Acsa is yet again disputing the Independent Regulating Committee’s ruling on its tariffs for the next five years, saying the Permission has to be approved by the Transport minister.

The Regulating Committee announced last week that the airports authority would be able to increase its tariffs by 161% over the next year five years compared with the 129% increase granted initially in March 2010 despite Acsa’s requested 190% increase. Acsa fees would thus increase from R81 to R211 per passenger over the period.

Acsa first challenged the 2010/11 Permission in court last year, ordering the Regulating Committee to submit the tariff adjustment to the transport minister for consideration and approval.

The minister then set up a task team to independently assess the proposed Permission. This raised a number of concerns that the minister then asked the Regulating Committee to consider.

Following his evaluation of the minister’s request, the regulator has maintained the increase of 33% implemented in the year 2010/11, which Acsa did not take due to its legal challenge. The regulator has also granted an increase of 34,8% in 2011/12 and a 30,6% increase in 2012/13, compared with the 25,6% and 16,2% respectively granted in the initial Permission. The fourth-and fifth-year increases have remained at 5,6% and 5,5% respectively.

Chris Zweigenthal, CE Airlines Association of Southern Africa, says: “Passengers will pay a significantly higher Passenger Service Charge and the increase on the direct operating costs of the airline industry will either have to be absorbed by the airlines, further eroding their already small margins, or by passing them on to the passenger through higher airfares.”

Zweigenthal says further consultations should have taken place prior to the publication of the Permission and that the tariff hikes could not come at a worse time due to high fuel prices.

Joint CEO at Comair, Erik Venter, says the Acsa increase also comes as average airfares have been declining. “The increase threatens the growth of air travel in South Africa and will have a negative knock-on effect on the competitiveness of South Africa as a tourist destination and the broader economy.
 
“Acsa is now calling on users of its airports to fund its financial shortfall. In this freely competitive environment it is unlikely that local airlines will be able to absorb the 161% proposed increase in an industry where margins are consistently under pressure,” says Venter.

Zweigenthal says, although the Regulator has tried to smooth the increase over the next two years, the cumulative impact will be “potentially devastating” for both airlines and consumers.

Regulating Committee chairperson Mohamed Sizwe said that the committee had taken into account Acsa’s arguments on the request of the minister and that the process was now concluded. “We have announced the Permission and there is no further recourse to change it.”

Iata believes Acsa should be prevented from “driving business away from South Africa with high costs”.

The organisation has added its voice to local airline concerns surrounding the tariff hikes saying even the 129% initially granted to Acsa would add US$1,2bn (R8,1bn) to airline costs, a “big burden” for airlines to bear. Johannesburg charges, it adds, will rank among the most expensive for airports of similar size.

The increase, it says, is primarily driven by “poor business performance” in the previous regulated period and the cost of the “unnecessary” King Shaka Airport in Durban.

“During consultations, the airline industry made several representations questioning the necessity for the level capital investment due to the lack of affordability both from Acsa, the airline industry and the passenger’s perspective,” adds Zweigenthal.
 
Acsa denies poor financial performance, saying it had proposed a different approach in terms of which the tariffs would have been smoothed over a period of time to avoid major increases during periods of high investments.

“Unfortunately, a decision was taken to delay a tariff recovery until the infrastructure was in use. The 2010-2015 tariff application is a reflection of the completed infrastructure,” says Acsa spokesperson, Solomon Makgale.

It says an independent study has shown its tariffs will remain competitive going forward.