mean that approximately 0.3%of all jobs in the country would be supported

80、by the SAA Group,up from 0.1%in the baseline.The majority of jobs supported by the SAA Group will come through the indirect channel,as the increase in SAAs operational spending will support more jobs along its domestic supply chain.The second largest contribution will stem from the induced impact ch

81、annel,as wages paid to employees at SAA and to employees in its supply chain will support additional jobs through the wage-spend channel.Fig.3.Total core GVA contribution,constant 2023 pricesSources:SAA,Oxford Economics Africa 05 00010 00015 00020 00025 000DirectIndirectInducedR million2023/242024/2

82、52025/262026/272027/282028/292029/3015OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysFurthermore,we estimate that SAAs total core contribution to fiscal revenue amounted to around R1.1 billion during 2023/24,equivalent to roughly 0.1%of fiscal revenues during 2023.This

83、is projected to reach R4.4 billion by 2029/30,measured in constant 2023 prices.This will be equivalent to 0.2%of expected fiscal revenue in 2029.Whereas direct taxes will be driven by the SAA Groups economic activity and financial performance,the indirect and induced taxes will be determined by the

84、amount of economic activity SAA supports through its supply chain and how its employees spend their wages in the consumer economy.Fig.4.Total core employment impactSources:SAA,Oxford Economics Africa 05 00010 00015 00020 00025 00030 00035 00040 00045 00050 0002023/242024/252025/262026/272027/282028/

85、292029/30JobsDirectIndirectInducedFig.5.Total core fiscal contribution,constant 2023 pricesSources:SAA,Oxford Economics Africa 05001 0001 5002 0002 5003 0003 5004 0004 5005 0002023/242024/252025/262026/272027/282028/292029/30R millionDirectIndirectInduced16OXFORDEC O N OM IC SAFRICAThe Future Econom

86、ic Impact of South African AirwaysFig.6.Regional share of air arrivals in South Africa in 2023North AmericaCentral&South AmericaSADCWestAfricaEast&CentralAfricaAustralasiaAsiaEuropeMiddle East7%4%19%2%2%46%3%2%15%Sources:Stats SA,Oxford Economics Africa3.CATALYTIC AVIATION-FACILITATED IMPACTSSAAs im

87、pact on the South African economy extends beyond its core operations.By facilitating tourist arrivals,as well as international trade by transporting cargo,additional economic activity is generated in the country.This chapter describes and quantifies these catalytic aviation-facilitated tourism and t

88、rade impacts being supported as a result of SAAs operations.3.1 TOURISM IMPACT In 2023,30%of tourists who visited South Africa arrived by air travel.Air travel is especially important for the overseas and non-Southern African Development Community(SADC)tourist markets.More than 90%of tourists from t

89、hese markets used air travel to visit South Africa in 2023(Stats SA,2024).While visiting South Africa,tourists spend money on a variety of goods at local shops as well as on domestic services,including accommodation,restaurants,and transport.The impact of tourists spending goes beyond their direct s

90、pending and includes the impact throughout the tourism industrys supply chain,and the wage-spend of those working in the industry and its suppliers.We estimate that tourists who arrived with SAA flights in 2023/24 spent R2.1 billion in the South African economy.In total,we estimate that SAA-facilita

91、ted tourist spending contributed R1.7 billion in GVA to the economy in 2023/24.Furthermore,this economic activity also supported 8,100 jobs in the tourism industry and its supply chain.As SAA increases the frequency of flights to key regional markets,such as Zimbabwe,Zambia,Mozambique and Namibia,an

92、d expands its route offering to include significant overseas markets such as Europe and the United States,tourist spending in the South African economy is projected to grow,contributing R8.9 billion in GVA by 2029/30 and supporting a projected 34,500 jobs that year.18OXFORDEC O N OM IC SAFRICAThe Fu

93、ture Economic Impact of South African AirwaysFig.7.SAA-facilitated tourism impact on GVA and employment,constant 2023 pricesSource:Oxford Economics Africa04 0008 00012 00016 00020 00024 00028 00032 00036 00001 0002 0003 0004 0005 0006 0007 0008 0009 00010 000GVA(LHS)R millionJobs2023/242024/252025/2

