Committee 2nd Tourism Summit: Day two, Commission one: Unlocking Airlift Barriers for Tourism


18 September 2013
Chairperson: Mr F Bhengu (ANC)
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Meeting Summary

Day two of the Summit was divided into three different commissions, which met in a joint session at the end for a report back and adoption of resolutions.

Commission one dealt with unlocking airlift barriers for tourism. Five presentations followed one after the other, with discussion afterwards.

The briefing by the Department of Transport dealt with implications of the Yamoussoukro Declaration for a national airlift strategy. The Declaration had been intended to strengthen intra-African aviation, through abolishing limiting regulations. There was reluctance among African nations to commit to the principles of the Declaration, and limiting bilaterals were entered into. Challenges were a fear of the unknown and ongoing battles for competitive advantage.

The briefing by the Airport Company South Africa (ACSA) dealt with aviation issues impacting on tourism. ACSA aimed at the development and management of world-class airports. There was investment in local airport capacity. Airport taxes presented a challenge. Future sustainability depended on growth.

The briefing by South African Airways (SAA) dealt with unlocking international and regional airlift for the benefit of South Africa. Air traffic provided one in twelve jobs in the country. There was alignment with national objectives like women and youth, and national tourism assets. Challenges were regulations and finances, and the perception of South Africa as a long haul destination. There was a flexible business-driven business model. Sustainable development was aimed at.

The briefing by Mango Airlines dealt with the role of low cost airlines in domestic aviation. Low prices drove demand, and there could be growth. Contribution to the GDP stimulated economic activity. Mango Airlines had generic awareness campaigns assisted by supermarket chains. It was currently possible to buy an air ticket at Checkers and pay it off over 12 months.

The briefing by South African Weather Services dealt with tourism-climate interactions. Climate change presented a major challenge to tourism. Natural draw cards lost their attractiveness through the effects of increasing heat. Increased air turbulence was foreseen. Vegetation was affected, and the animals that fed on it. Tourism contributed to the problem through emissions. There had to be accurate meteorological information on tourist destinations.

In discussion, it was asked if the Yamoussoukro declaration was detrimental to South Africa, and whether it could be reviewed.  ACSA was asked about landing costs. There was considerable concern about shortcomings in domestic connectivity, and the reluctance of African states to implement South African open skies. SAA was criticised for lack of cooperation with visa issues. Mango Airlines was asked how they managed to keep costs down, whereas SAA was asked why they were so expensive. There was a question about an audit of the carbon footprint of aviation in South Africa, and also about the capacity of aircraft to withstand extreme wind conditions due to climate change.

The report was adopted with the proviso that there was room for further development. It was also decided that the report would be sent to the National Assembly as recommendations, with the understanding that further inputs might be added.

Meeting report

Recap of the first day
Mr R Shah (DA) gave a recap of the first day. The context to removing barriers to tourism growth was outlined. The Minister of Tourism showed how tourism drove economic development, and commented on shifts in the global market and air connectivity. There were briefings on policy and legislative mandates for domestic tourism; the role of the Portfolio Committee; industrial capacity and leadership; the role of arts and culture; tourism development at local government level, and tourism-environment interactions.

Highlights included more resources for domestic tourism. International tourism was not to be neglected, but domestic tourism had to be the anchor. The roles of stakeholders were important. Those who could not benefit from tourism also had to be catered for. The central role of Strategic Infrastructure Projects (SIPs) had been underlined. There had to be joint planning by The Department of Cooperative Governance, the Department of Tourism, and the Department of Arts and Culture, for assistance at the local level.

Introduction by the Chairperson
The Chairperson stated that it was important for South Africans to remember who they were. 1994 had not been the end of the game. Although much had been achieved since 1994, the country was still engaged in transformation. All South Africans agreed to take the National Development Plan forward. It was a great challenge. Competition outside was looking at the country with greed. The economic downswing had placed the developing countries in an uncomfortable position. There was uneasiness among the BRICS nations. South Africans were not living what they had fought for. South Africans had to ask who they were. Wisdom was more important than material gains.

The presentations of the day before had pointed out the necessity of effortless and easy travel for tourists. Custom services, affordability and job creation had been highlighted. Those aspects spoke to the National Development Plan. There had to be good relations between South Africa and tourist destinations. There had to be collaboration to achieve international targets. There had to be engagement without begging. The perception of South Africa as a long haul destination posed a challenge. With regard to jet craft emissions, an end strategy for the country had to be understood. The role of low cost airlines in domestic tourism was important. It could influence the country and the continent.

Briefing by the Department of Transport on implications of the Yamoussoukro Declaration (YD) for national airlift strategy
Mr Zakhele Thwala, Deputy Director General: Aviation at the Department, said that the airlift strategy for the period 2006 to 2011 focused on connectivity, and seamless travel throughout. A competitive advantage for South African operators was sought. There were agreements between countries about frequencies between them. Agreements signed promoted connectivity. The low cost carrier concept was expanded.

