DINESH GOVENDER: Local flight price increases could affect coming holiday season

At the end of November 2021, after two years of restricted travel, travellers worldwide were preparing to pack their bags and board a plane for the holidays. Then the Omicron variant of Covid-19 was detected and the travel industry, once again, descended into chaos.

Disappointed SA travellers and travel industry partners who had already faced cancelled flights and travel bans to and from key markets suffered even greater inconvenience as the variant was incorrectly reported to have originated here.

So, it comes as no surprise that this year people are hungry to travel and make up for lost time more than ever. But other factors now stand in our way. Ahead of the upcoming holiday season, our data teams have collated insights about the South African travel landscape, specifically looking at pricing and availability of local flights.

Trends affecting local flight travel

The desire to travel is returning to pre-pandemic levels. Yet costs are climbing, with higher jet fuel prices and fewer local flight options. This pent-up demand, rising input cost and reduced supply have all contributed to an increase in local airline ticket prices of more than 50% since the start of 2022.

Revenge travel has emerged as a distinct post-pandemic trend. Globally, people are returning to travel at extraordinary rates. Our analysis of Discovery Bank customer behaviour shows that spend on travel has increased by 268% compared to 2020.

Enviable social media posts celebrating the European summer were something of a giveaway. We’re now noticing an uptick in bookings for the December holidays to popular international destinations and demand for local air travel is growing rapidly, approaching pre-Covid-19 levels.

However, Comair’s liquidation has resulted in a 40% loss of local flight capacity. Meanwhile, airlines like SAA, FlySafair and Lift have applied for licensing for additional flight paths, including regional routes to popular destinations like Victoria Falls and Mauritius, but these licences aren’t available now and it isn’t clear when they might be granted.

Costs are also up across the board, most notably due to the international increase in crude oil prices. Jet fuel prices have risen by 60% this year — a major cost driver for airlines.

The convergence of these three trends — pent-up demand, reduced capacity and rising input costs — has resulted in a significant increase in airline ticket prices.  

Solutions from the travel industry with financial services partners

Despite price increases, travel is still highly desirable and South Africans are still looking for ways to satisfy their wanderlust. Consumers are increasingly using third-party flight comparison tools, which allow them to compare flight availability and prices easily and quickly.

The difference in value for consumers depends on what booking platforms can charge, which airlines they can access, what payment methods they accept — and any discounts they offer. For this reason, many banks in SA are tapping into travel rewards benefits as a drawcard.

While various banks offer financial relief with discounts on flights and travel, these vary significantly by institution and engagement level or product suite. Several larger banks don’t offer discounts on local flights; others offer a small percentage, often in cash back, or a fixed discount such as one major bank that offers clients R100 off any flight they book. Another rotates airline partners monthly, which can restrict flexibility, forcing a choice between price and convenience.

There are similar trends in accommodation and destination travel packages, but these often go together with flight pricing. It is important for the SA economy that people can travel affordably. We need a revival of our travel, hospitality and tourism industries that have battled over the past three years and — equally significant — we need to give people a sense of wellbeing as the pandemic tapers off. The travel industry and its partners are optimistic and are doing our best to make affordable travel a reality again.

It is for this reason that when Comair, our long-standing partner, went into liquidation in June we extended access to Vitality Travel to all Discovery clients. As it had formerly only been accessible to Vitality members, this significantly broadened access to the benefit. With many enhancements it also now provides the most generous savings on travel in the market.

This is enabled through a digital bank account that has no monthly fees, called the Discovery Account — a safe, secure means to book travel, including flight and lounge bookings that is newly available in the Discovery Bank app and via the website.

Travel connects families, opens the mind and recharges the soul — whatever the reason, we hope more people have the opportunity to travel with improved affordability this December.  

• Govender is CEO of Discovery Vitality.