FIERCE price wars and a battle for marketshare on saturated routes were preventing South African airlines from making meaningful profits, said John Morrison, Airlines Association of Southern Africa (Aasa) ceo at the association's recent 37th AGM and Congress in Victoria Falls, Zimbabwe.

He said yields had dropped 25% in the past 10 years due to lower ticket prices and escalating costs. SA airline capacity had increased unrestrained and faster than passenger growth, with the only winners being passengers and service providers, who were charging higher tariffs. Consequently, while Acsa was investing R20bn in expanding infrastructure, based on current growth projections, these projections were not sustainable. Morrison said the expectation was that airlines and passengers would fund the programme, but with current levels of profitability of the local airlines, it was unclear how this would be achieved. “The problem for the airlines in the near future is not a weakness in the market, but a rapid escalation in costs that airlines simply cannot afford,” he said. On the R7bn development of the La Mercy airport north of Durban, Morrison said Aasa, Iata and The Board of Airline Representatives of South Africa (Barsa) had proposed to the Minister of Transport that government fund or contribute to this development. They were awaiting a response.