The Yamoussoukro Declaration (YD) strengthened regional civil aviation. It liberalised scheduled and non-scheduled intra-African air services, through abolishing limits on frequency of air services in Africa. Limiting bilaterals were an obstacle to getting the best out of the YD. Poor connectivity in Africa was a challenge. There was reduced competitiveness and quality of services on intra-African routes. Air travel costs were high. Air travel had an insignificant impact on the socio-economic development of most African populations. The YD prescribed that operators had to be domiciled. There were different levels of development among countries, and fear of the unknown. There was a battle for competitive advantage and competing regulations.

Briefing by the Airport Company South Africa (ACSA) on current aviation issues impacting on tourism
Mr Deon Cloete noted that ACSA started off in 1994, and was told that it lacked skills. ACSA then got a foreign partner and explored international strategy, within BRICS. ACSA was instrumental in giving facelifts to local airports in the run up to the 2010 World Cup. The aim was to develop and manage world-class airports. There was a hub strategy with the Oliver Tambo airport in Johannesburg at the centre. Transit visa costs were not supportive. There was investment in local airport capacity. Operated airlines provided 75 000 jobs. Gross Domestic Product growth paralleled traffic volume. The question was whether airport taxes were enabling. The Treasury required a breakdown on air tickets. There was a 10-year capital investment plan with stakeholders. R45 million would be invested in infrastructure capacity. Airports had to expand.

Slot coordination was a critical issue. A more robust allocation system was needed. All stakeholders and shareholders responded well. There were continuous engagements. Future sustainability depended on growth. There had to be efficiency to do more with less. Business performance excellence was extremely important.

Briefing by South African Airways (SAA) on unlocking international and regional airlift for the benefit of South Africa
Mr Aaron Munetsi stated that authorities and airlines had different interests with regard to regulating the skies. With regard to open skies under the YD, there were friends and foes. Protectionism was widespread. The authority consisted of the Ministers of Transport and of Aviation, and government departments. The regulators were the Civil Aviation Authority and the licensing authority.

The airlift industry was capital intensive, and a luxury in terms of strategic intent. Yet air traffic provided one in twelve jobs. Upstream and downstream industry benefited. Revenue was in strong currencies like the Euro. Airlift was aligned to national objectives like youth and women. National assets like parks and wildlife were utilised. Airlift intentions were to enhance living conditions. There were challenges of regulations and finances and competition was increasingly furious and robust. There was a focus on core business, which was to create new markets and customers, to exploit new business markets and to enter adjacent markets.

Mr Munetsi referred to the perception that South Africa was a long haul destination. The question was long haul from where. Traveler needs had to be identified, population size and visitor profiles determined. Spending power had to be utilised. It was a matter of transform or perish. An enabling environment had to be created. There was a flexible business driven business model, to liberalise the industry. Growth of jobs in aviation and related industries was aimed at. There was an all of State approach. Airlift was not an isolated activity. The focus was on sustainable development. Transport infrastructure followed economic growth. Stakeholder relations were important.

Briefing by Mango Airlines on the role of low cost airlines in domestic tourism
Mr Nico Bezuidenhout, CEO of Mango Airlines, said that the key to low cost airlift success was simplicity. Lower prices drove demand, and there was growth. Low cost carriers carried 35% globally, and 50% between Cape Town and Johannesburg, locally. GDP contribution stimulated economic activity. Buying fuel benefited other state owned companies. Mango Airlines employed 543 people. There was a catalytic effect on tourism that could create 9 000 jobs. The reduced cost of travel was of benefit to the economy. The Bloemfontein to Cape Town route was opened in 2006. The route had doubled in size in five years. There were generic awareness campaigns that reached 250 000 people per week. Mango was able to market through chain stores like Checkers. People could buy air tickets there and pay them off over 12 months.

Briefing by South African Weather Services on tourism-climate interactions
Professor Themba Dube, of the South African Weather Services, referred to the Tunisia and Davos Declarations, which had anticipated that climate change would be the greatest challenge to tourism in the twenty first century. The year 2009 was the warmest ever in South Africa. There were heat waves throughout the world. There was a lack of knowledge about climate change in Africa, South America and the Middle East, and water scarcity in Africa. Tourist destination choices were affected, as natural draw cards lost their attractiveness. Cape Town summer heat caused fires ahead of the tourist season. Increased air turbulence was expected from 2014. In South Africa, there was an impact on indigenous vegetation like fynbos. Succulents in the Karoo areas were affected. Disappearing vegetation had an effect on mammalian populations.

Tourism was part of the problem, by contributing to emissions. There had been efforts in developing countries in the Caribbean to curb emissions. Weather and climate information had to be used for adaptations. Provincial scenarios had to be developed. There had to be sound meteorological information about tourism destinations. The climate sensitivity of major tourism attractions had to be identified.