94、62026/272027/282028/292029/30Employment(RHS)Tourist spending will also generate VAT,company and other tax revenue for the government of South Africa.We estimate that in 2023/24,the tax revenue supported by SAA-facilitated tourist spending amounted to R350 million.Given the expected increase in touri

95、st arrivals and spending,we project that this figure will increase to R1.8 billion by 2029/30.Fig.8.SAA-facilitated tourism impact on fiscal revenues,constant 2023 pricesSource:Oxford Economics Africa05001 0001 5002 000R million2023/242024/252029/302025/262026/272027/282028/293.2 TRADE IMPACTBy faci

96、litating imports and exports,SAA supports the activities of local wholesalers and logistics providers involved in transporting and distributing internationally traded goods.Margins accrue to these businesses as they move and distribute goods,benefitting the South African economy.These businesses als

97、o procure goods and services,while the wage-induced spend of workers employed in these industries further stimulate economic activity.19OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysFig.10.SAA-facilitated trade impact on fiscal revenue,constant 2023 pricesSource:Oxford

98、 Economics Africa060802040100160140120180200R million2023/242024/252029/302025/262026/272027/282028/29Meanwhile,the tax revenue that accrues to the South African government through the wholesale and distribution of international trade facilitated by SAA is estimated to increase from R60 million in 2

99、023/24 to R200 million in 2029/30 based on current cargo projections.Based on SAAs cargo volumes,we estimate that SAA-facilitated trade contributed R330 million to the South Africas GDP in 2023/24 and supported 1,100 jobs in the country.South Africas top trading partners in 2023 included China,Germa

100、ny,and the United States.As SAA expands its flight frequencies and routes to include these destinations,cargo volumes are expected to grow,which will boost local logistical activities.We estimate that by 2029/30,the GDP impact of SAA-facilitated trade will amount to R1.2 billion with a projected 3,3

101、00 jobs being supported.Fig.9.SAA-facilitated trade impact on GVA and employment,constant 2023 pricesSource:Oxford Economics Africa05001 0001 5002 0002 5003 0003 50002004006008001 0001 2001 400GVA(LHS)Employment(RHS)R millionJobs2023/242024/252025/262026/272027/282028/292029/302023/242024/252025/262

102、026/272027/282028/292029/3020OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African Airways4.TOTAL ECONOMIC IMPACTIn the previous chapters,we quantified the contribution of the SAA Group to the South African economy between 2023/24 and 2029/30.Combining its core operational impact and

103、 the aviation-facilitated tourism and trade benefits its operations provide gives the total economic contribution supported through SAAs operations.Our modelling suggests that during 2023/24,the SAA Group made a combined GVA contribution to the South African economy amounting to R9.1 billion.This is

104、 equivalent to 0.1%of South Africas GDP that year.Over the coming years,SAAs operations will expand as it introduces new routes.Passenger and cargo volumes will be boosted as a result,strengthening the core impact and stimulating more tourism spending and logistics activity in the country.Our modell

105、ing indicates that by 2029/30,the Groups total GVA contribution to GDP will reach R32.6 billion,when measured in constant 2023 prices.Based on Oxford Economics Africas macroeconomic forecast for the economy,this would be equivalent to 0.4%of South Africas GDP for that year.During 2023/24,SAAs operat

106、ions supported a total of 25,200 jobs across its core and aviation-facilitated tourism and trade impacts.This number is predicted to increase to 86,700 jobs by 2029/30,equivalent to 0.5%of overall employment for South Africa that year.Lastly,the total government revenue supported by the SAA Groups o

107、perations is estimated at R1.5 billion in 2023/24.This revenue is projected to rise to around R6.4 billion by 2029/30,which,based on our macroeconomic forecast,will equate to 0.3%of fiscal revenue for that year.The table below shows SAAs economic impact by channel in terms of the Groups GVA contribu

108、tion,jobs,and government revenues supported.Only the baseline(2023/24)and final(2029/30)years are included in the table below,but the information for the entire period is provided in the appendix.INDICATORCHANNELUNITS2023/242029/30FGDPCoreZAR million,2023 prices7,10022,600TourismZAR million,2023 pri

