Cape Town - A competitive market is a healthy one and FlySafair says its entry into the low-cost domestic market is proof of this.
Surveys indicate that local travellers have been given access to wider choice and better airfare pricing since the arrival of Skywise and Flysafair dented the dominance of Mango and kulula, following the closure of 1Time and Velvet Sky in 2012.
Comair, the operators of kulula and the domestic routes of British Airways, is currently challenging the bank guarantees given to SAA in the High Court, alleging it was issued in circumstances that not only “bound the hands of Parliament as the ones who would be picking up the debt” but also placed the other privately-owned players within the SA domestic market at an unfair advantage.
READ: Skywise calls on state to help make domestic travel cheaper
Skywise has since called for an urgent roundtable discussion with top level government departments, including the Minister of Tourism, echoing the argument being presented by Comair, that at no point during the issuing of bank guarantees to national carrier SAA, did government consult with the industry at large.
Skywise Co-chair J Malik believes the discussions could result in policy changes and influence from government that could translate into a reductions of taxes and levies for the various domestic players.
This could then be transferred across to the consumer to allow for better pricing of local air tickets, suggests Malik who said it was time for "government to meet its responsibility to the consumer and help make domestic travel cheaper across SA" instead of adding to the “distortion in the market”.
FlySafair, has added its support to the call for open dialogue, stating that since its entry into the market pricing and demand on popular routes it operates have influenced healthy competition.
READ: Low-cost carrier flood pushes prices down
According to a recent Travelstart survey, fare reductions of up to 38% have been recorded on some of the routes operated by FlySafair, with demand increasing by as much as 132%.
“Conversely, routes we do not yet fly have seen fare increases of just less than 10% over the same time,” FlySafair Chief Financial Officer Elmar Conradie said in response to the call for a roundtable discussion between industry players and government.
“Any meeting with an aim to drive tourism growth is worthwhile, but it will not solve the underlying competitive issues.
“Airlines should not have to go to court to preserve competition. Regulation is for the regulators, and they must move, in the interests of the country and its travelling public to reduce competitive barriers and remove unfair competition.”
Conradie said it would be FlySafair’s intention to engage with the Department of Tourism to align objectives in terms of how to grow the domestic tourism sector most efficiently.
“We want to afford more South Africans the privilege of being able to enjoy our lovely country, and hopefully creating more employment in the process.”
“State subsidies are intrinsically uncompetitive.
“They do not benefit the State, which must stump up the money to keep non-efficient loss-making operations going.
“They do not benefit the economy as they are a draw on the state coffers and ultimately lead to reduced competition, higher fares, fewer passengers, less taxes and low consumer confidence, all of which negatively impact our economy,” said Conradie.
Conradie said new competitive airlines have proven across the world that they can help create more jobs and add more value in regional economies.
“More than can ever be sustained by state subsidies to airlines who put out the begging bowl rather than competing fairly in the market.”
“When a state owned company drops its fares by 50%, as we saw when we entered the market, but they claw their losses back from the State, the ultimate loser is the consumer as unfair competition drives new entrants out of the market and forces fares up to unaffordable levels.”
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