Air transport a major contributor to SA economy but more could be done


The air transport sector supports 472 000 jobs in South Africa and contributes $9.4 billion to the Gross Domestic Product (GDP), but more could be done to maximise aviation benefits, according to the International Air Transport Association (IATA).

Today IATA presented its latest study on the economic value of air transport and tourism to South Africa, and identified opportunities for significant expansion over the next 20 years if key policy reforms are made.

IATA found that in 2017, 20.9 million passenger journeys were made to, from and within South Africa, with aviation and tourism representing $9.4 billion in gross value added. It accounts for 3.2% of South Africa’s GDP and supports 472,000 jobs.

Airlines, airport operators, airport on-site enterprises (restaurants and retail), aircraft manufacturers, and air navigation service providers employ 70,000 people in South Africa. In addition, by buying goods and services from local suppliers the sector supported another 113,000 jobs. On top of this, the sector is estimated to support a further 48,000 jobs through the wages it pays its employees, some or all of which are subsequently spent on consumer goods and services. Foreign tourists arriving by air to South Africa, who spend their money in the local economy, are estimated to support an additional 241,000 jobs. In total 472,000 jobs are supported by air transport and tourists arriving by air.

Over the next 20 years the South African market could more than double in size, resulting in 23.8 million additional passenger journeys, over 372,000 more jobs, and a total of $20.2 billion in GDP by 2037, the Association found.

Under the current trend, the air transport market in South Africa is forecast to grow by 102% over the next 20 years, for an additional 21.4 million passengers (total 42.2 million). Aviation is expected to contribute $19.1 billion to GDP by 2037 and support 797 407 jobs.

IATA identified three areas where government action can enable aviation to continue its growth trajectory and generate even more value in South Africa. The first is reforming harmful policies on immigration, notably the need for visas and transit visas. Alexandre de Juniac, IATA’s Director General and CEO, noted that many examples of visa requirements being eased leading to increased tourism, and said the decline in South African tourism figures was directly related to harsh visa requirements.

IATA believes that taxes and charges are increasing the cost of doing business in the country, especially regarding Broad Based Black Economic Empowerment (BBBEE) and taxing companies for not complying, even if those companies are based outside South Africa (South Africa intends imposing a BBBEE scorecard and obligations on foreign airlines). IATA said that South Africa from 1 June introduced a carbon tax, which it believes will not alter passengers’ travel habits while revenue is not being spent on environmental causes.

IATA said that South Africa needs to undertake a harmonized strategic approach to policy-making with transport and aviation central to economic planning. There have been instances where different government departments contradict each other. For example, the Square Kilometre Array (SKA) radio telescope area in the Karoo is being promoted by the government as a boon to the economy but it requires radio silence yet it has Africa’s busiest air corridor right overhead. Airlines are expected to possibly route around the SKA area, at added expense and travel time.

“The results of the study are a reminder that robust air connectivity unlocks significant economic and social benefits. I call aviation the business of freedom,” said de Juniac. “Air transport creates jobs, facilitates tourism, supports international trade and is an engine of economic activity. With more than 20.9 million passengers departing and arriving from airports in South Africa every year, there is good reason to be proud of all that aviation has achieved here.

“However, while these are robust numbers, we are concerned by the respective Q1 2019 4.4% and 3.6% contractions in the transport and tourism sectors, which reflect uncertainties and diminished confidence. Government policy reforms to promote business, trade, investment and tourism are essential to make the most of air transport to the benefit of the South African people and economy,” de Juniac said.

Recent continental developments also hold promise for South Africa. “The implementation of the Africa Continental Free Trade Area and the accompanying Single African Air Transport Market intended to underpin it, are initiatives that will benefit South Africa and other countries with business and trade enabling policy and legal frameworks,” added de Juniac.

De Juniac said that South Africa is the strongest aviation market in the region, but needs to invest in infrastructure to keep this position. “Despite strengths we have areas of dissatisfaction,” he said, especially with regard to regulations. South Africa should be taking the lead with the new Single African Air Transport Market, as this has the potential to benefit Africa like the European Union benefitted Europe.