Domestic flight ticket prices spike in South Africa

 ·13 Jun 2022

The liquidation of Comair is having a notable impact on South Africa’s domestic travel market in the coming months, says economists at the Bureau for Economic Research (BER).

Comair, which operated domestic British Airways flights and low-cost carrier Kulula, was responsible for 40% of domestic airline capacity. It entered into liquidation after the company was unable to secure the necessary funding to remain a going concern.

On Thursday (9 June), the airline’s business rescue practitioners said it failed to secure the necessary funding to pull it out of financial straits, and there is no longer any reasonable prospect that the company can be rescued.

“The immediate impact of the failure will be the unfortunate loss of jobs as Comair employs more than 1,000 people,” the BER said.

“Furthermore, at least in the near term, air ticket prices are likely to spike. As seen with the reduced routes being flown by South African Airways, over time, other operators will fill the gap left by Comair. However, over the short term, higher ticket prices will add to domestic inflationary pressures.”

SA Flyer editor Guy Leitch told Moneyweb that the loss of Comair could lead to ticket price increases of as much as 300% – 400%.

He added that airlines operate on a dynamic seat pricing and structure their prices according to the demand – leading to price changes literally minute by minute.

“So that’s going to force the prices up a huge amount and on top of that, we’ve had enormous price increases because of the fuel price increases, so although there’s going to be a removal of 40% of the supply, the demand is virtually going to drop off while a new equilibrium is established. So it’s going to price a lot of the travellers out of the market.”

Comair went into business rescue in May 2020 after Covid-19 pandemic era lockdowns, travel bans, as well as rising fuel prices, wreaked havoc on the travel industry.

The carrier’s administrators were in negotiations with an international backer with a presence in South Africa for funding, after its existing lenders and investors – a group of wealthy individuals who bailed out the airline in 2020 – said they weren’t prepared to put in more funds.


Read: These flight routes are under strain in South Africa right now after Comair grounding

Show comments
Subscribe to our daily newsletter