With Comair’s Kulula and British Airways aircraft out of the skies, domestic air travellers should be prepared to pay three to four times more for their flight tickets.
This is as airline capacity has reportedly dropped 40% since Comair’s business rescue practitioners announced plans to liquidate the airline.
Speaking to Moneyweb, SA Flyer editor Guy Leitch says Comair’s exit, coupled with the type of market structure the industry operates in as well as spiralling operational costs, could have an enormous impact on ticket prices.
"Airlines operate on what is called dynamic seat pricing or yield management systems and they structure their prices according to the demand, and obviously, on a particular flight they can vary the prices literally minute by minute," Leitch says.
"So that’s going to force the prices up a huge amount and on top of that, we’ve had enormous price increases because of the fuel price increases, so although there’s going to be a removal of 40% of the supply, the demand is virtually going to drop off while a new equilibrium is established.
"A few years ago, you could buy a seat to Cape Town from Joburg for about R800, now it’s costing up to three times that much, four times that much, even right now, this weekend," he adds.
Holiday peak
FlySafair chief marketing officer Kirby Gordon tells Moneyweb that since news of Comair’s permanent grounding went public, the airline has seen an uptick in flight prices, adding that this is expected to be more pronounced during the approaching holiday season.
"We are price takers, so pricing is always as a result of supply and demand forces in the market and when one [is] approached with a situation like we are at the moment where supply is being constrained relative to the demand that is out there, we are going to see increases in prices, that is only natural," Gordon says.
"We may well see some higher prices come to the end of the month when we are looking at school holidays " and very constrained availability on those flights.
