Low-cost airline 1time has reacted angrily to Airports Company South Africa's move to increase passenger service charges by 9,8 percent for the remainder of this year and then increase them by an average 11,4 percent per year for the next five years.
This will increase overall ticket prices dramatically.
The passenger service charges are the component of airport taxes that go to Acsa. The increase means all departing passengers will pay R47 to Acsa for domestic flights, R97 for all regional flights, and R128 for international flights.
The extra money generated by the passenger service charges will go towards the five-year improvement programme which is expected to cost R19,3-billion to improve airports around the country.
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| 'Acsa is the most profitable airports company in the world.' |
But airline operators are not impressed and Glenn Orsmond, CEO of 1time, feels increases could have been avoided.
He says Acsa should have been investing profits over the past five years to accommodate growth in the market, but instead gave it to shareholders.
"What really irritates the airlines is that Acsa is the most profitable airports company in the world.
"It makes operating profits at 50 percent of revenue compared to airlines which make approximately 6 percent."
Orsmond said the air travel market in South Africa had grown by 70 percent in the past five years and airport taxes should have fallen but instead have increased dramatically.
| 'Service standards at the airports are shocking' |
"Acsa make profits of close to R1 000-million a year. Instead of investing these profits in infrastructure over the past five years to accommodate this growth, they have paid this out to their shareholders.
"Now that their infrastructure is inadequate they squeeze the same passengers and airlines. Effectively, by not investing for the past five years, they are making the passenger pay twice," he said.
Acsa's increases in airport taxes due to it went up by 9,8 percent with effect from Friday and will grow to 11,4 percent next year. This is a large increase when considering that over the past five years to 2006, passenger service charges were increased by an average 4 percent.
The charges are being levied on all passengers departing from Acsa-operated airports, which include OR Tambo, Cape Town, Durban, East London, Port Elizabeth, Kimberley, Pilanesberg, Bloemfontein and Upington.
According to Acsa, it has experienced, and will continue to experience, strong demand growth due to a rapidly growing GDP in South Africa and the surrounding region, as well as the 2010 Soccer World Cup.
The company plans to spend about R4,9-billion over the 12-month period to March 31.
"This is an enormous leap considering that we spent about the same amount over the previous five-year period and now have to do it in one year," said Khulile Boqwana, Acsa's group specialist in economic regulation.
He said because the new tariff increase only came into effect this month the regulator had agreed that the increase for the year may be spread over the remaining five months, giving rise to tariffs that will be charged between this month and March.
"Furthermore, we work on the 'user pays' principle. In other words, passengers only pay for the infrastructure that they are using.
"So, the average 11,4 percent increase in tariffs is a reflection of the new facilities that will be coming on stream over the five-year period.
"We are therefore of the view that our tariffs are reasonable and compare with other international airport.
But while Acsa argues that the tariffs compare with international airports, airline operators feel the service do not match up.
"Service standards at the airports are shocking. Baggage theft costs millions a year, security is a joke, conveyor belts break down continually, inadequate check in and ramp facilities cause on-going delays costing millions as well," said Orsmond.
- This article was originally published on page 11 of Cape Argus on November 03, 2007
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