Good news on airfares

Mango CEO Nico Bezuidenhout said yesterday, 9 June 2009, that the strengthening of the rand over the past couple of months should mitigate the near US$20 a barrel increase in the oil price during the past few weeks. Bezuidenhout expects the oil price to continue rising as the global economy moves to recover from the devastation of the past 12 months. He added that South African airlines are better positioned to weather the vast global losses in aviation, buffered by a packed sporting calendar.

“A strengthening rand bodes well for domestic aviation,” said Bezuidenhout. Much of an airline's operating cost outside fuel is also priced in the US currency. “As we have seen last year when oil prices hit all time highs, operational efficiencies in a low-cost model allows substantial buffering in the cost of air travel. Mango's business model was proven during this time and the airline is now well positioned to ride out the recession.” Bezuidenhout added that while overall air travel has declined sharply, in some months up to 20% year on year, Mango has maintained high average load factors. “Our fleet still operates at over 85% capacity,” he said.

The expected influx of foreign visitors and expected spike in domestic travel over the period June 2009 to July 2010 also bodes well for aviation in general as an additional layer of recession proofing a strained industry. “We expect low-cost airlines to fare particularly well, considering the economy, as a large influx of sport tourists are expected during the next 12 months.” He noted the British and Irish Lions Tour, the Tri-Nations, the Confederations Cup and next year's 2010 celebration of the beautiful game as powerful industry stimulants.