What Acsa’s global footprint means for the passenger’s bottom line to travel more

2018-09-28 07:19 - Selene Brophy
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Airports Company South Africa (Acsa) has released its 2018 financials, but why should you as the traveller care?

Well, for one, Acsa is the company that runs nine international airport hubs across SA, often seen as cities unto themselves – they help to connect you with your loved ones, friends and business partners across the world.

Heard the buzz about Gauteng’s plans for an Aerotropolis? Then read on.

The state-owned Acsa on Thursday announced a drop in profits of 58% to R843m for the year to end-March. Its Revenue fell 20% to R6.9bn.

Acsa not only manages nine SA airports, they also have their hand in service delivery across another four airports in Africa and investments in another two Internationally.

India’s Mumbai Chhatrapati Shivaji International Airport is turning a profit. It is part of the equity investment that has enabled Acsa to put forward a relatively healthy balance sheet, despite a rather chunky 35% cut in its aeronautical fees. They also shaved off 490m off its debt, currently sitting at R9bn.   

“The international strategy and expansion to grow our footprint is really built around reducing reliance and dependency on aeronautical charges in the South African business,” says Acsa  Chief Financial Officer Dirk Kunz who spoke to Traveller24 on Thursday at the Financials briefing.

Its Sao Paulo equity investment in Brazil on the other hand, is not quite there yet – Acsa lost R563m at the Guarulhos International Airport.

“Over the long term we are expecting equity investments like Mumbai and Sao Paul to bear the necessary fruit in terms of the returns.”

Kunz says while still in early stages with its Sao Paulo investment, the partnership is six years strong of its overall 20 year investment period, with profitability only forecast in about two to three years’ time.

But it’s not all doom and gloom when it comes to ACSA.

Overall the company is one of the better run parastatals. Their strategy is geared towards the importance of "enhanced passenger facilities, infrastructure and improved experience".   

Development on homegrown soil indicate Acsa is ready to move from the "maintenance phase to an investment phase". Although cautiously, according Kunz. Acsa is well aware of the effects of poorly managed debt and how any shift in ratings could have significant bottom-line consequences – for all of us.

Improved passenger connectivity?

“The whole idea of an aerotropolis is to create an inter-nodal transport system that supports creating sufficient economic activity around the airport,” says Kunz. But with the likes of Uber and the Gautrain being great for the passenger it does dip into the parking revenue. Is there a plan to mitigate the disruption?

When it comes to the aerotropolis strategy, Acsa sees development as a means to subsidise the revenue pool and thus diversify more from its aeronautical charges.

“You should start to see construction around our OR Tambo International airport – beginning at the Shade 2 and Shade 3 parking on landside, close to the Gautrain Station,” says Kunz. The plan is for the construction of an office park development built to concept – but this is just one of the initiatives Acsa is launching to support the aerotropolis concept planned for the north-west quarter of Gauteng. It will see multi-model transport options for travellers, as well as  industrial, commercial and residential projects.

As new avenues of economic expansion are sought, building up infrastructure to enhance airlift and capacity in and around SA’s airports remain paramount. Long-term developments will also see the Gautrain route expansions. 

READ: 19 new Gautrain stations planned, to include Lanseria Airport, Cradle of Humankind and Soweto

Cape Town International Domestic Terminal and runway realignment

Kunz acknowledge the delays to the revamp of Cape Town International but stated it had been impacted by the permission decision related to aeronautical revenue – making revenue uncertain and forcing investment decisions that should have taken place in 2014 to only be finalised in 2016. The R4.5bn refurb of Cape Town International Airport runway realignment and New Terminal investment is expected to commence during 2019. It will take about three years to complete, he says.

UPDATE: Cape Town's new runway approved

So, what about passenger tariff increases?

Acsa is currently in the midst of the audit permission period for the next five years, meaning that for the next two years from 2019 to 2020, there are no increases expected from the current 5.8% which has been instituted. However, from 2021, Acsa forecasts an increase of about 7.7%.

The lack of passenger tax increase will not significantly impact the cost of travel though. You currently pay R87 on domestic flight services and about R239 on International flight services per passenger.

Airport infrastructure across Africa

When it comes to Acsa’s African strategy, the company recognised the need to contribute in service delivery as opposed to investing in airports – since most airports are owned by governments and the African Aviation Market is not at investment phase, says Kunz.

Acsa ability to add technical and operation readiness type services for example and to help improve the passenger experience is its core means to add value to #AfriTravel. Currently, Acsa is involved in about four African countries where they are providing technical services he says, including Ghana which will be launching its new terminal in October. Others include Liberia and Zambia.

Kunz states Acsa is also in knowledge-sharing partnerships with Germany’s Munich Airport, so "we're constantly on the lookout for best-practice opportunities" to bring back home.

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