The cost of airline tickets is set to skyrocket even further if the economic regulator grants Airports Company South Africa (Acsa) permission to increase passenger service charges by a whopping 161 percent over the next five years.
If the new cost structure is implemented this year, budget airline passengers will pay an R80.81 service charge for each domestic flight, almost double the current average cost of R42.61.
On international flights the increase is R104.30, bringing the total to R220.72 on overseas fares.
The Airlines Association of Southern Africa (Aasa) on Wednesday warned that the cumulative impact of the increases was potentially devastating for both the airline industry and passengers.
Aasa chief executive Chris Zweigenthal said the industry was “extremely concerned” about the final permission which, according to him, had been issued by the economic regulator for Acsa last Wednesday, for 2010/11 to 2014/15.
But Acsa group spokesman Solomon Makgale said none of the increases had been finalised.
He said the regulator had jumped the gun and not followed the correct procedure before informing airlines that permission had been granted.
“Acsa successfully challenged the 2010/11 tariffs in court,” said Makgale. “The court set aside the tariffs and ordered the regulating committee to submit the tariff adjustment to the Minister of Transport for consideration and approval.
“Following the court order, the minister set up a task team to independently assess the proposed permission and advise the minister.
“We understand the task team’s report was finalised and it raised fundamental concerns, confirming what had been raised by Acsa.”
Makgale said Transport Minister S’bu Ndebele had then asked for the regulating committee to consider the concerns by the task team and resubmit a revised permission by the end of February.
“Subsequent to that, Acsa received a letter on May 20 purporting to be the adjusted tariffs.
We then wrote to the regulating committee (to confirm) whether it had submitted a new permission to the minister for approval in line with the court order. We were made to believe that the regulating committee had not.”
The chairman of the economic regulator for Acsa, Mohammed Sizwe, said yesterday: “I can’t speak on this now. I’m in Japan.”
But Zweigenthal insists the regulator confirmed to the association that it had effectively increased its determination to grant Acsa a cumulative increase of 161 percent over five years, compared to the 129 percent increase granted in March last year.
“Following his evaluation of the minister’s request, the regulator maintained the increase of 33 percent, which was implemented in the year 2010/11, following Acsa’s rejection of the original permission when Acsa questioned its legality,” he said.
“In that permission, the regulator granted a 40.7 percent increase for 2010/11, which Acsa did not take due to its legal challenge. However, the regulator has granted an increase of 34.8 percent in 2011/12 and a 30.6 percent increase in 2012/13, compared to the 25.6 percent and 16.2 percent respectively granted in the initial permission.”
“The fourth- and fifth-year increases have remained at 5.6 and 5.5 percent respectively.”
Transport Ministry spokesman Logan Maistry said the regulator had not consulted the Transport Department on the
increases.
Comair (Kulula and British Airways SA) chief executive Erik Venter said the increase came at a time when average airfares had been declining while fuel prices have increased dramatically.
He said the increases threatened the growth of air travel and would have a negative knock-on effect on the competitiveness of South Africa as a tourist destination and on the broader economy.
“Budget-sensitive travellers will be hardest hit, as half of airfares will now go towards Acsa’s airport charges.”
Even though the regulator had tried to smooth the increase over the next two years, Zweigenthal said the cumulative impact of the increase was potentially devastating.
“Passengers will pay a significantly higher passenger service charge and the increase on the direct operating costs of the airline industry will either have to be absorbed by the airlines, further eroding their already small margins or passing them on to the passenger through higher air fares.
“The increased charges have arisen as the regulator compensates Acsa in recovering costs on the investments made on the significant capital infrastructure improvements at OR Tambo, Cape Town International and King Shaka International airports for the World Cup.” - Cape Argus