Fares have become increasingly volatile for South African travellers due to the impact of drastic exchange rate fluctuations paired with IATA’s standardised dollar pricing rule.
Since December, IATA’s Resolution 024a has required airlines to file all passenger fares in US dollars. While some fares still appear in South African rands, they are filed in USD. This means that even if airline fares remain the same in US dollar terms, the exchange rate on any given day could result in major price fluctuations.
Travel agents have noticed these differences in fares quoted just a few days apart.
David van den Heever-Liebenberg from Mr and Mr Jones Boutique Travel Management (formerly Marmalade Toast) recently quoted a corporate client on business-class return flights on Air France-KLM to Madrid. The fare was US$5 810 (published not negotiated fare) and came to R126 770 including taxes on April 1, based on the rate of exchange on the day.
“The client was undecided and asked me to hold off on issuing. I explained that the USD/ZAR ROE changes would affect the ticket price – but no one expected it to jump at the levels at which it did.” On April 14, the same booking of US$5 810 was R133 880 including taxes, increasing by over R7 000.
He believes this volatility will affect the mid-range leisure market who budget specific amounts for holidays. Travel is usually the first thing they cut from their budget. “This should incentivise agents to get their clients to close the deal urgently. Book and pay today for flights and hotels, transfers, tours, everything in full, and not with deposits,” he said.
He advised agents to educate their clients how US dollar-based fares work and to adopt approaches and technology to retain clients.
“There are a huge number of agents out there not willing to embrace change and are sticking to their old ways of only booking GDS tickets. They cannot get their heads around adapting to NDC, and this is a massive concern for them,” said Van den Heever-Liebenberg. “I see agents complaining about losing business and not getting comparable fares to what clients are seeing. Clients are becoming savvy with checking fares online, and they are going to do it.”
