Impact%20of%20Low%20Cost%20Carriers%20Tourism

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Impact of Low Cost Carriers Tourism
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Fundamentals 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.
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Economic 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
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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
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Potential 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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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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