Opinionista Ian Ollis 21 April 2014

Can anyone really fly?

In the past week we have seen the finalisation of the approvals and licensing of @flysaffair, allowing the new low-cost airline to finally take to the skies and (hopefully) provide the public with discounted ticket prices on key routes. Many will remember how the ticket price on some of these routes increased by up to 30% after the demise of 1Time and Velvet Sky airlines, leaving the public with limited choices. With this new entrant, we may see prices on certain airlines discounted again and passenger numbers increase as a result. But the skies over SA and Africa as a whole are unfriendly to new entrants and low cost airlines alike.

I have never used the phrase before, but let me outline what I would do “if I were the South African Transport Minister” to clear away obstacles to the airline industry in general and the low-cost (or more correctly low-fare) airlines in particular to enable more people to fly at reduced prices, both in SA and over Africa too.

The first step I would take would be to privatise all state-owned airports such as Wonderboom and Rand Airport, among others, to encourage competition and options for low-cost carriers. Currently many of these smaller airports around the country are owned by local governments and run inefficiently. The huge costs related to the use of small state-owned municipal airports is making them inaccessible to low-cost airlines, depriving commuters of the opportunity to move around the country easily and cheaply.

Allied to this, I would privatise ACSA, and the operation of all international and local airports under its control for greater competition and an open market. This can be done through selling of shares in the parastatal, leading to full private ownership.

Tied to this, I would insist on multiple suppliers of jet fuel being allowed access to these small and medium sized airports to ensure competition. Currently some of these airports have seen jet fuel suppliers only being allowed into airports under contract to local governments and some of these contracts have been issued to a single BEE company per airport often tied to the governing party. This leads to exorbitant prices being charged to airlines who would use these airports. Wonderboom, in Tshwane-Pretoria has been the poster child for this kind of abuse. This airport could be a hub for low-cost direct flights to Cape Town, Durban or other Southern African destinations, but A1Jetfuel, when it is available, is mostly charged at three times the price that the same fuel is available for at OR Tambo international. With fuel being so expensive, the competitive advantage of lower taxes and landing fees and locations closer to other potential passengers is neutralised and a low-cost airline is unable to operate out of these airports. Multiple players offering Jetfuel will result in fuel prices coming down. Unlike fuel for motor vehicles, Jetfuel prices fluctuate with markets and suppliers and is not fixed centrally by a government agency. Just reducing the pricing through competition will bring down ticket prices and open up airports largely ignored and under-utilised before.

The party I serve believes further that it is necessary to privatise SAA, SAExpress and Mango. As we have seen with other international flag carriers, such as British Airways, one can still have a national flag carrier in private hands. SAA et al could operate much more efficiently if run along the lines of BA. As a safety net, the DA proposes a possible incentivising of key routes that are seen as strategic for tourism or the promotion of trade, should the privatised airlines not be able to service such routes profitably. However, these incentives would not necessarily go to SAA but rather to any airline that tenders for that route. Once all airlines operating out of SA were in private hands, only routes that were marginal or not serviced and which were considered to have strategic importance to the country would be considered for such incentives.

Once this has been achieved, I would then allow greater foreign ownership of local airlines and low-cost airlines than is currently the case. The greatest amount of competition would result in lower prices and a bigger market as more people would be able to fly. This in turn would result in genuine job creation, rather than artificial government job farming at taxpayer’s expense.

Further measures would also be required to complete the overhaul of the skies. I would pursue a much more aggressive policy of “open skies” with neighbouring countries and ultimately all over Africa to create a fair, level playing field and ensure new entrants survive to become successful local and regional airlines.

New City airports in Cape Town, Johannesburg, Pretoria and Durban would in turn be granted international licenses to operate, particularly into Africa with business and airfreight services as well as for tourism to cut costs to starting and running new businesses that export into Africa. One of the military airports in the greater Cape Town could be turned into a true City Airport with a light industrial zone surrounding it to airlift products directly into Africa. This could still be shared with the military if required. Wonderboom or Rand Airport in Gauteng should also be considered with another in KZN in the medium term.

I would then link airports to CBDs using Metrorail, especially in Durban, Port Elizabeth and Cape Town, and look at further applications elsewhere, for rail or BRT bus systems for smaller airports, linking them into the Gautrain and existing BRT systems such as MyCiti and Reya Vaya.

Together, this would be the biggest leap forward for airline sustainability, if it were implemented, encouraging new entrants into the market and opportunities for low-cost carriers – and it would boost tourism and trade with lower air travel costs. DM

Ian M. Ollis is the DA Shadow Transport Minister and can be followed on Twitter @ianollis



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