Guiding consumers since 2009

FlySafair facing possible fare increase in 2016

By Jessica Anne Wood

Managing to top the polls in December, and in fact for all of 2015, as the most on-time airline in South Africa, according to Kirby Gordon FlySafair vice president for sales and distribution, the low cost airline has promised to maintain their modest pricing structure, despite slight possible fee increments.

Following on the heels of the festive rush, Gordon noted: “People want to get to where they want to be, when they want to be there. I think a trend that we all noticed, retailers included, was the very last minute nature of bookings. Customers were certainly booking flights later this year than before, and that obviously has an impact on us too.

“Then I think the other major thing was just this tendency to rather fly than drive or take alternative forms of road transportation, which was great to see. Just shy of 15% of the customers on our December flights had never been on an aircraft before which is just really awesome.”

This was largely as a result of the supply and demand principle as Gordon outlined, “in February 2015 Travelstart.co.za conducted comparative research and found that our entry to the market had reduced fares on routes we operate by as much as 39%. The same sort of trend emerged when we began to operate new routes to Durban and East London in October 2015.

“Weekly seat capacity in South African Domestic Aviation increased to almost 400 000 seats a week, which is a considerable increase against years before – unfortunately the industry did not see a mirrored increase in demand. As a result, using the old laws of supply and demand, when the supply out-weighs the demand, the price drops, which was certainly the case in 2015.”

Price increase margin 

This year, however, the inverse is expected as the airline is affected by external factors like the Rand/Dollar exchange rate and the price of oil.

“As I’m sure you’re aware, the price of Brent crude oil hit an 11 year low yesterday, which would be amazing news for us had it not been for the very weak exchange rate against the dollar which erodes that saving. Forty percent of the cost of operating a flight is fuel, so if the price of fuel goes up, we can expect flight fares to rise accordingly. If the rand weakens further against the dollar and the oil price rises, this impact will be amplified,” stated Gordon.

At this stage it is challenging to determine the exact increase, as the macro-economic changes (as mentioned above) are still fairly unpredictable.

Gordon mentioned, however, that some of the airlines competitors have indicated that they are “under-pricing some routes by 15% to 20% so we could see a market correction within those realms.”

Best time to book a flight 

You will always get the best price if you book as far in advance as possible.

“The first seats on a flight always go for the best price and as the aircraft fills up, the seats become incrementally more expensive. You want to be the first to book on a flight. I would recommend that people try to book as far out as six weeks before a flight and maybe more for the very busy holiday periods and long weekends,” Gordon suggested.

The low-cost airline has publically promised to hold out for as long as they can on fee increases. “We pride ourselves on very tight cost controls and will continue to keep that remaining 60% of the cost of operating a flight as low as possible to ensure that we can mitigate as much of the fuel price increase as we can.

With regard to exactly what percentage the price of oil in SA will rise is a major question and one that our economists are probably better poised to evaluate,” explained Gordon.

He concluded by saying that a slow adjustment is all businesses can hope for at this stage, as increases are inevitable. This is also something that we as consumers, with the current rising cost of living, must become accustomed to going into 2016. 

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