109、ces1,7008,900TradeZAR million,2023 prices3301,200TotalZAR million,2023 prices9,10032,600JOBSCoreNumber of jobs16,00048,900TourismNumber of jobs8,10034,500TradeNumber of jobs1,1003,300TotalNumber of jobs25,20086,700TAXCoreZAR million,2023 prices1,1004,400TourismZAR million,2023 prices3501,800TradeZAR

110、 million,2023 prices60200TotalZAR million,2023 prices1,5006,400Table 1.Total core,tourism,and trade impact of SAA GroupSource:Oxford Economics Africa *Values might not sum due to rounding21OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African Airways5.WIDER BENEFITS FROM INCREASED CO

111、NNECTIVITYAnother crucial benefit that arises from SAAs operations relates to improved global connectivity in the future.More flights connecting South Africa with highly productive markets can boost long-term economic growth potential through productivity gains.The increased connectivity enables ind

112、ividuals to transfer knowledge by attending conferences,getting an overseas qualification,and interacting with other individuals from highly productive markets.Meanwhile,for businesses,enhanced connectivity could help increase the efficiency of their operations by providing improved trade opportunit

113、ies.Air travel allows goods to be transported across borders more efficiently,reducing transit times.This helps firms to be more flexible in adapting to demand fluctuations and reduces the need to stockpile large inventories.Firms trading perishable or time-sensitive goods also gain from reduced tra

114、nsit times.Moreover,aviation encourages interactions by enabling in-person meetings,which are essential for fostering strong business relationships,negotiating deals,and ensuring smooth collaboration in global operations.Firms can also benefit from reaching more customers in larger markets and gaini

115、ng access to new suppliers.Furthermore,firms could have a greater incentive to innovate,as the increased connectivity also exposes them to greater competition from firms in other countries.Over the long term,all these interactions and activities can materialise as tangible economic benefits through

116、productivity gains for individuals and firms,ultimately enhancing South Africas overall productivity and long-term economic growth potential.Fig.11.How air connectivity increases productivitySource:Oxford Economics Africa IncreasedtradeBigger marketsfor domesticproducersIncreaseddomesticinnovationIn

117、creasedForeign DirectInvestment(FDI)Increasedcompetition fordomesticproducersIncreased transferof know-howand technologyLower-cost,higher-qualitygoods andservicesMore-skilledworkforceDirect effect.CONNECTIVITYPRODUCTIVITYINCREASES.creates newconditions.yieldingdynamic benefits2223OXFORDEC O N OM IC

118、SAFRICAThe Future Economic Impact of South African Airways6.CONCLUSIONThis study aimed to examine how SAA might impact the South African economy in future.It must be emphasised that SAAs contribution to and impact on the South African economy extends far beyond its direct business operations.The Gro

119、up also procures a substantial amount of goods and services from South African suppliers,and this procurement spend supports the businesses in its supply chain.Moreover,the wages paid by SAA and its suppliers are ultimately spent on consumer goods and services,stimulating additional economic activit

120、y.Aside from the core impact described in this study,the nature of SAAs operations entails further benefits for the local economy.Firstly,SAA fulfils a crucial role in facilitating international tourist arrivals to South Africa.These tourists spend their money in the local economy to the advantage o

121、f the tourism sector and its suppliers and employees.Secondly,SAA facilitates the international trade in goods.This supports the activities of local wholesalers and logistics providers involved in transporting and distributing internationally traded goods.Margins accrue to these businesses as they m

122、ove and distribute goods,furthering the South African economy.After assessing SAAs operations and incorporating the aviation-facilitated tourism and trade impacts,the findings indicate that the SAA Groups contribution to the South African economy is significant.In 2023/24,SAA supported a total of R9

123、.1 billion in GVA contribution to GDP,some 25,200 jobs,and R1.5 billion in fiscal revenues.With its planned expansion over the medium term,the airline is expected to contribute even more to the South African economy.New routes will be brought online,boosting passenger and cargo volumes and,by extens

124、ion,the amount of tourism spending and logistics activity in the country.We forecast that by 2029/30,SAA will support roughly R32.6 billion in GVA contribution to GDP,when measured in constant 2023 prices.Meanwhile,the number of jobs being supported across all the impact channels is expected to grow

125、 to 86,700 jobs.At the same time,fiscal revenues supported will also rise substantially to a projected R6.4 billion by 2029/30.Besides the economic benefits that stem from SAAs core,tourism and trade-facilitated activities,there are additional future gains for the South African economy through the i

