Tourism Conference, Sandton Convention Centre
29 October 2007
It is indeed a great pleasure for me to be here amongst the top leaders of
the tourism and aviation industry. I am most honoured to join all of you at
this August event. Ladies and gentlemen, it is very clear that the tourism
industry by far has grown to such a proportion that its impact on our economy
is clearly evident and as such government, and industry stakeholders will have
to work in tandem to harness the progress thus made and to continue to make
every concerted effort in strengthening and growing this wonderful sector of
our economy. I can assure you that government is hundred percent in support of
this sector.
It is indeed a fact that people from abroad really want to see this
spectacular country and as such the demand to come to South Africa continues to
grow. On the other side of the coin, we have you, our partners and the most
important stakeholder in this industry who demands that people do come to South
Africa, and there's absolutely nothing wrong with this. We also have the
airlines that in their own right make demands on the routes, which they would
like to fly.
This therefore points to the importance of aligning the aviation
requirements with that of the tourism market. Aviation in South Africa has an
extremely important role to play in achieving sustainable growth and
development for the industry and economy at large. The expansion of air
services both domestically and internationally is a necessary condition for the
development and growth in tourism, business focused traffic and trade
enhancement.
Air travel in South Africa has grown above 10 percent per year over the past
three years, due largely to the proliferation of low-cost airlines following
the deregulation of the industry in the early nineties and the increased volume
of international traffic flowing into the country. This can be evidenced by the
fact that, in 1993, fewer than 12 international airlines flew into South
Africa. However, this number increased to 20 by 1995 and, today, more than 70
international airlines fly into the country on a regular basis.
In terms of passenger growth, between 1994 and 2000, the rate of domestic
growth was pinned at 7, 5 percent compared to the global rate of 3 percent.
Similarly, while global international traffic grew at an average of 7 percent
during this period, South Africa experienced an international passenger growth
rate of approximately 8, 5 percent and as it can be seen in recent figures,
passenger growth has now surpassed the 10 percent mark per annum. In
particular, Airports Company South Africa Limited (ACSA) is handling 16,8
million departing passengers annually and is currently experiencing an annual
growth of 10,8 percent.
We have seen a huge growth in smaller airports, such as Port Elizabeth,
Kimberley and Bloemfontein Airports, which grew by 10,4 percent on average,
reaching total passenger volumes of 1,4 million passengers for the year. The
current consolidated terminal capacity for smaller airports is two million
passengers.
The positive growth in passenger numbers is largely as a result of the
domestic passenger market, which was powered by a stable economy and growth in
Gross Domestic Product (GDP) levels to around four percent
It is precisely for this reason that we had to develop a five-year airlift
strategy which was approved by Cabinet in July 2006. The aim was to put in
place effectively structured regulatory measures in order to increase tourism
growth for South Africa. In particular, this strategy was developed on the
basis of aviation policy directives and as a specific contribution to
Accelerated and Shared Growth Initiative for South Africa (AsgiSA) through:
* greater alignment with the tourism growth strategy and industry
* prioritisation of tourism and trade markets; and
* unblocking obstacles to growth through regulatory mechanisms and bilateral
and multilateral air services negotiations.
In particular, the strategy supports the Millennium Development Goals and
the objectives of New Partnership for African Development (Nepad) to increase
African connectivity and access through the accelerated implementation of the
Yamoussoukro decision.
The overall objective of the airlift strategy is to increase aviation's
contribution towards sustainable economic growth and job creation. This
required the creation and maintenance of an enabling framework within which
both suppliers and consumers of air transport services may exercise reasonable
flexibility and choice.
In particular, the strategy will enhance the prospects of South Africa as a
preferred air travel destination and to synchronise the basis for bilateral air
services negotiations with other priorities.
It also provides specific guidelines for various unique markets with
emphasis on the needs of intra-African air services and aims to improve the
regulation of particularly the supply-side of air transport services.
My department also went on to develop an Airlift Implementation Plan, which
provides a clear framework and capacity targets to be met. It is prudent to
note that whilst this plan was being developed that work continued and the
Department of Transport continued in having bilateral discussions and
negotiations in order to address increasing capacity demand. We therefore
believe that the airlift strategy will promote the provision of adequate air
service capacity and infrastructure to cater for the projected growth in air
movements within South Africa and between South Africa and its key
international partners.
The demonstration of this fact has been the entry of new foreign carriers
including Delta, Thai Airways and Virgin Nigeria buoyed international passenger
arrivals. Last week Singapore Airlines successfully launched the first A 380
commercial flight from Singapore to Sydney. In line with the anticipated demand
and large volume of passengers, which the A380 Airbus carries, ACSA has already
put in place the infrastructure in the form of five A380 parking bays located
on the Echo Apron at O R Tambo International Airport.
