Billionaire wants to buy South African airports: report

South African billionaire Rob Hersov says he will approach the Department of Public Enterprises with R2 billion to buy six regional airports owned by the government.

Speaking to Business Report, Hersov said he and his business partner Nick Ferguson’s recent informal offer made for the airports was rejected by the government, and the two now plan to bid, through their company RSA.aero, for regional airports in:

• George
• Gqeberha
• East London
• Bloemfontein
• Kimberley
• Upington

The billionaire said they saw the opportunity to save these government-owned assets and, with the skills, capital and expertise at their disposal, they could turn the airports into successful money-making enterprises.

“Selling the regional airports to investor-operators like us who have the funds and the relevant skills is a chance to save and grow the regional airports. We are interested in buying only the six regional airports of ACSA (Airports Company South Africa). We will pay R2 billion for them and invest a significant amount going forward in upgrading and improving them.”

Despite interest in ACSA by the private sector, the government has taken a tough stance against integrating public entities in the state-owned aviation sector, with the transport minister Fikile Mbalula stating that there is no intention to divest its equity in ACSA in favour of private shareholding in the foreseeable future.

The South African aviation industry has been on thin ice, with SAA’s failure and slow renewal in full swing and roughly 40% of domestic flight capacity wiped out with Comair’s liquidation.

Recent inflation in the price of jet fuel has also made it more expensive to expand airline flights and facilities, said FlySafair’s chief marketing officer Kirby Gordan.

Jet fuel has increased by around 220% over the last year, making up about 50% of total operating costs – up from 30%. Such an increase has taken its toll on prospective travellers, with ticket prices soaring.

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.

Government’s plans

In June of this year, the Department of Transport announced that government would give increased attention to the country’s airports in the coming years.

This includes calls for expanding current international airports into larger “aerotropolises” while considering the necessity for more compact, less profitable airports.

The department said that public sector investment aviation aims to not only take into account market return but also broaden socio-economic value.

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