Airports Company South Africa comments on Carte Blanche report

Johannesburg, South Africa, 2013-10-07 — /travelprnews.com/ — Following the broadcast by Carte Blanche on the 6th of October on tariff increase, Airports Company South Africa would like to provide context to some of the misleading and inaccurate information presented in the report.

On the issue of tariffs, the company has increased its tariffs by 5,5 percent with effect from 1 April 2013. Contrary to the television programme, the increase was not a unilateral decision imposed on the industry by Airports Company South Africa. The approval for the increase was granted to the company following an application to the duly authorised institution, the Regulating Committee. The decision was also taken in consultation with relevant industry stakeholders, including the airline industry.

The increase is based on the need for Airports Company South Africa to recover its R17 billion capital expenditure programme that it embarked on to improve capacity of its airports as part of preparations for the 2010 FIFA World Cup and beyond. It is also important to indicate that the Regulating Committee made a decision in 2007 that Airports Company South Africa would only start levying tariffs once infrastructural developments were completed and in use.

“We advised the industry that the result of this new approach would be a substantial increase in the 1st year of the five-year tariff cycle. Airlines knew the implications of the Regulating Committee’s decision. For a three year period, the aviation industry enjoyed very low tariffs, whilst Airports Company South Africa was using its balance sheet to borrow funds. If the regulatory approach had not been changed, we would not be in this situation today,” Bongani Maseko Airports Company South Africa.

The tariff increase is CPI-linked and takes into account the impact of the sluggish economic conditions and high fuel prices affecting the aviation industry.  “Future tariff increases are not expected to rise above inflation, as the company has proposed a review of the current revenue model, which will reduce our historical dependence on tariff increases as a key component of our income,” Maseko explains.

The tariff increase covers airport charges that are made out of landing charges, parking charges and passenger services charge. Over the five-year period to 2007, tariffs increased at an average of 4% a year.

According to Airports Company South Africa it is also nonfactual to suggest that the demise of some South African airlines can be directly attributed to the tariff increase. To the contrary, the company has processes in place to try and assist airlines to improve their business models.

With respect to the 10 year plan, this is a vigorous internally focused plan that has a strong focus on its stakeholder management strategy. This plan should not in any way be confused with the O.R. Tambo International Airport’s infrastructural plans that have a longer term vision guided by the economic and traffic outlook.

 

Frequently asked questions:
What are airport taxes?
Airport Taxes are made up of a variety of charges by the relevant role-players who are involved in ensuring passengers’ safe travel through Airports Company South Africa airports.
The table provides a breakdown of what contributes to the Airport Tax, passengers pay when booking their flights.

 

Description	Examples
Taxes	Value added tax International Departure tax
Regulated Charges	Airports Company South Africa passenger service charge SA Civil Aviation Authority safety charge Air Traffic and Navigation Services charge
Non-regulated charges	ACS passenger charge (ACS is a company owned jointly by the airline associations
Airline costs	Fuel surcharger* Insurance

 

What is an airport tax – how much and what is it for?
The term ‘airport taxes’ is often used for all charges, costs and taxes recovered through the air ticket, thus creating an impression that ‘airport taxes’ accrue to Airports Company South Africa. This is not the case. Airports Company South Africa passenger service charges are but one of the charges collected through the air ticket.  These charges are required by National Treasury to be split between taxes, regulated charges, non-regulated charges and airline costs.

The current Airports Company South Africa passenger service charges, inclusive of VAT, effective from 1 April 2013 are –

Domestic: R120
Regional: R249 (Botswana, Namibia, Swaziland and Lesotho)
International: R328

In other words the above amounts are what you pay under airport taxes (what comes to Airports Company South Africa).

In conclusion, it is important to note that while Airports Company South Africa SOC Limited is majority owned by the South African Government, through the Department of Transport, the Company is legally and financially autonomous and operates under commercial law. In other words, Airports Company South Africa does not operate on a state subsidy and derives its income from aeronautical and non-aeronautical revenue.

 

Additional note:

For any further media inquiry, please contact:
Unathi Batyashe-Fillis
Airports Company South Africa Spokesperson
Mobile: 079 882 7307
Email: Unathi.batyashe-fillis@airports.co.za

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