Download Airport taxes

Airports Company South Africa
Presentation to the Portfolio Committee on Tourism
6 November 2012
“Airport taxes”
National Treasury requires the following breakdown on air tickets:
Description
Example
Taxes
• Value Added Tax (VAT)
• International departure tax on regional and international
departures
Regulated
charges
• ACSA passenger service charge
• Current - Domestic: R110, Regional: R227, International: R299
• From 1 Sep – Domestic: R116, Regional: R242, International: R319
• SACAA security charge
Non-regulated
charges
• ACS passenger charge
(ACS is a company owned by the airlines associations)
Airline costs
• Fuel surcharges
• Insurance
The term airport taxes are incorrectly used for taxes, charges and
other costs recovered by way of the air ticket
2
South African Airport Sector
‘The Tyranny of Distance’
 Uncommon to have major
population centres so dispersed
 Johannesburg-Cape Town
equivalent to London-Madrid or
Amsterdam-Rome
 Domestic routes dominated by ‘The
Golden Triangle’
 The South African national (and
regional) economy suffers from ‘the
tyranny of distance’ and the three
airports’ role in ameliorating this
problem cannot be underestimated
Source: Mott MacDonald Ltd Analysis
Airport Charges in Perspective
Leigh Fisher benchmarking:
2011 Review of Airport Charges
Johannesburg
 Based on charges effective on 31
December 2010
 24th cheapest out of 50 airports
 ACSA has increased charges by
69.6% since this study due to
recovery over six months of an
annualised 34.8% charges increase
for 2011/12
 Awaiting latest Leigh Fisher
benchmarking
 A further increase of 8% became
effective on 1 October 2012
4
Evolution of Airport Charges
R 300
R 250
35,000
Introduction of prefunding: charges
reduced
30,000
Millions
Price spike
implication of prefunding
Economic Regulation

Lacks predictability,
transparency and
balance between the
regulated entity and the
users

Pre-funding introduced at
commencement of major
infrastructure investment
in 2007

Price spikes inevitable
within current framework

DoT has embarked on
roadmap to improve
regulatory framework
25,000
R 200
20,000
R 150
15,000
R 100
10,000
R 50
5,000
R0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Cumulative investment
Domestic PSC (10% pa increase)
International PSC (10% pa increase)
Domestic PSC
International PSC
5
Economic Regulatory Review
May 2011 amended permission
Promulgated tariff increase
2012/13
2013/14
2014/15
30.6%
5.5%
5.6%
Indicative tariff increase
based on current approach
Current changes considered for the economic regulatory
framework in time for the next Tariff Application (“Permission”
Application):
 Internal dispute resolution (before the regulatory decision) and
Appeals mechanism (following a regulatory decision)
 No overlapping of Permissions – effective Permission of 5 years
 Improved flexibility to deal with uncertainty –

Triggers required for major infrastructure investments
(Planning, Design, Phase 1 construction, etc)

Re-opening of Permission triggers, eg. demand growth,
technological advances, regulatory compliance
 Certainty regarding re-opening of Permission rules
 Capacity of the Regulating Committee
No new capacity investments
Smoothed tariff decrease
2015/16
2016/17
2017/18
-13.4%
-13.4%
-13.4%
If successful –
• Re-assess the “no new capacity”
assumption based on level of understanding
of stakeholder expectations and the impact
of key demand drivers
If unsuccessful –
• Re-assess the “no new capacity”
assumption based on the understanding of
the change within the economic regulatory
framework
6
-5%
Traffic volume
Aug-12
Apr-12
Dec-11
Aug-11
Apr-11
Dec-10
Aug-10
Apr-10
Dec-09
Aug-09
Apr-09
Dec-08
Aug-08
Apr-08
Dec-07
Aug-07
Apr-07
Dec-06
Aug-06
Apr-06
Dec-05
Aug-05
Apr-05
Dec-04
Aug-04
Apr-04
Dec-03
Aug-03
Apr-03
Dec-02
Aug-02
Apr-02
Dec-01
Aug-01
Apr-01
Dec-00
Aug-00
Apr-00
The Real Driver of Traffic Volume Growth
Traffic growth vs GDP growth
25%
20%
15%
10%
5%
0%
-10%
-15%
-20%
GDP
GDP growth is a key driver for traffic volume growth
7
Current capacity
•
Enhanced connectivity - world class
gateways to the country and its
regions
•
Ability to deliver improved customer
service and experience
•
Robust non-aeronautical revenue
base
Million Annual Passengers
60
50
1995
by 2006
40
by 2010
30
Airport capacity is a function of peak hour
capacity (based on demand) and the duration
of the peak
20
10
0
Approximate group terminal capacity
Behavioural changes within the South
African aviation sector could lead to
postponement of future capacity
requirements, i.e. lead to the better use of
current facilities
8
Airport Demographics
Airport
Passenger
throughput
(2012)
Total air traffic
movements
(2012)
Approx. Annual
passenger
handling
capacity
Public parking bays
O.R. Tambo
19 004 000
212 580
28 000 000
16 300
Cape Town
8 576 709
97 935
14 000 000
6 080
King Shaka
(Durban)
5 040 094
55 194
7 500 000
4 500
Port Elizabeth
1 364 976
68 893
2 000 000
900
Bloemfontein
441 954
20 088
600 000
370
East London
681 529
32 587
1 200 000
550
George
575 799
33 479
900 000
415
Kimberley
140 248
12 347
200 000
90
Upington
52 224
7 826
100 000
100
Thousands
Departing passengers from ACSA
Airports per Destination
14,000
13,000
12,000
11,000
10,000
9,000
8,000
Domestic
7,000
International
Regional
6,000
Unscheduled
5,000
4,000
3,000
2,000
1,000
0
2005
2006
2007
Source: ACSA – data per financial year
2008
2009
2010
2011
2012
10
Thousands
Aircraft Landings at ACSA Airports per
Origin
160
140
120
100
Domestic
International
80
Regional
Unscheduled
60
40
20
0
2005
2006
2007
Source: ACSA – data per financial year
2008
2009
2010
2011
2012
11
Thank you
12