Flights in South Africa are expensive because costs have doubled, says Lift CEO
Lift CEO Jonathan Ayache said costs to operate flights have more than doubled since the airline launched in 2020.
He told Classic Business that the local airline industry has yet to recover from the Covid-19 pandemic.
The airline industry is sensitive to shifts in supply and demand and can go from healthy to unhealthy very quickly.
The Covid-19 pandemic saw several local airlines close down, and the number of flights has dropped significantly.
Ayache said the domestic market has only recovered to about 80% of its passenger volumes pre-Covid. For international and regional travel, this number is even lower.
“At an aggregate level, looking at people moving around, the market has not recovered,” he said.
However, with some players re-entering the market and others exiting, there have been notable shifts in the supply of seats which have shifted the balance of the industry, as demand cannot keep up.
Ayache said the industry has not seen the recovery that the rest of the world has because of the country’s macroeconomic situation.
“I think you’re seeing the pressure of interest rates and the lack of disposable income. People and companies are under pressure and trying to curtail spending wherever possible, even if they travel.”
According to Ayache, the recovery has largely come from business travel, which looks as though it has recovered to pre-Covid levels.
He explained that the lag in overall recovery to pre-Covid levels is coming from leisure travel and people visiting their family and friends.
Ayache added that the supply had recovered to the time before Comair exited in June last year.
“There is a lot of pressure on the industry. On top of that, costs to operate flights have more than doubled since we launched,” he said.
“So it’s a fine balance, and that’s the challenge of the industry that we’re trying to manage.”
However, Ayache said he is optimistic about the industry’s future. “I think if we see a stabilisation in the interest rate and those rates coming down or easing. I think that will put less pressure on consumers and boost travel.”
He added that it is also a very seasonal market which gets a “massive boost” from tourists over holiday periods.
This article was first published by Daily Investor and is republished with permission.
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