The Airports Company South Africa (ACSA) says comments made by International Air Transport Association (Iata) director-general Willie Walsh earlier this week that some airports and air navigation service providers want to increase charges to recover the money that airlines could not spend with them during the crisis, are unfounded.
During the Iata annual general meeting, Walsh had named several airport companies, including ACSA, saying they wanted to “raise charges by 38% in 2022,” to offset losses incurred as a result of Covid-19.
ACSA says it has recently engaged Iata regional VP for Africa and the Middle East Kamil Al-Awadi, who at no point raised these concerns during his visit to South Africa.
"These accusations are unfounded and stem from a lack of understanding of how tariffs are regulated in South Africa," ACSA states.
ACSA's aeronautical tariffs, including aircraft landing fees, aircraft parking fees and a passenger service charge, are determined by an independent economic regulating committee (RC), which took a decision to suspend ACSA's 2022 to 2026 Tariff Permission Application and, thus, run the current 2019 to 2023 permission to the end, ACSA argues. The 2019 to 2023 permission allows for tariff increases of 3.3% in 2021/22 and 3.1% in 2022/23.
“The consideration for possible tariff increases in 2022/23 was initiated by the RC and is under discussion between the RC, the Airlines Associations and ACSA as the regulated entity. ACSA was invited by the RC to submit proposals on how the committee could assist regulated entities to be financially sustainable, but without placing an undue burden on users,” said ACSA CEO Mpumi Mpofu.
ACSA suggested an increase in tariffs of 35%, which, given the forecasts for air traffic, will allow ACSA to break even in the year 2022/23 after accumulating losses in the previous three years. ACSA tariffs had been reduced by 35.5% in the 2017/18 financial year, to the benefit of airlines and passengers, it said.
“In mitigating the negative financial impact of the pandemic on stakeholders including airlines, we moved quickly to introduce relief measures in the form of deferred payment arrangements and credit reprieves, to enable the long-term sustainability of our industry,” Mpofu said.
“We have taken significant steps to support our financial sustainability. Capital expenditure projects that would have required investment of more than R14-billion were suspended in 2020. Operating expenditure has been cut significantly by R1.2-billion and headcount has been reduced by 20% to date.”
The RC is yet to make a final decision on the proposed tariff increase. In the event that the committee agrees to ACSA's proposal, ACSA will still be one of four airports companies globally with the lowest airport charges. By way of example, the additional cost of a flight from OR Tambo International Airport to Cape Town International Airport would be in the region of R30, ACSA said.
“It is, therefore, incorrect to claim that ACSA simply wishes to recover its losses through increased tariffs and continue as before. ACSA recognised early in the pandemic that its operating environment had changed radically and responded accordingly through drastic measures internally,” it said.
Al-Awadi, meanwhile, responded, saying it takes note of ACSA's position, but that it stands by its statements and "reiterates its call for all governments - including South Africa’s, its entities and tariff regulators - to step-up their support to the airline and tourism industries by providing, among other things, financial relief through the reduction of charges. Any increases in tariffs at this time will be harmful, not only to air travel, but to jobs and the recovery of economies”.