Presentation Transcript
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 efficiency And 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