SA tourism presentation for Handout Vinod

SOUTH AFRICA NATIONAL TOURISM CONFERENCE“Strengthening the Interdependence of Aviation and Tourism”: 

SOUTH AFRICA NATIONAL TOURISM CONFERENCE “Strengthening the Interdependence of Aviation and Tourism” AFFORDABILITY OF AIR TRANSPORT Vinod Chidambaram Regional Vice President – AFRICA IATA

Air transport delivers a significant proportion of South Africa’s visitors, particularly non-African regional tourists: 

Air transport delivers a significant proportion of South Africa’s visitors, particularly non-African regional tourists Source: UNWTO, 2004 AIR 30% LAND & SEA 70%

Flights and available seats to/from South Africa are increasing: 

Flights and available seats to/from South Africa are increasing Source: IATA / SRS Analyser

A large percentage of visitors arriving by air travel from Europe: 

A large percentage of visitors arriving by air travel from Europe Source: IATA / Pax-IS

Routes from Middle East forecast to show strong growth in percentage terms…: 

Routes from Middle East forecast to show strong growth in percentage terms… Source: IATA

…and also in terms of absolute passenger numbers but significant numbers of new European visitors expected: 

…and also in terms of absolute passenger numbers but significant numbers of new European visitors expected Source: IATA

US economy slowing but Asia and Europe remain strong: 

US economy slowing but Asia and Europe remain strong Source: EIU ASIA PACIFIC EU US

Due to Currency Factor Visiting South Africa is 25% cheaper for European visitors now compared to 2005: 

Due to Currency Factor Visiting South Africa is 25% cheaper for European visitors now compared to 2005 Source: EIU

South Africa has a number of competitive advantages in tourism: 

South Africa has a number of competitive advantages in tourism Source: World Economic Forum

But has not capitalised on these with growth in tourist arrivals lagging behind on average: 

But has not capitalised on these with growth in tourist arrivals lagging behind on average Source: UNWTO

Europe originating traffic is important,but the 35% from Africa should not be neglected: 

Europe originating traffic is important, but the 35% from Africa should not be neglected Source: IATA / Pax-IS

The real cost of air travel has declined significantly: 

The real cost of air travel has declined significantly Source: ICAO

And further liberalisation of air routes would increase tourism opportunities: 

And further liberalisation of air routes would increase tourism opportunities Source: WTO Index of travel market liberalisation

But African airline financial returns are very fragile: 

But African airline financial returns are very fragile Source: ICAO / IATA

The cost of fuel is expected to remain very high: 

The cost of fuel is expected to remain very high Source: IATA

But Against this backdrop, Airlines have been busy improving their efficiencyAnd Since 2002: 

But Against this backdrop, Airlines have been busy improving their efficiency And Since 2002 o Labour productivity up 56% o Distribution costs down 13% o Non-fuel unit costs down 15% o Fuel efficiency improved 10.5% o Load factors: global average of 76% (record high of 81% in July 2007)

Airlines have been seeking to offset higher fuel costs: 

Airlines have been seeking to offset higher fuel costs Source: IATA

They grabbed: 

They grabbed US$1.4 billion

Effective regulation and Stakeholder consultation is vital: 

Effective regulation and Stakeholder consultation is vital Airport monopolies have Little incentive for cost efficiency Little incentive for service quality Incentive-based regulation can benefit all Targets for cost efficiency Pass-through to airport customers Transparency can reduce airport financing costs The myth that airport charges represent only 3-4% of total Airlines cost has to be dispelled

To Summarise: 

To Summarise Good prospects for tourism growth in SA especially from Europe and Africa South Africa has many Travel & Tourism competitive advantages including a favourable Euro/rand exchange rate since 2005 But may benefit from further liberalisation including YD on the African front Air Transport has become more affordable in real terms since 2002, but is being plagued by the high cost of fuel and inadequately regulated monopoly charges from service providers, especially airports And airlines’ financial outlook remains fragile with low margin on turnover The industry has reacted positively and has improved efficiencies seriously But airport charges remain a challenge and the outrageous margins practiced by some, including in Africa, has to be decried Effective regulation of these monopolies coupled with proactive consultation with all stakeholders is an absolute must

Slide23: 

THANK YOU