Kulula raises alarm over prices

Johannesburg - Kulula.com and its parent company Comair Limited on Monday raised serious concerns about the financial crisis at the Airport Company of South Africa, the state-owned operator of South Africa's major airports.

This follows the release of Acsa's financial results last week in which the airport operator revealed a massive shortfall in funding to cover its R17bn capital expenditure commitments.

"We fully support the investment in necessary airport infrastructure, however, for the past few years the aviation industry has vehemently opposed Acsa's excessive spend, to no avail. Now passengers are going to be called on to pay for it," said Comair Joint CEO Erik Venter.

The new R7.5bn airport currently being built at La Mercy, near Durban, has been highlighted as a project undertaken without the support of the airlines and without a proven business case.

A study by Iata showed that the existing airport in Durban could handle demand for the next 10-15 years.

"Currently around 14% of the average domestic airfare goes to Acsa, comprising a charge for passengers of R49 as well as landing fees and rentals charged to the airlines. Acsa is proposing a doubling of these charges even though, relative to the ticket price, they are already among the highest in the world. The proposal also comes at a time when travel volumes have already declined by 10% year-on-year and travellers are more price sensitive than ever before!"

"Following the massive capital expenditure, Acsa is in desperate need of a capital injection from its shareholders. During these tough economic times, travellers do not deserve to be hit by yet another massive increase in airport charges," concluded Venter.

Kulula.com also said that passengers had been hit by higher-than-average charges by Acsa.

It noted that currently Acsa was paid approximately R100 per single flight for each domestic passenger that travels through one of its airports.

This is made up of a R49 passenger service charge (PSC) and an additional R50 that is charged to the airlines for landing fees and rentals, it said.

It noted that Acsa charges were 14% of average domestic ticket prices in South Africa (R720).

This ratio is one of the highest in world and yet Acsa has mentioned that it would like to double these charges, said kulula.com.

Kulula.com also noted that domestic air travel had declined by 10% over the past year.

Demand is very price sensitive and there is a direct correlation between air fares and demand.

Based on trends, as tracked by Comair, an increase in airfares would result in the same percentage decline in demand, it said.

- I-Net Bridge