Johannesburg - South Africa’s airport management company, Airport Company South Africa (Acsa) said on Thursday that it would slash tariffs by 35.5 percent in April in a move that might see airliners also reviewing their ticket prices.
Acsa operates the country’s nine airports, including OR Tambo International Airport, Cape Town International Airport and King Shaka International Airport. Airliners would still determine ticket prices, but the mooted reduction would translate into a decrease in airliners costs such as landing, parking and passenger service charges.
Acsa’s announcement follows the company’s update on Wednesday that it would be assessing the implications of the final permission and come with a proper response in order to maintain a prudent financial state. “The company will engage with investors and rating agencies once the details of the response to the final determination are approved by the company’s board of directors,” the company had said.
Acsa said the tariffs would be reduced by 35.5 percent this financial year. However, the charges would increase by 5.8 percent in the 2018 financial year and by 7.4 percent in the 2019 financial period.
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Acsa chief executive, Bongani Maseko, said that the Independent Regulating Committee had approved the tariffs. “We are happy that this process has finally concluded, and all the role players can now have regulatory certainty,” he said.
The new permission to levy airport charges was promulgated and published in the Government Gazette last month.
Maseko said Acsa had already incorporated the expected reduction in its financial planning. “It is important to note that the financial permission is in line with Acsa’s expectations and what was proposed to the Regulatory Committee. We anticipated this outcome for some time, and factored in into our financial and business planning,” said Maseko.
Passenger service charge per departing domestic passenger will be R82, down from R127. Passenger service charge per departing international passenger will be reduced from R346 to R223, while passenger charge per departing passenger for airports within Lesotho, Botswana, Swaziland and Namibia would go down to R223 from R346. Acsa said aircraft landing fees and aircraft parking fees would also be impacted, but these would vary according to the maximum take-off weight on aircraft and length of stay.
Comair chief executive Erik Venter said yesterday that the tariff reduction would bring relief to airlines and the flying public, “but does not go far enough.” He said the reduction was long overdue in terms of the regulating formula in the Acsa Act that determines Acsa’s revenue.
“It does not, however, address the super profits Acsa has made over the past two years, when it underspent its capex budget, but continued to collect tariffs at exorbitant rates set for the World Cup. These World Cup increases saw tariffs rise by around 160percent.
“There is provision in the Acsa Act for the regulator to claw back excess profits resulting from over-collection of tariffs or under-spending on budget. We hope that this legal provision is applied and the claw back is used to offset future increases in the passenger tax and landing fees,” said Venter.
The claw back should also address the sale of Durban International Airport to Transnet for approximately R2billion. “This went directly to Acsa’s bottom line, despite the fact that airlines and their customers paid for the airport, as well as its replacement, King Shaka. It should also consider interest earned on the super-profits as well as proceeds from the sale of Durban Airport,” he said.
June Crawford, chief executive of the Board of Airline Representatives South Africa, said yesterday that the decrease in tariffs would prove to be good for the consumers and the tourism industry, but said the delays had impacted on infrastructure roll-out in the sector.
“The lengthy discussions with the economic regulator have led to a two-year delay, so we are now well into the 2015-2020 permission period. This has in turn resulted in delays for Acsa in respect of infrastructure developments and improvements,” said Crawford.