The aviation and travel industries were among the hardest hit during the global pandemic. But three years on the market is showing signs of recovery. At the close of 2023, the global aviation market had reached 94.1% of 2019 levels, with tourism improving to just under 90% of pre-pandemic levels worldwide. Aviation in Africa is tracking global trends closely, reaching 93% recovery by the end of 2023.

Although these figures speak to an increasingly robust industry and an end to the volatility of the past few years, there are still a number of key developments and trends that need to be considered.

To discuss these, regional low-cost airline FlySafair held a media round table hosted by Chief Marketing Officer, Kirby Gordon.

“For both the aviation and tourism industries the past three years have been defined by instability and volatility. Thankfully, recovery has been good both internationally and in South Africa,” said Gordon.

Recovery in South Africa is also looking up. Airports Company South Africa (Acsa) recently reported an 87% recovery in passenger numbers across the entire network and flight numbers reaching 93% of 2019 levels.

Tourism in South Africa has also shown a strong and sustained recovery as international tourist arrivals from January to December 2023 totalled 8.5 million, representing a 48.9% increase when compared with the same period in 2022.

“Overall, the market both globally and locally is looking far stronger than it has at any time since the pandemic. This steady improvement speaks to the resilience of the industry and hopefully points to an end to volatility,” said Gordon.

“That being said, there are a number of new factors that should be considered, especially within South Africa. These emerging trends are having an impact on the direction the aviation and tourism industry is going as well as how consumers are engaging with products and services.”

During the round table event, Gordon unpacked key industry trends.

The health of aviation infrastructure in SA

The air transport sector is a major contributor to the South African economy. According to a report published by Iata, in 2017 the air transport sector was responsible for the creation of 490 000 jobs and US$12 billion of South Africa’s GDP. In the same year, air transport infrastructure in South Africa was ranked tenth-best in the world.

The pandemic hit airports as much as it did airlines and many airports around the world deferred maintenance to save money in the near term.

By August 2021, some of this was coming home to roost with Polokwane and Plettenberg Bay airports experiencing downgrades due to higher level safety standards not being met. By the end of 2023, issues relating to airport infrastructure have continued to plague airlines and consumers.

In 2022 a fuel supply issue left travellers stranded at OR Tambo International Airport during the busy December period. In 2023, a similar incident occurred where the baggage sortation hall at OR Tambo broke down completely, leaving travellers without their luggage during the festive season.

“With each ticket sold, Acsa collects its share of airport tax from consumers via the airlines. This is then used to maintain the infrastructure of Acsa-owned and -run airports across the country. However, airlines have raised their concerns that despite this consistent tax contribution, there seems to be a lack of basic infrastructure maintenance,” said Gordon.

“At FlySafair, we have stepped in to fill certain gaps including implementing contingency plans for intermittent fuel supply. But some infrastructural elements like the baggage halls are unfortunately out of control. Ultimately, if there are mishaps that fall under Acsa’s remit, airlines are the ones that bear the brunt of disgruntled consumers when issues occur.”

The rise of the travel agent

The advent of the 1990s brought about significant shifts in the travel industry. Travel agent revenue structures changed, and, over time, the emergence of online booking platforms further transformed the landscape, providing modern travellers with direct access to a wide array of travel options, redefining the role of traditional travel agencies in the process.

But this seems to be changing again. During his recent Economic Outlook 2024 presentation, Standard Bank’s Chief Economist Goolam Ballim touched on consumer spending trends. While direct spend with airlines remains dominant, there was an increase in share of consumer spend with travel agents, from 1% in 2022 to 1.5% in 2023. This represented a compound annual growth rate of 13.6% across both online and offline agencies.

“There are several reasons for this change. For many the COVID-19 pandemic highlighted the complexities of travelling, leading many to turn to experts for assistance. The increased cost of living has also resulted in travellers seeking better deals and reassurance in travel agencies. Finally, the growth of loyalty schemes has also pushed consumers back to travel agents,” noted Gordon.

Fuel supply and demand dynamics

Various factors have led to the increase in the cost of jet fuel, which has contributed to ticket price increases in recent years. The start of the Russia-Ukraine war in early 2022 coupled with the closure of a local Jet A1 synthesis plant put a strain on supply.

In the immediate short term, there was a jet fuel shortage which saw some airports run dry. To ensure business continuity and adequate supply, South Africa now imports a significant portion of its jet fuel, which has kept running costs for airlines high.

“We often still get critique around pricing, especially when the price of oil has dropped. Although the price is down from the all-time highs of 2022, when oil has come down, even for a short time, jet fuel has continued to increase. This has had a significant impact on pricing across the industry,” said Gordon.