THE airline industry has responded with anger after SA's airport regulator yesterday proposed a 59,9% increase in airport charges for 2010-11, even though it is half the 132,9% requested by Airports Company SA (Acsa) last year. The tariff will rise a further 25% in 2011-12.

In the past few months there has been a war of words between Acsa and the airline industry over the proposed increase, and yesterday's announcement only added fuel to the debate.

Acsa is relying on the increased tariffs to fund its multibillion-rand infrastructure programme, while the airlines oppose any increase out of fear that it will further weaken an already hard-hit aviation industry.

Leading the charge was airline group Comair , which said the proposal by the regulator "for a 100% increase in airport charges over two years" threatened the growth of air travel in SA and would have a negative knock-on effect on tourism and the broader economy.

Mango CEO Nico Bezuidenhout said while there might be a compelling case for a tariff increase, pricing prudence was required - "in particular during recessionary times where disposable income is at a premium".

Chris Zweigenthal, CEO of the Airlines Association of Southern Africa, said the increase was in addition to the 42% tariff increase granted to Air Traffic and Navigational Services. "We do not believe the airlines and the consumer can afford these increases," he said.

The tariff increase refers to the passenger service charge levied on each departing passenger, as well as the landing fee and other fees Acsa charges the airlines. Currently the passenger service charge for a domestic departure is R42,98 and R118,42 for an international departure. Comair estimates the landing fees per passenger across its fleet at R29 and other charges at R3, making a total of R81. It is just one of several charges levied on airfares by a range of industry and government bodies.

"Like Eskom, Acsa is calling on users of its airports to fund its financial shortfall. In the past few years Acsa has made profit margins of more than 24% and has paid billions of rands worth of dividends to its shareholders - which include government, the PIC (Public Investment Corporation) and Acsa management," said Gidon Novick, the joint CEO of Comair, operators of British Airways and kulula airline.

"The proposed increases would take these charges to R159 per passenger (if landing fees and other Acsa charges are included). When you consider that a low-cost flight between Johannesburg and Durban costs only R300, Acsa's charges will make up more than half the cost of this ticket."

In terms of the regulatory framework, Acsa is entitled to recover its capital expenditure from the previous five-year cycle in the following cycle. In the past few years Acsa has spent more than R17bn on new infrastructure, including building the King Shaka Airport in the north of Durban. Many in the airline sector see this expenditure as extravagant and a waste of money.

"The level of spend, however, on Acsa's projects has been excessive, not only at planning stage but also in terms of overspends relative to plan. The clearest example is the new La Mercy Airport in Durban which, when completed, will have cost more than R7bn. The current Durban airport is perfectly functional and has significant growth capacity. New low-cost terminals overseas, like the one in Kuala Lumpur, Malaysia, are being constructed at a fraction of the cost of Acsa airports," said Novick.