“The charges on airport tariffs are unfounded”

Durban – Airports Company South Africa (ACSA) responds to recent accusations by the International Air Transport Association (IATA) regarding the company’s stance on airport fares.

They said the comments were “not only unfortunate, but unfounded and lacked a basic understanding of how tariffs are regulated in South Africa.”

Willy Walsh, chief executive of IATA said this week that some suppliers had abused their positions to mitigate losses caused by Covid-19.

In his opening remarks earlier this week at the 77th IATA Hybrid Annual General Meeting in Boston, Walsh said some airports and air navigation service providers were looking to shore up their finances by recouping lost revenue from their airline customers.

Walsh named several airport companies, including ACSA, as wishing to “increase charges by 38% in 2022”, to offset losses suffered as a result of Covid-19.

ACSA contends that the allegations were “not supported by the facts”.

ACSA said in a statement: “Its aggressive response is unnecessary in an industry that depends more than ever on collaborative responses to the global aviation crisis and post-pandemic recovery.”

According to ACSA, their aeronautical tariffs, including landing charges, aircraft parking charges and passenger service charges, have been determined by an independent Economic Regulatory Committee (RC).

“It was the RC that took the decision to suspend the 2022-2026 tariff authorization request from Airports Company South Africa and therefore to execute the current 2019-2023 authorization until the end. The 2019- authorization 2023 allows tariff increases of 3.3% in 2021/22 and 3.1% in 2022/23 “, he revealed.

They said that “the examination of possible tariff increases in 2022/23 has been initiated by the RC”.

CEO Mpumi Mpofu said ACSA has been invited by the RC to submit proposals on how the committee could help regulated entities be financially viable without placing an undue burden on users.

Mpofu said the company responded by suggesting a 35% tariff increase.

ACSA believes this increase will allow Airports Company South Africa to break even in 2022/2023 after accumulating losses over the previous three years.

“It is important to keep in mind that Airports Company South Africa’s fares were reduced by 35.5% in fiscal year 2017/18, to the benefit of airlines and passengers.

“By 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 stays, in order to enable the long-term sustainability of our industry. We have taken important steps to support our financial sustainability. Capital expenditure plans that would have required an investment of over R14 billion were put on hold in 2020. Operating expenses were significantly reduced by R1.2 billion and the workforce was reduced by 20% to this day, ”Mpofu added.

The RC has yet to make a final decision on the proposed tariff increase, CASA said.

“In the event that the committee accepts the proposal of Airports Company South Africa, the company will still be one of the four airport companies in the world with the lowest airport charges,” added ACSA.