Title: Impact%20of%20Low%20Cost%20Carriers%20Tourism
1Impact of Low Cost Carriers Tourism
2Fundamentals of Low Cost Aviation
Simplicity reduces cost
- Uniformity and consistency drives operating
efficiencies.
- 35 of global air traffic
- 50 of all passengers between Johannesburg Cape
Town - 60 of narrow-body aircraft orders
Reduced cost drives lower Prices
- LCCs adopt Market penetration pricing
strategies, supported by active promotions,
Marketing and Innovation.
Lower prices drives demand growth
- Demand growth due to increased frequency of use
as well as modality switch.
All on/from low cost carriers.
3Economic Impact of Low Cost Airlines (Mango)
GDP Contribution
- Approximate direct contribution to Mangos local
supply chain (ex fuel) ZAR 400m
- Approximate indirect contribution through supply
chain and employee spend ZAR 320m
- Approximate catalytic benefits through tourism
ZAR 1 bn
- SOC contribution (ACSA, ATNS,
SA Weather Services) ZAR500m
- Approximate Treasury contribution through VAT and
taxes R200m
- Approximate Industrial Participation Program
benefit R70m.
Estimates adapted from a recent study by Oxford
Economics
Estimates adapted from a recent study by Oxford
Economics
4Economic Impact of Low Cost Airlines (Mango)
Employment Effect
- Estimated that approximately
100 new jobs are created when an
airline assumes operation at an airport
- Mango directly employs 543 people, supporting
approximately 5,000 persons downstream
- Approximately 7,400 jobs are supported through
the Mango supply chain and employee spend
- Catalytic effects on tourism sees an
approximate 9,000 jobs created
- Aviation creates high-value employment twice
the national average.
Estimates adapted from a recent study by Oxford
Economics
5Potential for Low Cost Aviation and Tourism
International precedent
- Premise LCCs reduce cost of travel with
resultant benefit to the economy as a whole and
the business as well as tourism sectors
individually
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1
- Spanish Example
- Volume growth post 9/11 driven by LCC expansion
- By 2008 LCCs gained gt 50 share
- Overall Market showed sustained growth, despite
recessionary impacts
- Substantial benefit
- 612,000 tourism jobs supported
- 40.0 billion in catalytic benefits through
tourism - 149m passenger per annum, 55 LCC.
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7More than just low prices
Ongoing generic awareness campaigns
- Mango Juice 75 tourism/destination content
- Social media 250,000 downstream communication
recipients - Leverage of distribution networks Edcon,
Shoprite, Momentum etc.
Intentional tourism stimulation
- Event and Destination-driven offerings
- Cooperation with tourism authorities and bodies
in targeted promotional campaigns.
Value-chain alignment for gain
- Bundling of related products, offered to the
right customer, at the right time.
8END