Impacts of deregulation on the airline industry in South Africa : a review of the literature.

Abstract

Deregulation of air transport has had major global impacts on the domestic air transport markets, with effects ranging from stimulation to changes in the structure and functioning of these markets. In South Africa, deregulation has had wide-reaching effects on the domestic market. The purpose of this article was to investigate the impacts of deregulation on the airline industry in South Africa. A literature review was performed to examine the effects of deregulation in the domestic air transport market in South Africa. The study showed that deregulation has benefited passengers by including a wider variety of airlines to choose from and more frequencies throughout the day, making connecting flights to hubs more accessible. However, deregulation has also resulted in the entry of a lot of LCCs which has resulted in overcapacity in the South African domestic market and negatively affected the performance of airlines. Although deregulation broke the monopoly held by the state-owned carrier and reduced its market share, state-funded support for SAA is seen by many to have skewed the market and to have provided the airline with a competitive advantage. Partial and selective deregulation, designed to maintain the protection of national carriers, represents a considerable threat to private operators, thereby rendering the aviation business unprofitable, something that stifles the region’s tourism prospects.