Airlines on the defensive after Comair’s permanent grounding

Now that Kulula and Comair’s British Airways franchise planes are permanently grounded, airfares are bound to increase, but airlines are rushing to assure potential passengers that the suggestion fares could triple or quadruple in the near future is “alarmist”.

Airfares have been rising around the world on the back of soaring fuel prices triggered by the conflict in Ukraine – and because airlines are looking to improve cashflows as they struggle back from the financial devastation of Covid and its associated lockdowns and restrictions.

ALSO READ: Govt unable to assist Comair as Ramaphosa places blame on ‘limited resources’

Social media was all over airlines like a rash in the past few days, accusing the industry of price gouging, especially ahead of the Youth Day long weekend, when demand for flights rose.

Prices are predicted to rise over the school holidays this year as well.

Fuelling the fire, Moneyweb quoted aviation analyst Guy Leitch as saying travellers could expect to pay a lot more for flights in the near term.

In the article he cited the exit of Comair’s capacity in the market, around 40% of available seats, as well as rising input costs such as fuel as major influences on prices.

Not so, said aviation analyst Phuthego Mojapele. Without Comair, the market is more equalised.

He said: “I have been monitoring airfares since Comair’s grounding and there has only been a fractional movement upwards, if at all.”

He added long weekends and holiday periods were usually high demand and lower fares are always sold out well in advance.

“This means it could look more expensive than usual but, in fact, it is not. It is just a reflection of demand-side spikes and the concomitant last seats on the aircraft, which are usually priced higher.”

Airlines, like hotels, price dynamically and depending on the airline, cheaper prices may be available well in advance of a flight, with the price curve heading upwards the closer it gets to the departure date.

ALSO READ: Comair’s wings permanently clipped, after failing to secure additional funding

FlySafair chief marketing officer Kirby Gordon told Moneyweb that since the news of Comair’s permanent grounding went public, the airline has seen an uptick in flight prices.

This is expected to be more pronounced during the school holiday periods.

“We are price takers, so pricing is always as a result of supplyand demand forces in the market and when one [is] approached with a situation like we are at the moment, where supply is constrained relative to demand, we are going to see increases in prices. That is only natural,” he said.

“We may well see some higher prices come the end of the month, when we are looking at school holidays and constrained availability on those flights.”

Lift’s chief executive, Jonathan Ayache, said while Comair may have had 40% of the seats available in the market, what really should be questioned is how many of the seats it managed to sell.

He said: “Pushing out capacity does not mean you make the sale.” Ayache also questioned where the stories of price gouging came from.

READ MORE: Did Comair know it was going to suspend flights while selling discounted tickets?

He trawled the internet and said: “I can book a flight tomorrow Johannesburg-Cape Town for R1 250 and the return flight for R600.”

The Competition Commission met airlines after the previous Comair grounding, by civil aviation, and sought cooperation from all role players not to dramatically increase fares.

Mojapele is of the opinion that airlines have taken heed. Gordon said the budget carrier had not adjusted its fare levels nor its dynamic pricing model.

He added: “With the possible exception of the public holiday this week, we’ve been going through a low period and we’ve not always been able to charge up to our highest fare classes.”

Comair’s demise did not make a significant difference in the market, according to Gordon, while both Lift and FlySafair said the market is still recovering and remains well below pre-Covid demand levels.