126、mprovement in global connectivity provided by SAA.The planned expansion of the SAA network will increase global connections with highly productive markets,stimulating skills transfer,trade,and investment,which together boost long-term productivity and growth.24OXFORDEC O N OM IC SAFRICAThe Future Ec

127、onomic Impact of South African AirwaysAPPENDIXA1:INPUT-OUTPUT(I-O)TABLEThe core database for our economic impact model is an input-output(I-O)table.I-O tables are designed to give a snapshot of an economy at a particular time,showing the major spending flows.These include“final demand”(consumer spen

128、ding,government spending and exports to the rest of the world);intermediate spending(what each sector buys from every other sector the supply chain);how much of that spending stays within the economy;and the distribution of income between employment income and other income(mainly profits).I-O tables

129、 are,therefore,particularly useful when estimating indirect and induced economic impacts.The idea behind the I-O table is that the economy can be divided into a number of producing industries and that the output of each industry is either used as an input into another industry or in final consumptio

130、n.In essence,the I-O table shows who buys what from whom in the economy.Reading horizontally illustrates the distribution of each industrys output,split between intermediate demand from other industries(used as an input to production)and final demand(consumer spending,exports,and other government co

131、nsumption).Therefore,Industry 2 in Fig.12 purchases an amount,C2,1 from Industry 1 as an input to its production process.Thus,reading down vertically indicates what each industry purchases from other industries in the national economy by way of inputs which,when combined with imports from abroad(lea

132、kages),employment costs,operating surplus and any additional taxes or subsidies to production,give total inputs,which will equal total outputs.In the simple model illustrated in Fig.12,C8,1 will equal C1,8.Fig.12.Stylistic representation of an Input-Output tableSource:Oxford Economics Africa Industr

133、y1Industry 1Industry 2Industry 3C 1,1C 1,2C 1,3EmploymentIncomesProfitsC 1,4C 1,5LeakagesC 1,6,7Total InputsC 1,8C 2,1C 3,1Industry2Industry3C 4,1C 5,6,7,1ConsumerSpendingOther FinalDemandC 8,1TotalOutputs25OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysTo effectively q

134、uantify the SAA Groups economic footprint,the study utilised a well-established assessment methodology that focuses on the three channels in which the companys activities stimulate economic activity:the direct impact relates to the economic contribution made by the SAA Groups operations.It encompass

135、es the economic activity,employment and tax contribution supported by the company itself;the indirect impact of the SAA Groups expenditure on input goods and services from domestic suppliers.This expenditure stimulates economic activity and employment along the companys supply chain;and the induced

136、impact of individuals employed by the SAA Group and companies in its local supply chains spending their wages in the domestic economy.These employees spend a proportion of this income in the consumer economy,typically at the retail and leisure outlets close to where they live.These impacts spread ac

137、ross the rest of the South African economy through these outlets own supply chains.The impact channels are illustrated in Fig.13 below:Fig 13.Overview of economic impact methodology channelsSource:Oxford Economics AfricaA company or sector employs lots of staff.Its operations generate GDP and tax fo

138、r the authorities.It also spends money with suppliers who emply staff,generate GDP and pay taxes.They use other suppliers in turn.Employees(including of the suppliers)spend thier wages in the wider economy,generating more GDP,jobs and tax revenues.Added together,these three effects direct,indirect,i

139、nduced comprise the total economic impact of the company or sector.Total ImpactInduced ImpactIndirect ImpactDirect Impact26OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysThe SAA Groups overall contribution to the economy is the sum of all three channels of economic impa

140、ct.The results are presented on a gross rather than a net basis1.The economic impacts measured in this study are quantified using three metrics.These are:Gross value-added:this measures the contribution to the economy of each company,industry,or sector in South Africa.It is the sum of compensation o

141、f employees and earnings before interest,taxes,depreciation,and amortisation(EBITDA).On the other hand,it is also a measure of net output,most easily thought of as the value of goods or services produced,less the value of inputs used in that outputs production.Added up across all firms in an economy

142、,and after adjustments for taxes and subsidies,gross value added is equal to GDP.Employment:this is measured on a headcount rather than a full-time equivalent basis.This is to facilitate comparison with official sources employment data for the relevant sectors.Tax revenues:this is the amount of tax

