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Impact of Low Cost Carriers Tourism

Explore how low-cost carriers drive tourism growth, reduce travel costs, and create jobs, with a focus on Mango Airlines. Discover the economic contributions, employment effects, and the potential for low-cost aviation in boosting tourism internationally.

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Impact of Low Cost Carriers Tourism

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  1. Impact of Low Cost Carriers Tourism

  2. 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 • LCC’s 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.

  3. Economic Impact of Low Cost Airlines (Mango) GDP Contribution • Approximate direct contribution to Mango’s 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

  4. 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; • Catalyticeffectson tourism sees an approximate 9,000 jobs created; • Aviation creates high-valueemployment– twice the national average. Estimates adapted from a recent study by Oxford Economics

  5. Potential for Low Cost Aviation and Tourism International precedent • Premise: LCC’s 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: LCC’s gained > 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.

  6. 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.

  7. END

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