Airlines are having to contend with higher fuel costs, which is translating into higher airfares for travellers.
In the South African aviation landscape, the cost of air travel has risen notably in the past two years.
While a reduction in the number of operating airlines has often been said to be the cause, the real cause is the soaring price of jet fuel.
AIRLINES IN LOCAL AVIATION SPACE
Before Covid-19 there were 7 airlines operating services in South Africa.
That said, fares were lower and it appeared that there was more competition.
In 2019 the South African Passenger Airline Market was contested by South African Airways (which owned Mango Airlines and SAA), Comair (which owned the local British Airways franchise and budget carrier Kulula.com), Cemair, FlySafair, and Airlink.
In 2024 the market is contested by South African Airways, FlySafair, Lift, Cemair, and Airlink.
AVIATION FUEL
Jet A1, the lifeblood of jet aircraft, is much like diesel in its pricing freedom.
Derived from crude oil, its cost tracks the movements of Brent Crude Oil on the global stage.
AIRLINE FUEL COSTS
For airlines, fuel is not just another expense; it represents a substantial portion of a flight’s direct operating costs, making airlines particularly vulnerable to price volatility.
FlySafair reports that approximately 60% of the direct operating cost of its flights is attributed to jet fuel.
FUEL COSTS RISE
The 71% hike in jet fuel prices in early 2022 had a huge impact on the sector.
The onset of the conflict between Russia and Ukraine also played a part in the major price increases that took place.
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IMPACTING SOUTH AFRICA
However, the issue was compounded in South Africa by the closure of local Jet A1 synthesis plants.
The closures necessitated increased imports, translating to frequent fuel shortages at the country’s major airports.
Despite the restabilising of supply, jet fuel prices in South Africa continue to rise.
EXIT OF MAJOR AIRLINE
Comair’s departure, while challenging, was a double-edged sword for surviving airlines.
It allowed them to achieve prices necessary to temporarily weather the rising fuel costs in the country.
However, this led to public perception issues, with airlines viewed as taking advantage of consumers through inflated pricing due to the exit of Comair.
SOUTH AFRICAN AVIATION LANDSCAPE
Today, equilibrium has returned to South Africa’s domestic passenger market.
From the pre-pandemic period to December 2023, the country’s aviation space has achieved a 94% recovery in seat availability.
This is impressive, considering the rising operational costs.
The industry landscape has transformed, with five airline companies still contesting the market but each one flying under individual branding.
HIGHER AIRLINE TICKET PRICES
The new reality for travellers, however, is higher costs of flying, predominantly due to the escalated costs of jet fuel.
Nevertheless, the market has stabilised, with most airlines offering services at sustainable prices while maintaining narrow profit margins.
