With Comair’s liquidation, experts are warning that domestic travellers might pay up to three or four times more for their flights.
This comes after Comair’s business rescue practitioners announced that they have lodged a court application to convert the business rescue proceedings into liquidation proceedings, last week.
The company operated domestic British Airways flights and Kulula was responsible for 40% of domestic airline capacity. Comair’s business rescue practitioners said they had been unable to secure the capital required for the airline to recommence operations. “We did our utmost to secure the funding, but when we were unable to do so had no option to lodge the application. It is an extremely sad day for the company, its employees, its customers and South African aviation,” they said.
According to SA Flyer editor, Guy Leitch, the loss of Comair could lead to ticket price increases of as much as 300% – 400% as per Moneyweb. “Airlines operate on what are called dynamic seat pricing or yield management systems and they structure their prices according to the demand, and obviously, on a particular flight they can vary the prices literally minute by minute,” he said.
“So that’s going to force the prices up a huge amount and on top of that, we’ve had enormous price increases because of the fuel price increases, so although there’s going to be a removal of 40% of the supply, the demand is virtually going to drop off while a new equilibrium is established.”
BusinessTech reported that Economists at the Bureau for Economic Research (BER) said the liquidation of Comair will have a significant impact on the country’s domestic travel market in the near future. “Furthermore, at least in the near term, air ticket prices are likely to spike. As seen with the reduced routes being flown by South African Airways, over time, other operators will fill the gap left by Comair. However, over the short term, higher ticket prices will add to domestic inflationary pressures.”