Mr Shah asked Mr Thwala if the YD was detrimental to the local industry. He asked what other tool there was. Increased trade in Africa would lower the cost of travel. He asked how the African agenda was to be realised.

Mr Thwala replied that the objectives of the YD had not been reached. Other countries did not want to accommodate South Africa. Most agreements were bilateral. Yet South Africa supported the Declaration.

Mr Shah asked Mr Cloete about the role of the Treasury. Landing costs had not been discussed. Airlines would recover the costs from the traveler. He asked what made up landing costs.

Mr Cloete replied that landing costs were first subsidised by government, and there was sustainability pressure. The allocation of 20% commercial revenues and 80% tariffs restored balance. Landing fees included a parking fee for the airport apron. There would be zero increase in tariffs over the following few years. ACSA did not just build, it optimised. Engineering capacity was created to get the best out of infrastructure. ACSA had commissioned new self-help services. International strategies had to be of benefit at the local level.

Mr Shah asked Mr Munetsi about domestic connectivity. He had to fly to Johannesburg to get to Umtata from Durban. He asked what determined volume. There was a reluctance of African states to implement South African open skies. It could be that they were afraid of South Africa as a big brother figure. The South African Airways (SAA) had shown lack of cooperation on the visa issue. The regime was constraining. The role of The Departments of Home Affairs and International Affairs had to be determined.

Mr Munetsi replied that connectivity was affected by density of demand. The mandate of the SAA was to be profitable. Routes had to be profitable. The SAA did not make money through the Durban to Cape Town route. Mango airlines used smaller aircraft. SAA had to conform to the shareholder’s mandate.

Mr Thwala added that underutilised airports like Umtata posed a challenge. It could be possible for ACSA to take over. ACSA had to lead with infrastructure. The issue of mandates came up in choices of routes.

Mr Shah asked Mr Bezuidenhout what made it possible for Mango Airlines to have low costs. He asked if it was because they did not serve food. He asked how they made a profit. The only simple thing he was seeing was that they did not provide meals. He asked about the size of their operation. He asked why SAA was so expensive.

Mr Shah asked Prof Dube if an audit of the carbon footprint of aviation in South Africa had been done. He asked if the SAA had done that.

Prof Dube replied that there had been estimates of jet craft emissions by the Department of Environmental Affairs. Air quality information system estimates of emissions were being developed. A database was being developed. 100 industries and municipalities cooperated. The next phase would be air quality warnings.
Mr Jeff Mabunda, National Tourism Development Manager, North West Parks and Tourism Board, remarked that tourism authorities were also stakeholders.

Mr Mabunda asked if South Africa was not a signatory to the YD.

Mr Ndabo Khoza, CEO of Tourism KZN, referred to the explosion of the African Air Market. He asked if the YD could be reviewed, and who it was that would ensure that it was for the benefit of Africa.

Mr Thwala replied that the Minister of Transport or the African Union could engage with that.

Mr Mabunda remarked that it took one day to travel from Botswana to Durban. There was minimised connection. Only 10% of South Africans made use of airplane flight as public transport. There were also problems of transport to airports.

Mr Thwala replied that public transport to airports was not being marketed.

Mr Mabunda asked if a new generation of airplanes could withstand weather conditions. He had been on a flight were the captain had said that the wind was 90 km/h, whereas the plane was only built to withstand 60 km/h.

Prof Dube replied that the weather was not normal any more. The Department of Transport had to take issues of aircraft design through international forums.

Mr Paul Bannister, in his personal capacity, noted that the Emirates model had made people to spend time at Dubai. There were economic benefits to that country.

Mr Bannister asked if South Africa was maximising access and egress. Victoria Falls posed a threat to South Africa, as it could take hub traffic away from SA.

Mr Bannister stated that Johannesburg needed a powerful second airport. There was the price creep of low cost airlines. New moves to block new entrants was undesirable.

Mr Cloete replied that there was a need for two Gauteng airports. There were two licenses. The National Development Plan had to inform developments. There had to be certainty about sustainability. Airports had been built that had to be closed down after three years.

The Chairperson concluded that there were crosscutting issues. Intergovernmental relations had to be strengthened. The YD had to be further engaged. South Africa had to up its influence there. There had to be a meeting with the Minister to find common ground, so that key objectives could be reached.

Report back and adoption of resolutions
For a summary of the report back on the three commissions, see the PMG report on commission two.

Following the report back, a DA Portfolio Committee member moved that the Committee be given time to consolidate, as the report would affect other departments. It was moved that the report be adopted with the proviso that there was room for further development. An ANC Member seconded the motion. The Portfolio Committee Chairperson decided that the report would be sent to the National Assembly as recommendations, with the understanding that further inputs might be added.

The Chairperson adjourned the meeting.

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