Now airlines face probe of ‘hidden' fares

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The probe, to be announced by Trade and Industry Minister Rob Davies in the next two weeks, is believed to focus mainly on fuel surcharges and other airline charges. The airport taxes passengers pay include up to seven regulated and nonregulated charges.

The investigation is likely to add to pressure on the industry, particularly domestic carriers, which are already under pressure from the public due to perceived high prices during the World Cup and are the subject of a Competition Commission investigation.

Tourism Minister Marthinus van Schalkwyk alluded to the possibility of a probe in a statement released late yesterday in which he said the lack of transparency was hurting the tourism industry.

“As a government, we are taking a number of steps to grow the South African tourism industry and expand its job-creation potential,” he said.

“I consider the lack of transparency in airline pricing structures a barrier to our goals. In order to increase the South African tourism industry's contribution to economic growth even further, we must facilitate travel rather than levy hidden taxes.

“Members of the public have a right to know what they are paying for. This matter has been brought to the fore as a result of questions about airline ticket prices during the World Cup later this year, but it is also vital that we investigate it in the context of our tourism industry's long-term sustainability and growth.

“The Minister of Trade and Industry shares the tourism industry's concerns ... and we agree that current airline pricing practices and policies may be in breach of the Consumer Protection Act. This matter is being considered as part of the Industrial Policy Action Plan, and Minister Davies will be making further announcements … within the next two weeks.”

The issue of “airport taxes” has long been a bone of contention, particularly between the airlines and Airports Company SA (Acsa). While the airlines claim a surge in state or regulated charges is hurting the industry, Acsa points out that a large part of “airport taxes” is the airlines' own charges.

Nimrod Zalk, trade and industry director-general, has also in the past called for a probe.

The seven taxes passengers pay are: Acsa's passenger service charge, which varies from R42,98 a domestic departure to R118,42 an international departure; an R11 South African Civil Aviation Authority compliance charge; an air passenger tax of about R150; VAT; airline collective Aviation Coordination Services' charge of up to R21; an aviation insurance premium, applied by individual airlines; and airline fuel surcharge. The charges levied by airlines are nonregulated.

Van Schalkwyk said a lack of transparency in the way airfares were quoted and published, and inconsistent cancellation policies made it “very difficult for consumers to compare flight prices”.

This damaged SA's competitiveness as a tourism destination, he said.

The probe could lead to a revision of legislation to compel airlines to include nonregulated charges in their core airfares.

Source: Business Day