Khulu Phasiwe
20 August 2007
Johannesburg — THE 11,4% increase in passenger service charges planned by the Airports Company SA (Acsa) will push up air fares and deter tourists , says the Board of Airlines Representatives of SA (Barsa).
The organisation, which represents all airlines operating in and out of SA, says the planned tariff increases, which will be effective from October until 2012, are "unacceptably high".
Barsa chairman Peter Barry says: "These substantial increases basically mean that the end consumer, that is the passenger, is going to be hit twice with increased fees - both in terms of the passenger service fees and with an increase in ticket prices due to the fact that the airlines have no choice but to incorporate the Acsa increased tariffs into the price of the ticket."
Acsa says the tariffs will be used to fund part of its R19,3bn capital investment over the next five years. About R12bn of this will be raised through the bond markets.
Acsa CEO Monhla Hlahla says more than half of the R19,3bn will be used to build a new terminal at OR Tambo International Airport. A further R5,8bn will be used to build a new airport at La Mercy, north of Durban. The new airport, to be known as King Shaka International Airport, will replace the current Durban International.
The remainder will be used to upgrade the other eight airports in Acsa's network.
Barry, who is also a GM for Virgin Atlantic Airways, says Barsa is worried that passengers and airlines are going to subsidise the building of King Shaka airport.
Although Acsa has told passengers that the "user-pays" practice will ensure passengers only pay for the airports they use, the principle does not apply to airline tariff increases.
The user-pays principle is an internationally accepted aviation business practice which dispenses with the single-till regime. This means tariffs collected at one airport cannot be used to cross-subsidise the development of another airport.
Barry says most Barsa members, most of which are international airlines, do not fly to Durban and will therefore not use King Shaka airport when it opens in 2010.
"All but four of our members use only OR Tambo and Cape Town international airports, while billions of rands are being used to build a new international airport in KwaZulu-Natal which 99% of our members do not, and have said they will not, utilise," says Barry.
Barsa CEO June Crawford says Acsa's high tariff increases could have unintended consequences on tourism.
She says the airline industry is already "experiencing crippling rises in fuel costs", which have negatively affected airline ticket prices.
"SA is already perceived as an expensive destination. Long-haul access has improved but remains limited, and an increase in ticket prices will prevent greater numbers of tourists visiting our shores," says Crawford.
Acsa had originally applied for a staggering 17% tariff increase, but this was reduced to a "still unacceptably high" 11,4% after intervention of the regulating committee and Barsa.
Acsa said last week the regulating committee had also clawed back R228m of the R1,3bn cash that Acsa generated from operations last year.
Hlahla said last week that the new passenger service charges for domestic travellers would increase to R32,46 from R26,32 a trip.
Regional tickets would cost R66,67 (from R53,51) while international tickets would rise to R87,72 from R70,18.
The Geneva-based airlines lobby group, the International Air Transport Association (Iata), says it is unfair that airlines and passengers had to pay for costs incurred by airport operators.
Iata says infrastructure charges by airport operators are now the second-largest external cost to airlines, after fuel. Airlines and passengers pay about $43,5bn a year to airports and air navigation service providers.
"The situation where airports spend and airlines pay is not the basis for a successful partnership," says Iata director-general and CEO Giovanni Bisignani.
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