Cape Town – The City is determined to stimulate tourism growth and has shifted its focus to airlines.
Mayco member for economic opportunities and assets management James Vos wants the Department of Tourism to establish a strategic aviation committee to investigate how aviation taxes could be reduced in order to stimulate tourism.
“Research clearly shows the inability of many South Africans to travel by air is as a result of the excessive costs involved.
"The International Air Transport Association predicts that by 2034 an estimated 7.3 billion airline passengers will be taking to the skies, which is more than double the 3.5 billion of 2015.
"In order to cope with this demand, airlines and countries need to have forward-thinking policies that will make provision for cost-efficient infrastructure and support business growth,” Vos said.
The fuel levy and other taxes needed to be evaluated in terms of direct benefit to aviation and the opportunity costs associated with it.
“One way to achieve this objective is to reduce aviation taxes as a way of lowering the cost of air travel so that more South Africans can travel at an affordable rate.
"I will be writing to them next month once I have workshopped my Blue Economy strategy with my department because an important contributor to economic growth is aviation,” he said.
According to the International Air Transport Association, African airlines continue to suffer because of high costs and were projected to show a loss of $200m (R2.9bn) next year, similar to the loss expected for this year. They said this was largely due to government taxes and fees, as well as low load factors.
The association also said the economic performance in 2019 was weaker than had been anticipated at the time of the June forecast.
This aligns with weaker global GDP growth of 2.5% (versus 2.7% forecast in June) and world trade growth of just 0.9% (down from a 2.5% forecast in June).
These negative developments contributed to softer passenger and cargo demand and corresponding weaker revenue growth, as passenger yields fell 3% and cargo yields dropped 5% compared to 2018.
They said that operating expenses did not rise as much as anticipated (3.8% vs. 7.4% June forecast) largely owing to lower-than-expected fuel costs, but it was not enough to offset the softness in revenue.
Linden Birns, managing director of aviation consulting firm Plane Talking, said: “It’s a good Idea to implement this largely because it would allow more tourists to visit. Air travel is costly and many logistics are involved.”