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Nqobile Bhebhe, Senior Business Reporter
GOVERNMENT’S Open Skies Policy has enhanced healthy business competition in the aviation sector resulting in lowering ticket costs, which is a major benefit to travellers, the Competition and Tariffs Commission (CTC), has said.
The Open Skies Policy has also come in handy in luring more tourists into the country by strategically positioning the destination as a favourable regional aviation hub where travellers from the region connect flights to different parts of the world.
When the Second Republic came into being in 2017, just three airlines were utilising the country’s airspace. Now more than 18 airlines are flying into the country.
In its latest newsletter, CTC said the entry of Kuva Air, for instance, which was launched on 22 April 2022 servicing the Harare-Kariba-Victoria Falls and Hwange routes, has led to a reduction in ticket prices.
“Kuva Air’s entry led to an immediate reduction of the price of a round trip by its main competitor, Fastjet from Harare to Victoria Falls,” said CTC.
“This assessment is based on the cheapest economy class ticket for a round/return trip from Harare to Victoria Falls. During its inaugural flight to Victoria Falls, Kuva Air charged US$340 for a round trip, which was US$91 cheaper than Fastjet.”
The Commission said Kuva Air’s entry led to an immediate reduction of the price of a round trip by its main competitor, Fastjet, from Harare to Victoria Falls, which shows the benefits of healthy business competition.
“Pricing data from June to July 2022 shows that Fastjet reduced its ticket prices by an average of US$50 following the entry of Kuva Air during this period. This shows the importance of competition in the aviation sector,” it said.
“Worth highlighting is that the ticket price reduction margin was higher in June 2022 immediately after the entry of Kuva Air,” reads part of the CTC aviation assessment report.
Reduction in air ticket prices has been witnessed globally post deregulation since 1978, leading to an increase in entry and competition in the sector, it said.
Deregulation and liberalisation of the skies also led to the entry of budget airlines, which came with new business models targeting the lower-end market thereby increasing competition in the sector.
“In Zimbabwe, there are three noticeable budget airlines that entered the market namely Fastjet, Fly Africa (now grounded) and Kuva Air. In Zimbabwe’s case, a reduction in air ticket prices will promote domestic tourism,” said CTC.
“Since air transport is fast, lower prices make it affordable for travellers to move from one tourist destination to another.
“It also spurs international tourism to other local tourist destinations like Kariba and Hwange provided air tickets are cheap, thereby promoting tourism.”
At the regional level, the Commission said given the geographic position of Zimbabwe, which is centrally located in Southern Africa, low air ticket prices can strategically position the country to become the regional aviation hub where travellers from the region connect flights to different parts of the world.
Competition in the aviation sector also has an impact on the quality of service provided by airlines, it said.
“Competition in the air transportation sector has been widely credited for improving the efficiency of airlines through the reduction in delayed and cancelled flights as travellers book tickets with reliable airlines,” it said.
“Again, increased competition leads to a significant reduction in airlines overbooking passengers and in missing baggage as they strive to gain the patronage of passengers.”
Online Reporter