SAA stands firm on baggage-wrapping fee

2014-02-16 14:00

SA Airways (SAA) this week ­defended its new baggage-wrapping service at OR Tambo ­International Airport after City Press ­revealed that it was charging for the service months before actually providing it.

SAA CEO Monwabisi Kalawe also confirmed the charge of R50 that is now being built into ticket prices, irrespective of whether flyers have their bags wrapped or not, likening it to on-board meals for which all passengers pay whether they eat or not.

Speaking during a radio interview, Kalawe also claimed that SAA was ­implementing the R26?million, three-month “trial” of the ­service awarded to Bagport Africa “in ­cooperation with” the Airports Company SA (Acsa).

Acsa is, however, sticking to its guns, ­saying that it “will be acting against Bagport in due course, not SAA, since the baggage-wrapping service provider is in breach of the lease agreement”.

This is after Andre Vermeulen, Acsa’s acting group executive for airport operations, wrote to SAA on January 22 asking it to ­“refrain from using the services of Bagport”.

Acsa insists that only its three licensed ground-handling contractors qualify to ­provide the service to airlines.

New documents show how the justification for the wrapping service evolved.

According to notes from a meeting of SAA executives on October 16, Kalawe instructed his management team to commence with the wrapping service.

At that meeting, SAA head of airport operations Tebogo Tsimane confirmed that the idea had earlier been rejected because it was too expensive.

The “too expensive” estimate was that it would cost R70?million a year, while ­addressing pilferage claims against SAA of R3.1?million a year.

The solution was seemingly to renegotiate the proposed contract with Bagport so that the total price increases, but SAA earns a margin and passes both on to passengers.

Despite internal concerns around passing this fee on to passengers, the “cost neutrality” became a key consideration in going ahead with the trial.

Now, the three-month trial will likely cost about R43?million, of which Bagport gets R26?million.

According to the documents, SAA’s total annual expenditure on luggage security at all local airports was about R17?million ­before the wrapping service was introduced at the end of last month.

This was set to increase to R20?million a year with the introduction of a new “tactical patrolling unit” late last year.

Wrapping bags at OR Tambo International costs more than all other security measures at all airports combined.

As the idea was developed inside SAA, the justification for the expense started ­focusing less on theft and more on baggage damage.

Claims for damaged baggage far outstrip claims for theft from bags, making the wrapping service more rational.

SAA has also referred to a similar trial of Bagport by smaller state-owned airline SA Express.

In internal documents, SAA makes various claims about how baggage wrapping at SA Express has dramatically reduced ­pilferage.

The claim varies from a 50% reduction to a virtual elimination of pilferage.

Even Bagport only claims a “70% ­deterrent to pilferage” in the business case document leaked to City Press.

SA Express told City Press that it had ­piloted the service in August “on a complimentary basis” and decided to keep it up.

According to an email from Kalawe, ­however, SA Express stopped using Bagport and now wants to create its own subsidiary to provide the service – an allegation SA ­Express would not be drawn on.

Déjà vu

This is not the first time that Bagport has scored an airport contract under acrimonious circumstances.

In 2009, it won the tender to provide the wrapping service that it still offers today in the public areas of local airports – and has a contract to deliver until 2017.

Ironically, it was Acsa that had to defend that Bagport contract in court.

A losing bidder took Acsa to court in 2009, alleging that Bagport was only properly ­incorporated as a closed company after ­getting the contract and had no relevant ­experience.

Acsa won that case.

Back then, Bagport was known as Urban Innovative Management Services.

A legal opinion sought by SAA to defend its wrapping trial has pointed out that ­Bagport and Urban seem to be the same company.

In reality, they are separately registered companies with the same directors: ­Nhlanhla Dakile and Muzi Dhlomo.

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