Retailers have warned that hesitation from travellers will keep growing and flatten demand if there isn’t a correction to price hikes soon. For long-haul routes, however, that will depend on how quickly airlines bring back capacity on priority routes.
Retailers have reported price hikes of up to 20% on some of SA’s most popular long-haul routes in recent months, which they attribute to major airline seat capacity constraints post-COVID-19. Airlines attribute them to the hike in the oil price due to the Ukraine conflict
Agencies say they are struggling to find seats on flights to Dubai, London, Atlanta and New York out of South Africa.
On the domestic front, increases on domestic airfares have been about 15%. Fewer seats between Cape Town and Johannesburg are another challenge following Comair’s collapse.
Priority routes
Vanya Lessing, Sure Travel CEO, said routes to the UK, Europe and US were a priority for business travellers. Also, the Johannesburg-Cape Town route, another strategic route for business and tourism, was currently undersupplied, she said.
Mauritius, Zanzibar and countries with relaxed visa requirements for South African passport holders are some of Sure Travel’s most popular leisure routes at present. Lessing said sales were also being negatively affected by flight cancellations (due to staff shortages at airlines and airports) and she described visa wait times as critical.
Sandra Engelbrecht, Head of Operations at Carlson Wagonlit Travel, identified the UK, UAE, and the US as the brand’s priority routes.
“Durban and Cape Town are generally fully booked. To Dubai, London, Atlanta, and New York, capacity is limited due to a lack of seat availability. African carriers have also reduced schedules significantly, making passengers’ planning in advance a necessity. Once the pax is in a country, we see further challenges with continuous airline schedule changes,” Engelbrecht said.
CWT reported increases of around 20% on long-haul airfares. Although, said Engelbrecht, dependent on the carrier, fare increases had been even steeper in some cases. “We have seen an increase in premier classes being sold with a bigger increase on average fares.”
Hesitation
Lindy Preston, MD of Travel Connections, said all routes were priority, depending on what your client base was. “I believe London and European major cities are where we need capacity, particularly in the premium classes. Flights are so full due to demand, that the lower classes are often not available, hence clients are paying top dollar for the flights. It’s about supply and demand. We have far less inventory than we had pre-COVID-19.”
Preston warned that there was already hesitation from the market already, even though many people were still choosing to pay the higher prices. “Clients are also being constrained as they cannot get appointments to obtain the necessary visas,” she said. “And the chaos at some airports is putting people off travelling right now.”
Slow capacity recovery
Whether governments will act swiftly, or at all, to fix wait times for visa appointments is unknown. However, there was some optimism that the chaos at major international air transport hubs could at least be resolved soon. Lessing said: “Some airports are now putting passenger capping into place to cope with demand, and thus airline seat capacity on certain routes and in certain classes is constrained.”
Preston added: “Slowly, we are seeing more capacity coming into the SA market. But the major airports need to step up to be able to handle the additional volumes. Otherwise, it is pointless, as it has a knock-on effect. I don’t think it will improve until 2023.”
Sue Garrett, GM Supply, Pricing and Marketing at the Flight Centre Travel Group South Africa, said airlines were adjusting capacity where they could. She also noted that only three carriers had announced an official fare alignment in the past six months and that price hikes were mostly driven by supply and demand. Garrett expects that prices will correct as capacity and balance are restored.
“The airlines are managing their inventory to close off on the low yield classes or tactical booking classes due to the high demand, which has a direct effect, ie the higher prices that we are seeing now. In the domestic market, the five carriers that remain in the skies are managing inventory in the same way, which has also resulted in higher fares. In July, we saw a 7% increase in yield across all air, for both leisure and corporate.”
Garrett added: “London was a problem due to the capacity limits at Heathrow. However, Emirates has responded well to this by adding daily frequencies to Stansted airport. Air Mauritius has also responded to the high demand into Mauritius by adding supplementary flights in June, July and October, and it has five additional frequencies in the first two weeks of December. Qantas will have direct operations into Perth by November and is increasing its Sydney operation to daily from October 30. United will also start direct operations between Cape Town and Washington DC in November. The key players to Dubai are Emirates and Qatar Airways.
“South Africans are still travelling! We are seeing ticket numbers hold steady and package holiday bookings are increasing (based on booking count, not only revenue). How sustainable this is, is more the question. I do feel as capacity increases, prices will stabilise,” she said.
For Engelbrecht, demand requires careful balance. “Travel is very fluid. We don’t foresee the demand for travel decreasing, COVID permitting. The visa challenges for South African passport holders are currently a hindrance for upcoming business trips during the high season. Other influences like fuel levies, seat capacity and more fare increases, could cause a drop in demand.”
