• Wed. May 11th, 2022

Figures from the Airports Company South Africa (Acsa) show that the airline industry is recovering very slowly from travel restrictions imposed by governments around the world over the past two years.

Importantly, the number of flights taking off and landing at South African airports proves that international travel has not improved much – and, by implication, neither has international tourism.

“The aviation industry has been one of the industries hardest hit by the Covid-19 pandemic. The various lockdowns we have experienced and the travel bans that have been instituted have had a significant impact on the entire aviation sector,” said Refentse Shinners, Head of Corporate Affairs Group at Acsa.

“However, we are seeing a steady recovery, but global projections suggest we will only see a return to pre-pandemic numbers in 2025.”

She adds: “We recorded an increase in the number of flights compared to our previous financial year. In the fiscal year ending March 2021, we had a total of 199,662 air traffic movements, and we are currently on 245,436 air traffic movements 11 months into fiscal 2022.”

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If the trend continues, Acsa will see almost 270,000 aircraft using its airports during the current financial year, an improvement of around 35%.

Acsa CEO Mpumi Mpofu said in her overview of the group’s latest annual report that traffic volumes remained significantly below pre-Covid-19 levels throughout the financial year to the end of March. 2021.

“The total number of departing passengers fell by 78.2% to 4.5 million (20.9 million the previous year) with domestic passengers down 72.3% to 4.0 million, regional passengers down 92.9% to 37,189 and international passengers down 92.9% to 412,322 (2019). /20 years: 5.8 million).

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However, passengers using non-scheduled flights rose by almost 70% to 97,109 due to repatriation flights which were allowed to operate during the lockdown.

In total, air traffic movements have decreased by almost 60% in the year to the end of March 2021.

This ruined Acsa’s financial performance.

Usually one of the few South African state-owned companies to report stable profits – thanks to operating the country’s main airports and collecting high rents from traders – Acsa suffered a loss of almost 2.6 billion rand in the year to March 2021. It reported a profit of nearly R1.4 billion in the 2020 financial year (which was already affected by Covid-19).

International fights

An analysis of recent figures Acsa provided in response to questions from Moneyweb shows that international air traffic movements are still very low compared to normal levels.

Acsa notes that the global travel restrictions imposed by Covid-19 have continued to pose “serious challenges” to the resumption of air traffic. He estimates that global traffic in 2022 will be up to 50% below pre-pandemic levels.

“Countries that have achieved high immunization rates are showing signs of recovery. However, a lasting recovery in global traffic will only be achieved with an acceleration of vaccination campaigns,” notes Acsa President Sandile Nogxina in his statement in the latest annual report.

“The aviation industry has been one of the sectors hardest hit by the pandemic as it triggered a complete market collapse at the start of the pandemic. Although there has been a gradual market recovery, it is tenuous and uncertain, a situation that will continue until large-scale global vaccination is achieved.

“The collapse in demand for air travel has been largely driven by public policy as governments around the world have implemented travel bans and border closures as part of containment measures to curb the spread of the virus. virus,” he said.

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The numbers support his view. In the 12 months to March 2020, Acsa reported 76,824 international air traffic movements, which fell to just 20,457 in 2021.

He has since recovered, but only marginally. Over the past 11 months, international flights have increased to 32,372 air traffic movements. This is still more than 50% lower than normal levels.

“Air travel, by its nature, involves people from all over the world meeting in close proximity and with multiple points of contact. These factors not only represent inherent risks, but also have a significant impact on the sentiment of potential passengers towards air travel,” says Nogxina.

Acsa points out that the International Air Transport Association (Iata) estimates that airlines will lose $314 billion in revenue this year as revenues fall 55% from normal pre-Covid-19 levels.

Long road

Acsa’s revenue decline of nearly 70% (to R2.2 billion in 2021 from R7.1 billion in 2020) indicates that the road to recovery will be long.

“Multiple lockdowns impacted revenue the most due to lower passenger numbers and aircraft movements that created massive revenue losses year-to-date,” management notes.

Aeronautical revenue – items such as landing fees and services paid by airlines – fell an ‘unprecedented’ 78% to R810 million in the last financial year, from R3.7 billion. the previous year.

Without passengers passing through airports and families bidding farewell, non-aeronautical revenues have also shrunk. Essentially, Acsa was unable to collect rents from retailers in what are essentially its malls at airports when they were not allowed to trade.

Non-aeronautical revenue decreased by 60% to R1.3 billion (2020: R3.4 billion) due to reduced passenger numbers and retail service offerings due to lockdown measures.

“Retail has been badly affected due to the forced closure of all retail tenants during the hard foreclosure, except those providing essential services,” according to Acsa’s annual report.

As Shinners mentioned, full recovery of the South African airline industry is only expected by 2025. Figures suggest full recovery hinges on international travelers returning with their fat wallets full of hard currency.