Flight costs to remain unchanged despite drop in oil price

By Staff Writer
Despite the recent decline in the price of oil, the cost of flights is unlikely to change as the aviation industry continues to recover from the fuel hikes of previous years.
 
Over the past three years the cost of domestic flights in South Africa has risen between 20 and 40% according to a report. This is in large part due to the high cost of oil in the past, which hit the airlines' business hard.
 
In order to recover from past price increases, the airlines are unable to reduce the price of airfares in spite of the continued decline in the global price of oil.
 
"In previous years it (the oil price) was sitting at $120 (R1 404, 21), and we're still recovering from those losses. We are not at a position where we have recovered from those losses," said Kirsten King, Comair financial director.
 
Spokesman for Mango Hein Kaiser added: "The aviation sector remains under pressure due to excess capacity in the domestic market and no real growth in traveller numbers. Add to this the economic pressure on consumers, as well as the weakening currency, and one can expect that airlines will remain under pressure for some time to come."
 
Kaiser explained that in an environment where currency and fuel prices are stable and other input costs remaining on a similar level regular flyers could expect stability in the cost of air travel. "However, the benefit of lower fuel prices are offset against the weakened currency given the fact that a substantial portion of an airline's cost base is billed in US Dollars. Dependent on the fleet of any particular airline as well as the reigning cost of fuel, energy represents between 30-40% of an airline's input cost."
 
Oliver Wigdahl VP Commercial of new entrant FlySafair explained that fuel is a significant operational cost component of flying, however, if oil prices come down, eventually aviation fuel costs will come down too.
 
"When aviation fuel costs come down, we are able to pass this on to the public in the form of a greater proportion of our seats sold at competitive rates. As more new entrants come into the domestic aviation market, and capacity increases, then inevitably average prices will fall. By maintaining a competitive cost base, without compromising on safety, we are able to offer sustainably lower average fares," said Wigdahl.
 
Air travel still popular
 
Despite the expense of flights air travel still appears to be a popular form of travel. Over the festive season, FlySafair claims it got 100% load factor for their Johannesburg to Cape Town route and 97% for their Johannesburg to George route. Mango had a 90% load factor over this period. Wigdahl highlights that since FlySafair became operational in October 2014, the airline has already transported 125 000 passengers.
 
While flight prices are not declining, consumers can still find deals when booking flights in advance. For example, if you are planning to go away over the Easter weekend, now is the perfect time to book flights at a discounted rate. For example, FlySafair has departure flights available from as little as R799,94 leaving on Friday 3 April with return flights from R1 048,94 on Monday 6 April*.
 
Justmoney's airline purchase tips:
 
1.Before booking the first flight you come across, shop around for the best price. There are several comparison websites available that find the best deals for you, such as SAFlights.co.za and Domestic Flights South Africa.
 
2.Remember that there can be additional costs. Buying food or drink from the inflight service can be costly. So, if possible, wait to buy something until you have landed.
 
3.Keep to the luggage weight limits. If you exceed the allotted weight, you will be liable for a fee to cover the excess weight. Low frills airline FlySafair's ticket prices do not include baggage costs, for example, and if a traveller wishes to have a bag, there is a cost of R150 for luggage up to 32kgs, with an added charge of R250 for additional luggage. There's no charge for hand luggage as long as it doesn't exceed 7kgs and can fit in the overhead compartments.
 
*Prices accurate on date of publication, 9 January 2015

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