Acsa's 35% tariff cut means cheaper air travel in 2017

2017-01-05 13:31 - Selene Brophy
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Cape Town – Could 2017 be the year for cheaper air travel in SA? We can only hope so. 

The anticipated outcome for tariff adjustments for Airports Company South Africa (Acsa) for 2017 seems to support this outlook.

Acsa confirmed it will be decreasing aircraft landing fees, aircraft parking fees and the passenger service charges by 35.5% as of 1 April 2017.

SEE: New SA flight routes travellers can take advantage of in 2017

The new tariff decision, determined by the independent industry Regulating Committee and published in the Government Gazette on 29 December 2016, will see a reduction in airport charges of 35.5% for the 2017/18 financial year -  however nominal this means cheaper air tickets. 

The new passenger service charges (with prior year passenger service fees) are as follows and include VAT:

- Passenger service charge per departing domestic passenger: R82 (R127);

- Passenger service charge per departing passenger for an airport within Botswana, Lesotho, Namibia or Swaziland: R169 (R263)

- Passenger service charge per departing international passenger: R223 (R346).

WATCH: SA enjoying the best deals in air travel right now - Cheapflights

Bongani Maseko, the Chief Executive of Airports Company South Africa says, “We are happy that this process has finally concluded, and all role players in the industry can now have regulatory certainty.”

While there are a number of taxes influencing the cost of air travel tickets, the most expensive of all and unaffected but these Acsa decreases is the fuel surcharge - priced in dollars, as are airline overheads and almost always sees Rand-based operators at a disadvantage. 

Aircraft landing fees and aircraft parking fees vary according to the maximum take-off weight (MTOW) of an aircraft and length of stay. Both sets of charges vary further according to whether the flight originated within South Africa, Namibia, Lesotho, Botswana or Swaziland or outside of South Africa.

SEE: Cost p/km survey shows just how expensive SA air travel is

FlySafair Head of Sales and Distribution Kirby Gordon welcomed the decrease saying, " This is excellent news for South African flyers and the economy as a whole."  

“Overall pricing of tickets is a complex issue where we need to consider a number of factors. Fuel alone can account for 40% of direct costs, so our exposure to the rising price of oil and a weakening rand tends to have a stronger influence on fares. That said, the decrease in these tariffs is great and is a saving that we will most certainly seek to pass onto our customers,” says Gordon.

“There’s no doubt that the reduction in this tariff is excellent news for the industry and the consumer collectively." 

5% increase from 2018

But travellers should keep in mind that Acsa also confirmed these charges will again rise by 5.8% in the 2018/19 financial year and 7.4% in the 2019/20 financial year.

For 2016 Acsa reported a profit of R1.9bn. The state-owned enterprise's earnings before interest, taxes, depreciation and amortisation (Ebitda) was up 7.1% to R5.2bn. It also showed revenue increased 6.8% to R8.3bn as a result of the introduction of new routes, growing passenger numbers from Europe and Asia and the performance of its non-aeronautical operations.   

Acsa has had a number of development initiatives in the pipeline, including the re-alignment of the runway and terminal improvements at Cape Town International Airport (expected to commence in 2017) and the addition of aprons at OR Tambo.

SEE: Acsa to invest R7.7bn in SA airports including overhaul for Cape Town International

According to Fin24 Acsa has developed a capital expenditure programme of R4.9bn from 2017 to 2019. A “major part” of the funding is to be generated internally and R800m of the funding will be sourced through debt".

A deleveraging strategy has helped the organisation pay off its debt, "with the trend in borrowings receding, similarly in interests on costs". The report states Acsa debt is at R9.8bn and R2.9bn is due in the next 3 years, from 2017 to 2019. In the past five years, Acsa paid off R7bn of its borrowings.  

“It is important to note that the Final Permission is in line with Airports Company South Africa’s expectations and what was proposed to the Regulating Committee. We anticipated this outcome for some time, and factored it into our financial and business planning,” says Maseko.

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