Johannesburg. 11 Dec 2009
I would like to comment on the ACSA request for a 132.9% tariff increase, and various statements regarding this, on three levels
ACSA is just another example in recent history of tariff hikes that appear to be way out of sync with inflation. Certainly, with the regulator hearings in mind, parties will request higher increases than they expect to finally receive, but clearly, such large increases suggest that the planning has gone awry. It is accepted that certain unexpected exposures have had an influence, such as acceleration of projects for SWC 2010, and the forced development of King Shaka airport.
What concerns me is the re-emergence of the arrogant monopoly, which was a feature of the previous regime, but something that I had hoped would disappear in the new dispensation. The "arrogant" refers to the way in which ACSA and others, fob off stakeholder concerns with statements of the kind "you do not understand our business".
Fin24: Mabelane expressed disappointment at Comair chief financial officer Yasas Sri-Chandana's criticism of the tariff increase application.
Sri-Chandana, who is also a member of the Airlines Association of Southern Africa, showed "a remarkable lack of understanding Acsa's financial structure".
For a business person to make this kind of statement about the financial director of a listed company that has never made a loss, is to me disappointing,
Mabelane responded: "The statements made by Sri-Chandana are yet another attempt to deflect attention from the fact that the airlines continue to deceive passengers into believing that 'airport taxes' accrue to Acsa only through an opaque ticketing system.
"In reality, the airlines get the lion's share of the 'airport taxes'. It is unfortunate that airlines continue to hone these fears to deflect attention from their own derelict practices," she said
It is indeed true that the airlines do practice a form of deception. When airport taxes were first introduced in the 1990’s, structures had to be set up to collect these fees on behalf of airports and governments, as it was reasonably concluded that payment booths at airports would not be desirable (even though some countries have chosen this route). Fields were created in airline tickets which could be used to collect fixed fees that were not controlled by airlines. As time has passed the airlines have cottoned on to the use of these fields to collect fees for themselves as well, most notably the "fuel surcharge" which has crept in during the last 3-4 years. This allows airlines to claim that "their" fares are lower than actually is the case. When the fuel surcharges were originally introduced, they were deemed to be temporary in nature, ha ha ha.
Now to public reality. The requested increase would amount to R81 on domestic air sectors. Taking the cheapest available fare from Joburg to Durban at R259, the new fare will be R340, a 31% increase. In summary, are the public willing to pay a 31% increase to use the new Durban airport?
The system of airport monopolies is not working, not here, and not abroad either.
We create corporations which are handed prime real estate, and which are allowed to disturb the balance of the economy by poor management of assets. ACSA claims to be protecting ROI of its investors. Well, ROI is calculated when a project is commenced, and I do not believe for one moment that when ACSA approached investors, it would have projected 132% annual fee increases, so the numbers are all wrong there.
Ryanair in Europe, and many other carriers have been fighting the same battle for years, and eventually, two practices are emerging in Europe: (a) the development of "low-cost" terminals for "low-cost" carriers, where passenger fees are lower commensurate with a much lower facility standard. Lanseria is an example of this, and Durban airport could also have been, (b) the break-up of the airport monopolies, for example in the UK where London’s Gatwick airport has been sold to a new group.