The demand in international traffic is set to continue at South African
airports, with the Department of Transport actively engaged in dialogue with
Canada, the Republic of Korea, the United Kingdom and a number of other key
countries as identified by airlift strategy and the implementation plan.
The implementation of our strategy will yield a significant increase in the
number of passengers moving through ACSA network of airports. With passenger
traffic estimated to be in excess of 45 million passengers a year by 2012,
Airports Company South Africa (ACSA) will be spending R19,3 billion on
infrastructure developments at its network of ten airport over the next five
years. This investment is also meant for the new airport at La Mercy as part of
the Dube Trade Port in Durban. It is our intention to ensure that we provide
infrastructure capacity ahead of demand.
The Air Traffic and Navigation Services Company (ATNS) has also worked
tirelessly to improve our airspace safety management. This has included the
investment of more than R200 million for the renewal of terrestrial
aeronautical navigation systems and the replacement of existing older radar
systems in certain areas of South Africa.
Efficient airports and effective airspace management are also critical to
future development of air transport. Three projects aimed at addressing air
transport infrastructure are currently underway, namely: The Air Freight
Logistics Project, the creation of a National Airports Development Plan and a
project aimed at the possible establishment of an independent slot co-ordinator
for South Africa.
The principle of "fair and equal opportunity" enshrined in Bilateral Air
Services Agreements will be applied in cases of slot-constrained airports with
a view of achieving maximum economic benefits within a pro-competitive
environment.
We therefore believe that the Airlift Implementation Plan will respond
effectively to the challenges faced by various economic regions of the
world.
In order to achieve the best fit per region, the Department of Transport
will continue to seek the input of all major stakeholders. This will include
all relevant governmental departments, South African registered airlines and
the foreign operated airlines prior to seeking a mandate for the engagement of
all bilateral negotiations. Given the importance of this process, the span of
discussion engaged upon includes the tourism bodies and other aviation
participants. We firmly believe that we have to work together in other to
achieve a tacit and sustainable result for this industry.
The window of opportunity is now, whilst we are triumphant in the sporting
arena, the country engaged in what could be perhaps the largest construction
boom ever experienced, strong economic growth and the 2010 Federation of
International Football Association (FIFA) World Cup event in sight. We have to
take advantage of the current situation and maximise the results. In
particular, I'm glad to announce that the Department of Transport has formed a
task team to co-ordinate an air transport operational plan specifically for the
2010 World Cup.
For the past five years, we have also embarked on the implementation of a
comprehensive aviation security strategy. The nucleus of this strategy was the
development and approval of the National Aviation Security Plan (NASP, a
requirement by the International Civil Aviation Organisation (ICAO). We have
been able to use this plan to ensure that we comply with international aviation
security standards.
Distinguished guests, let me implore upon all in the aviation fraternity to
engage on an expansionary strategy. Expand your routes. It's the only way in
which we can achieve any tangible growth. So in essence perhaps it would be
incumbent to capture the more salient points derived out of the Airlift
Implementation plan and categorically state that we are going to be extremely
robust in our approach towards ensuring that airlines make use of frequencies
already allocated.
Historically, and the analysis conducted whilst drafting the plan, found
that a number of airlines who have previously been awarded route rights, have
as yet not really utilised such capacity. The fact is that we have at least a
fifty percent under utilisation of available capacity, which is contained
within the formal framework of bilateral air service agreements. If indeed we
believe that we have a tourism boom, it really is only half of what we could in
theory be experiencing.
In order to address part of this problem, the principle of 'Use it or Lose
it' will apply. Hence we have already commenced within the ambit of the
International Air Services Licensing Council to hold hearings and where deemed
appropriate the Council is withdrawing unused frequencies from airlines. These
frequencies are then made available to other airlines that wish to make use of
them.
The same applies to airlines who withdraw from routes, as per the
International Air Services Licensing Act, should such frequencies go unused,
then the process of holding a hearing will proceed. And based on the outcomes
of such hearings these frequencies may be withdrawn. The message is clear, if
you are in possession of frequencies, use it.
The markets identified by both the Department of Transport and Department of
Environmental Affairs and Tourism (DEAT) have been included in the Airlift
Implementation Plan and I am pleased to announce that we are in discussions
with a number of countries, with a firm view of reaching an agreement, which in
effect would provide newfound capacity. I have alluded to the world cup event,
and as we all know that the South Americans are a soccer fanatical continent,
yet we only have one South African carrier flying to Brazil. Why not Argentina,
Paraguay, Chile, Uruguay? I am most certain that we have an untapped market
here.
