Warning over airline ticket prices in South Africa: report
Operators of domestic airlines have warned that ticket price hikes may be on the cards for South Africa due to the rising cost of jet fuel and capacity constraints.
Speaking to the Sunday Times, FlySafair chief marketing officer Kirby Gordan said that there is a concern in the industry that ticket prices will have to be hiked due to higher fuel costs and capacity constraints caused by Comair’s collapse.
He said that prices are being artificially propped up by tightness in the availability of seats, but the price of jet fuel means they will not drop to previous levels.
Jet fuel has increased by around 220% over the last year and makes up about 50% of total operating costs – up from 30% previously. This is a huge deterrent for airlines to expand flights and operations, especially because they have to fly further between economic hubs in South Africa.
Despite concerns over fuel prices, airlines told the Sunday paper that the industry is beginning to stabilise, with planes fuller following the collapse of Comair – and thus operating more efficiently.
They also said that current prices are reasonable and that travellers can get tickets for around R1,000. The R3,000-plus tickets are usually the ones where people are looking to travel “today or tomorrow” and should expect to pay a premium.
The airlines also noted that travellers got used to cheaper flights available over the Covid-19 pandemic period due to low demand.
The cost of passenger air travel in South Africa has increased by almost 50% over the last year as pent-up demand and the closure of several domestic routes added pressure to the market.
Consumer Price Inflation data published by Statistics South Africa in June showed passenger transport by air increased by 49.5%.
Economists warned that the closure of Comair in June is likely to exacerbate the crisis as other operators scramble to meet the shortfall.
Comair operated domestic British Airways flights and low-cost carrier Kulula, and 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 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.
Airlines speaking to the Sunday Times said that the impact of Comair’s closure is overstated, noting that while the airline may have had 40% of the market capacity, it was not running at 100% with full planes each and every trip.
With Comair’s closure, the market can now stabilise and fill more seats.
“Ultimately, that is what any airline needs: to fill most of your flights, most of the time and hopefully charge prices that will get you past the break-even point and into the black. During peak periods, this has been more achievable than it has for some time,” said Gordon.
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