Ever-increasing cost of fuel brings challenges to industry

TOURISM is sensitive to the petrol price and escalating prices are hitting the South African industry and ground-based transport services hard.

Andrew Illes, CEO of Ashtons Tours, Safaris & Shuttles, says: “Fuel is a massive component in our monthly operational expenditure, but passing the rising costs on to our clients is not a solution. We continually strive to find creative ways to limit our overall monthly expenditure and make our products more attractive.”

As the cost of fuel has continued, on average, to escalate every year, not only will the tourism sector need to plan more effectively to weather the impact, but players will have to come up with creative new ways to address what some call a burgeoning crisis.

“We have to focus on keeping our seat rates as competitive as possible without compromising quality and service. If our seat occupancy is high then the damaging effect of a rising fuel price is limited, so we continue to focus on vital factors such as service, quality and price,” says Illes.

According to Mpho Mache, director of Tshuku Transport & Tours, it is often the unexpected price hikes that hit the hardest. “More often than not, we have already quoted a client and are then bound to that rate. As far as possible we try to absorb the fuel hikes so as to not increase our prices. When there are a lot of hikes, however, unfortunately there is not much else one can do but adjust pricing.”

Fanie van Zyl, MD of SA Coach Charters & Tours, says it is with these unexpected changes in mind that most companies allow for a 5% variance on the fuel price.

“Obviously any huge increase can affect one’s bottom line, but there is no clear solution. We have to consider the tour operator, as they also work on margins as do their agents. Thus, it remains contentious to force higher prices on operators.”

Another issue for smaller companies has been permits, continues Van Zyl.

“It is still a huge challenge, as government does not understand the industry,” he says. “They should simplify the process, especially for tourist and charter requirements. Once you are registered, a permit should be issued within 48 hours after submission of documents. They are linked up with SARS, eNatis and CIPC, so we see no reason why there should be a nine- to 15-month delay to obtain a permit. Once you take delivery of your R4,5m vehicle, the cost seconds start to tick and, without a permit, you cannot operate.”