Transcript Economic Impact of Low Cost Airlines (Mango)

Impact of Low Cost Carriers
Tourism
Fundamentals of Low Cost Aviation
Simplicity reduces cost
•
Uniformity and consistency drives
operating efficiencies.
Reduced cost drives lower
Prices
•
LCC’s 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.
• 35% of global air traffic
• 50% of all passengers
between Johannesburg
& Cape Town
• 60% of narrow-body
aircraft orders
All on/from low cost carriers.
Economic Impact of Low Cost Airlines (Mango)
GDP Contribution
•
Approximate direct contribution to
Mango’s 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
Economic 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
Potential for Low Cost Aviation and Tourism
International precedent
• Premise: LCC’s reduce cost of travel with
resultant benefit to the economy as a whole
and the business as well as tourism sectors
individually;
• Spanish Example:
• Volume growth post 9/11 driven by
LCC expansion;
• By 2008: LCC’s gained > 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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More 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.
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