143、revenue flowing to the national government.This includes income and corporate taxes,social contributions of directly employed staff,excise duties and value-added taxes(VAT)on sales A2:MEASURING THE SAA GROUPS OPERATIONAL IMPACTIn order to quantify the core economic impact that the SAA Groups operati

144、ons make on the South African economy this study made use of financial and employment forecasts provided by the SAA Group up to 2029/30 to calculate the groups direct economic contribution.Financial forecasts are based on growth rates informed by passenger projections provided by SAA.The direct valu

145、e-added contribution that the SAA Group makes to the South African economy is the sum of compensation of employees(the total remuneration payable to employees in cash or in kind,including private healthcare and social contributions payable by the employer)and earnings before interest,taxes,depreciat

146、ion,and amortisation(EBITDA).This was obtained from the financial data provided by the SAA Group.All direct employment data was provided by the SAA Group.Direct tax contribution in the baseline was provided by the SAA Group,while projections were calculated using financial forecast projections and p

147、assenger projections provided by SAA.All relevant macroeconomic data(GDP,employment,exchange rate etc.)are from Oxford Economics forecast data for South Africa.To estimate the broader impacts on South Africa,Oxford Economics Africa used its proprietary national input-output model for the South Afric

148、an economy.The model describes the economy in terms of interlinkages between industries in the economy,local household spending patterns,and the amount of demand that is met by local production or imported.Oxford Economics Africa utilized these models-along with supply chain spending data provided b

149、y SAA and its subsidiaries-to estimate SAA and its subsidiaries indirect and induced impacts in terms of gross value added,jobs and tax revenue supported in South Africa.1 A study of the gross impact necessarily ignores the alternative potential use of the resources that SAA employs.A net study defi

150、nes the impact created by the SAA Group in excess of what would have been created if the resources were used in their second most effective use.Calculating net figures relies on many bold assumptions about the counterfactual scenario and is thus open to criticism,which could detract from the overall

151、 message of the research.27OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysThe industry multipliers used in the model are developed using the internationally used Leontief2 system.Under the Leontief system,industry multipliers are calculated through a series of manipulat

152、ions of the I-O table/matrix.Oxford Economics Africa also modelled the expected additional economic activity stimulated in South Africa through SAA and its subsidiaries spending with international suppliers.This was achieved by using Oxford Economics Global Sustainability Model(GSM)-an inter-country

153、 input-output model covering 185 countries,allowing for an estimation of how spending in one economy can stimulate economic activity across global value chains.The GSM allows for“trade feedback loops”to be captured-for example,SAA spending with overseas machinery manufacturers could stimulate econom

154、ic activity in South Africa if those manufacturers subsequently purchase goods or services from South Africa as intermediate inputs in their production process.Using the model enables the calculation of the SAA Groups indirect and induced impacts.This involved identifying the expenditure that the co

155、mpany makes with its suppliers,both those based in South Africa as well as internationally.The SAA Group provided its procurement data by expenditure type,and when possible,where it was procured from.We aligned this spending to the appropriate industrial sectors in each geography from which inputs w

156、ere sourced.The countries to which international spending flowed were estimated based on SAAs flight schedule and South Africas overall trade data disaggregated by product.2 Leontief,W.1986.Input-Output Economics.Oxford University Press,New York.Domestic supplier spendDomestic supplier spendForeign

157、supplier spendForeign consumer spendto supply chain abroadconsumer spend abroadwageswagesprotsprotsFig.14.How the Global Sustainability Model(GSM)goes beyond the standard approachStandard approach.plus global linkagesDOMESTICECONOMYREST OFTHEWORLD28OXFORDEC O N OM IC SAFRICAThe Future Economic Impac

158、t of South African AirwaysA3:ESTIMATING THE CATALYTIC AVIATION-FACILITATED TOURISM IMPACTOxford Economics Africa used passenger forecast data provided by SAA,along with our internal database provided by Tourism Economics which has forecast data on South Africas international visitors by origin of co

159、untry.This data was used to forecast visitor and spending growth rates for inbound visitors into South Africa facilitated by SAA.Inbound tourists were calculated using StatsSA data that defines tourism as activities of persons travelling to,and staying in places outside their usual environment,for n

