Traffic at South Africa’s airports picking up

Domestic travel at airports run by Airports Company South Africa (ACSA) has recovered to 56% of pre-Covid-19 traffic, while the regional and international segments are still lagging behind.This is according to a stakeholder report presented by ACSA CEO Mpumi Mpofu on Monday.The domestic segment currently accounts for 83% of ACSA&#039;s total traffic in the current financial year. Pre-Covid-19 this segment accounted for 70% of total traffic. "Regional airports saw a faster recovery, largely due to traffic at these airports being driven by leisure and &#039;visiting friends and family&#039; traffic," states the report.On the other hand, the meetings, events and other business travel segments have been impacted the most due to reduced travel budgets and the rapid development of virtual meeting and conferencing platforms. These events and business travel segments - including government travel - accounted for over 50% of the traffic at ACSA&#039;s three international airports (Johannesburg, Cape Town and Durban) before the pandemic.During the financial year ending 31 December 2021, ACSA reported a loss before tax amounting to R924 million compared to a loss of R2.5 billion in the previous financial year. At the same time, an economic impact assessment indicates that ACSA&#039;s total economy wide impact was R22.1 billion in 2020, therefore, during the pandemic, and R72.2 billion in 2019, before the pandemic. It supported 52 498 jobs in 2020 compared to 144 599 jobs in 2019.In terms of a corporate financial plan ACSA aims to implement between 2023 and 2025, it wants to reduce operating expense by R1.8 billion by the end of the 2022/23 financial year, preserve capital and monetise on investment property and international concessions.The capital allocation limits for the corporate plan period remains R1 billion. Refurbishments have the largest capital expenditure allocation and includes the replacement of security detection equipment.ACSA is awaiting approval from the Public Investment Corporation (PIC) relating to a preference shares issuance to raise funding. In the view of aviation expert Desmond Latham, the PIC&#039;s ruling will have a major impact on ACSA&#039;s business model going forward particularly, with regard to cash flow. For Latham, ACSA&#039;s gearing ratio at 26% is "a threat to investors". Anything above 25% is a high-risk investment, in his view.Costs"Cashflow is a big problem. They&#039;ve burnt through most of the cash reserves. The savings projected going forward are largely based on trimming employee costs which implies retrenchments, but will ACSA be allowed to?" asks Latham. "Servicing of borrowing costs are also problematic with some debt payments reaching maturity."As for recommendations in the Zondo report on state capture, the ACSA report states that it is preparing an implementation report in this regard which has to be submitted to government by the end of June this year.The ACSA report also mentions that the conflict in Ukraine continues to put pressure on global oil prices."Rising fuel costs are starting to bite into airlines&#039; profitability as jet fuel accounts for close to a third of direct operating costs. This is adding even more downward pressure on airlines&#039; profitability already impacted by low demand due the Covid-19 pandemic," states the ACSA report.It expects that this impact could delay the rate at which airlines restore pre-Covid-19 capacity. Increased cost of living, could also undermine consumer demand for air travel."We have to closely watch the impact of the war in Ukraine&#039;s impact on oil and jet fuel prices. A chorus of leading global airline bosses are warning that those costs will have to be recovered. This will be through increases in fares, but there is very little room for this," says aviation expert Linden Birns of Plane Talking."There will be increased pressure on ACSA and other infrastructure and services providers as well as regulators and governments to make further concessions on charges and tariffs to ensure air transport stays affordable and sustainable. These factors will determine the pace at which the air transport and allied sectors recover from the devastating effects of Covid-19 and the associated restrictions imposed on them."-Fin24/Bloomberg

Traffic at South Africa’s airports picking up

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Namibian Sun 2025-04-29

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Traffic at South Africa’s airports picking up

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Namibian Sun 2025-04-29

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