Price cut in airfares no guarantee with Acsa slashing airport charges

(iStock)
(iStock)

Johannesburg – Although a massive reduction in airport charges will kick in at Airports Company SA (Acsa) airports on 1 April 2017, it is by no means a given that it will lead to a reduction in airfares.

Acsa announced on Thursday a cut in airport charges of 35.5% for the 2017/18 financial year. It will be followed by an increase in charges of 5.8% in the 2018/19 financial year and an increase of 7.4% in the 2019/20 financial year.   

A new permission to levy airport charges at Acsa airports was determined by the independent industry regulating committee. It was promulgated on 23 December 2016 and its impact on airport charges was published in the Government Gazette on 29 December 2016.

READ: Acsa’s BEE partners head to court

According to Acsa, the new permission takes effect on 1 April 2017. It sets out aircraft landing fees, aircraft parking fees and the passenger service charges that Acsa can levy.

From 1 April the passenger service charge per departing domestic passenger will decrease from R127 to R82 and per departing international passenger it will decrease from R346 to R223. The passenger service charge per departing passenger for an airport within Botswana, Lesotho, Namibia or Swaziland will go down from R263 to R169.

Acsa explained that aircraft landing fees and aircraft parking fees vary according to the maximum take-off weight (MTOW) of an aircraft and length of stay. Both sets of charges vary further according to whether the flight originated within South Africa, Namibia, Lesotho, Botswana or Swaziland or outside of South Africa.

Regulatory certainty

Acsa CEO Bongani Maseko said in a statement that the new permission has now created regulatory certainty for role players in the industry can now have regulatory certainty.
 
“It is important to note that the final permission is in line with Acsa’s expectations and what was proposed to the regulating committee. We anticipated this outcome for some time, and factored it into our financial and business planning,” said Maseko.

According to low-cost airline FlySafair, the big question now is whether or not the reduction in Acsa airport charges will mean a further reduction to airfares in 2017.

“Overall pricing of tickets is a complex issue where we need to consider a number of factors. Fuel alone can account for 40% of direct costs, so our exposure to the rising price of oil and a weakening rand tends to have a stronger influence on fares. That said, the decrease in these tariffs is great and is a saving that we will most certainly seek to pass onto our customers,” said Kirby Gordon, head of sales and distribution at FlySafair.

He pointed out that Andrew Shelton, managing director of comparison website CheapFlights, recently reported that SA travellers are seeing a reduction in fares of up to 15% on both domestic and international flight prices.

“There’s no doubt that the reduction in this tariff is excellent news for the industry and the consumer collectively,” said Gordon.

“We applaud the management at Acsa for achieving the efficiencies required to reduce this tariff. It’s a great note to start the year on.”

READ: Acsa posts R1.9bn profit

Acsa, a state-owned enterprise (SOE) reported a profit of R1.9bn for its financial year which ended on 31 March 2016. Earnings before interest, taxes, depreciation and amortisation (Ebitda) were up 7.1% to R5.2bn.

Revenue increased 6.8% to R8.3bn. According to Acsa this was as a result of the introduction of new routes, growing passenger numbers from Europe and Asia and the performance of its non-aeronautical operations.  

The R1.1bn in revenue from retail was driven by increased volumes in the passenger base, and the depreciation of rand against major currencies.

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