160、ot more than one uninterrupted year,for leisure,business,and other purposes.Spending data for tourists were calculated from Tourism Economics extensive database that includes statistics on international visitor spending by origin country and by spending category(e.g.accommodation,recreation,retail,e

161、tc.).It was important to estimate spending by origin country to account for variations in spending patterns and visit durations.The sectoral distribution of tourist spending is based on StatsSAs Tourism Satellite Account.Oxford Economics proprietary input-output model was then used to model the impa

162、ct of this expenditure on the South African economy.A4:ESTIMATING THE CATALYTIC AVIATION-FACILITATED TRADE IMPACTThe impact of international trade facilitated by SAA was calculated based on cargo volume data provided by SAA per route,and the value of the cargo volumes was estimated using import and

163、export data obtained from SARS.Distribution and wholesale margins were obtained from the StatsSA Supply-Use table for 2021.These margins are applied to the gross value of goods that are imported and exported by SAA which forms our estimate for the direct impact on the logistics and wholesale provide

164、rs.The distribution of the indirect and induced impacts is estimated using Oxford Economics input-output(I-O)model for South Africa.29OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysA5:FULL ECONOMIC IMPACT RESULTSThe table below provides the economic impact results for a

165、ll the years assessed in this study and disaggregated by type of impact:INDICATORCHANNELUNITS2023/242024/252025/262026/272027/292028/292029/30GDPCoreZAR million,2023 prices7,1008,80013,40015,10018,40021,80022,600TourismZAR million,2023 prices1,7002,3004,5006,0007,1008,4008,900TradeZAR million,2023 p

166、rices3306508308501,0001,1001,200TotalZAR million,2023 prices9,10011,70018,80021,90026,50031,30032,600JOBSCoreNumber of jobs16,00024,80033,70034,40041,40048,50048,900TourismNumber of jobs8,10010,80020,90026,40029,80033,90034,500TradeNumber of jobs1,1002,2002,7002,7003,1003,3003,300TotalNumber of jobs

167、25,20037,70057,40063,40074,30085,60086,700TAXCoreZAR million,2023 prices1,1001,8002,7003,1003,7004,3004,400TourismZAR million,2023 prices3504709401,2001,5001,7001,800TradeZAR million,2023 prices60110140140170190200TotalZAR million,2023 prices1,5002,3003,8004,5005,3006,2006,400Table 2.Total core,tour

168、ism,and trade impact of SAA Group,constant 2023 pricesSource:Oxford Economics Africa *Values might not sum due to rounding3031OXFORDEC O N OM IC SAFRICAThe Future Economic Impact of South African AirwaysABOUT OXFORD ECONOMICS AFRICAOxford Economics Africa specializes in political and macroeconomic r

169、esearch in Africa.We investigate and interpret the economic and sovereign risk,and political and macroeconomic conditions,of 54 African countries to caution against pitfalls and guide investors towards opportunities.Oxford Economics Africa has a strong reputation for independence and quality and has

170、 a highly qualified team of economists,econometricians,quantitative analysts,political analysts,and editors,who are all experts in their field and have decades of experience in covering Africa.Previously known as NKC African Economics,the firm was launched towards the end of 2002 to address the dear

171、th of rigorous,independent Africa research and analyses needed to help drive effective investment decisions.In 2015 we became part of the Oxford Economics group,to better combine Oxford Economics global base and unparalleled technical expertise in modelling with our Africa-specific skills and insigh

172、t.In September 2021,NKC African Economics decided to fully align its brand with its majority shareholder and became known as Oxford Economics Africa.October 2024All data shown in tables and charts are Oxford Economics Africas own data,except where otherwise stated and cited in footnotes,and are copy

173、right of Oxford Economics Africa(Pty)Ltd.This report is confidential to South African Airways SOC Ltd and may not be published or distributed without their prior written permission.The modelling and results presented here are based on information provided by third parties,upon which Oxford Economics

174、 Africa has relied in producing its report and forecasts in good faith.Any subsequent revision or update of those data will affect the assessments and projections shown.To discuss the report further please contact:Cobus de Hart Oxford Economics Africa Director of Africa Consulting Tel:+27 21 863 620

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