How South Africans can 'exploit' SA's low air prices
FlySafair chief marketing officer Kirby Gordon said recent air travel has been “effectively subsidised by their airline of choice – and will be for a while”.
He also revealed how the cost of a single plane ticket could contribute to helping the South African aviation sector inch its way back to economic recovery.
Gordon explained how they calculated their prices, and how it contributed to offering reduced prices for travellers during the pandemic. He said now was the perfect time for people to travel.
“What many don’t realise is that airlines are what economists call price-takers. The fares that we can achieve are effectively set by the market forces of supply and demand. Prices will climb when demand is high and supply is reaching its limits. This is what we’re used to seeing over periods like the Easter weekend and the December holidays. It wasn’t the case this year, because supply was plentiful and demand was low. This means that average ticket prices this year were about 30% to 35% down on 2019.
“With ticket prices as low as they currently are, there’s never been a better time to get away,” he said.
Gordon said airlines continued to fly with the hopes of covering their operating costs and at least put a dent in their fixed costs, such as aircraft leases.
He said with overheads in aviation at an all-time high, South Africa’s domestic airlines operated at losses.
“In essence, these companies are subsiding domestic air travel. The picture is not at all one of complete doom and gloom. News that South Africans are once again exploring local travel options could not be more welcome. With the prospects of inbound international travel still so uncertain, hopes for tourism – and its vital contribution to the economy – lie with domestic travel.
"While the tourism sector provides around 1.5 million jobs and contributes R425-billion to the South African GDP, the African Development Bank has also pegged cross-country mobility as key to economic recovery,” he said.
Gordon said South African domestic airlines have managed to bring between 75% and 80% of their capacity back online, which meant that 20% to 25% of unutilised capacity still bore overhead costs that weighed airlines down.
“Unfortunately, the average ticket prices airlines are achieving at the moment are not high enough to even think of making money,” he said.