We are serious about increasing airlift. Such a move of having entry points
at other parts of the country will inevitably require an increase in domestic
connectivity and I am sure we all can once again applaud the tremendous job
well done by the low cost carriers in our country. The positive growth in
passenger numbers is largely as a result of the domestic passenger market,
which was powered by a stable economy and growth in GDP levels to around four
percent.
Passenger demand, on the back of strong economic performance, is largely
driven by the entry of low cost carriers into a market where a growing
proportion of the population can now afford air travel.
There is still scope for more growth in South Africa's low-cost airline
industry. This is despite the launch of South Africa's third low-cost carrier,
Mango, during the peak holiday season last year. South Africa's three low-cost
carriers, Mango, kulula.com and 1time, enjoy about 30 percent market share.
They are vying to increase this figure and South Africa is swiftly joining the
global community in offering options for cheaper flights. My department views
the low cost carriers as an important part of the air travel model and as such
have included in its current strategic plan the objective of enhancing low cost
carrier infrastructure and support supply. I believe that we have to tailor the
infrastructure for the market.
In line with our airlift strategy, we will also continue to manage the
liberalisation of our skies to South Africa, in order to enhance growth within
the aviation and trade sectors of the economy. Liberalisation of air
transportation is one of International Air Transport Association's (IATA) major
campaigns around the world and Africa is coming behind in this area.
Globalisation is moving the industry from bilateral agreement to multilateral
and open skies agreements. The Yamoussoukro decision, which we all know has not
really materialised into a tangible result and still to liberalise the African
airspace and integrate African carriers.
This decision is yet to be fully implemented even when African States claim
they all subscribe to the treaty. At the African Union Ministers of Air
Transport meeting held earlier this year, the Ministers have passed a
resolution, which makes the African Civil Aviation Commission (AFCAC) the
Executing Agency for the Yamoussoukro decision. The underlying intention here
is to ensure that this body expedites the process in a structured way and
ensures that all States subscribe to implement the Yamoussoukro decision. South
Africa is fully supportive of AFCAC and will do everything within its power to
assist AFCAC in achieving its objective.
To expedite the implementation of this very important element of our air
transport system, the SADC Ministers for Transport tabled this matter for
discussion at the recent SADC Transport Ministers Meeting. SADC States are
aware of the vast liberalisation of aviation policies globally, and I am sure
that these countries will work in the best interest of the industry and in a
managed process adapt to the implementation of the Yamoussoukro decision.
Whilst we are jointly focussed on utilising aviation as a catalyst to
economic growth, it is equally incumbent on all of us to recognise that a new
dynamic challenge has approached this industry in the form of aircraft
emissions. Air transport is currently in the world spotlight with regards to
environmental impact issues flowing out of aircraft engine emissions.
The environment is a critical issue and the aviation industry has been
working on progressive improvements, especially in the design of aircraft power
plants. The fuel efficiency of a modern commercial aircraft is similar to that
of a small sized motor vehicle, in that the fuel efficiency is 3, 5 litres per
100 passenger kilometres. This level of consumption is set to decrease with the
introduction of the new generation of aircraft being currently produced. It is
estimated that these aircraft will consume less than three litres per 100
passenger kilometres. Irrespective of the advances being made by the aviation
sector, the fact remains, aviation indeed does account for three percent of
total emissions generated.
It is widely known that the European Union is quite inclined to implement an
emission-trading scheme, which seeks to impose a certain amount of taxes to the
polluting airlines. If this action is taken, it basically implies that so long
as the airlines have the money to pay for taxes, they can continue to pollute.
This is certainly not a solution, and as such has been rejected by the majority
of contracting States at ICAO General Assembly on the grounds that a
sustainable solution was necessary rather than imposing taxation.
It is my view and I am sure that you all will concur, that it is
unreasonable to believe that the right way to limit emissions is to discourage
flying! or by simply imposing punitive taxes or constraints on industry
growth.
South Africa like the majority of contracting States believe that the
inclusion of air transport under the banner of emissions trading within a
broader international solution is the most effective and economically efficient
mechanism for dealing with carbon dioxide (CO2) emissions from air
transport.
We support a long-term strategy driven by ICAO to limit air transport's
climate change contribution based on robust science, sound economics and
well-developed policy instruments.
I assure all of you that in advancing South Africa's aviation interest,
which has a direct correlation to the growth and expansion of tourism, the
Department of Transport will apply a balanced approach in air transport
development for the country. We are all ambassadors of this great country and I
am sure that our every action is in the best interest of our beloved land.
Let's together ensure that we push the window of opportunity wide open.
I wish this conference a great success. I'm sure that you will all benefit
from the discussions and find new opportunities for co-operation, which will
further strengthen and advance both the aviation and tourism industry in South
Africa.
I thank you.
Issued by: Department of Transport
29 October 2007
