Amidst a halt on flights for almost two months due to the nationwide lockdown, SA’s fragile aviation industry is now on the long road to recovery after seeing revenue fall close to zero while they continued spending money on maintenance, repaying debt and staff salaries. After the great recession of 2008, the airline industry took five years to fully recover and experts predict that we might see a similar pattern this time around too.

Although flights are resuming this month after the eased lockdown restrictions, airlines aren’t expecting to operate anywhere close to their pre-coronavirus capacity while flying also looks set to be very different with the introduction of health-related measures.

The financial impact
The International Air Transport Association estimated that revenues generated by South African airline companies will fall by roughly R55 billion in 2020 – this is 56% lower compared to 2019. This dramatic fall in revenue puts 252,100 South African jobs at risk in both state-owned and private domestic airlines. 

A staggering R93 billion of the country’s gross domestic product (GDP)*, which is generated by aviation directly plus air transport-depend tourism, are also at stake.

Airports Company SA (ACSA), the manager of nine South African airports, released a statement saying that they require R10 billion in government guarantees* over the coming five years to obtain bank loans in order to serve passengers and keep their operations alive. 

Permitted to fly?
Travel for recreation or leisure purposes is prohibited under Lockdown Alert Level 3. It is the responsibility of travellers to ensure that they have the necessary permission to travel before even thinking of buying a ticket. Right now, the most common reason would be for business purposes and to attend funerals.

If you travel for business, you will need to carry a stamped letter on your company letterhead, signed by an authorised person, as well as a completed employee permit form. You can find a form providing a template to create such a permit on FlySafair’s website. 

What can you expect to pay?
Although airlines are desperately wanting to fill seats and recover lost revenue, it doesn’t necessarily mean that the consumer will be able to pick up flight tickets at discount prices. It may even turn out to be quite the opposite as planes aren’t likely to be filled to capacity on each flight. The price of airline tickets will ultimately depend on supply and demand. 

Currently, it seems like airlines are trying to attract customers by offering less expensive ticket prices than expected. On FlySafair and Mango, you can expect a return Johannesburg – Durban flight to cost as little as R1,038 while a return Johannesburg – Cape Town flight starts from R1,736. A return Cape Town – Durban flight will set you back around R1,638.

These prices are constantly changing so it’s best to look out for flight tickets well in advance of your anticipated trip.

Words of the Week*

Gross Domestic Product (GDP) – the total value of goods and services produced in a country within a given time period – usually a year. It is used to measure the size of a country’s economy.

government guarantees – an agreement whereby the government agrees to pay any amounts outstanding to creditors in the event of a default on the said loan. Government usually guarantees the loans of state-owned enterprises.

Marnia Wessels

Written by .

Marnia has joined the 22seven team as a Slice and Blog writer. She’s currently gaining exposure to financial reporting and forecasting at De Beers Group, as well as pursuing the CFA designation. She has a passion for the ever-changing and hyper-competitive world of business. Continuous improvement and endless development are what interest her on a daily basis. Her love for running and the outdoors keeps growing, as nature is always constant and honest, so it is there where she finds her peace.
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