Airports Company South Africa: Setting the standard for South African state entities

As South Africa seeks to strengthen international trade links and encourage overseas investment, there is a huge onus on its transportation hubs, with air travel and infrastructure a key component to the nation’s success.

Much of the responsibility for handling passenger and cargo numbers efficiently falls squarely on the broad shoulders of Airports Company South Africa (ACSA), an entity which has managed 9 airports in South Africa since 1993, when they were transferred from Government ownership.

shutterstock_162389627Airports Company South Africa SOC Ltd is the largest airport authority in Africa. With a global footprint spanning 3 continents, ACSA provides a professional, world-class service for South Africa’s 9 principle airports as well as airports in Mumbai, India and São Paulo, Brazil.

ACSA’s 9 domestic airports encompass O.R. Tambo International, Cape Town International, King Shaka International, Bram Fischer International, Port Elizabeth International, Upington International, East London Airport, George Airport and Kimberley Airport. Collectively these airports are responsible for more than 80 per cent of South Africa’s commercial air travel, managing over 35 million passengers per year.

ACSA’s role in globalisation is critical for the success of the country and in October 2015, the organisation received a real boost when the Portfolio Committee on Transport hailed it as a model of success that other state entities should seek to emulate.

“This is an entity that is running an efficient service with less reliance on government for funding. An R1.6 billion profit for the year under review, 3 airports among the top 30 in the world, and the ACSA Chief Executive Officer (CEO) as deputy President of the Airports Council International, the Committee could only congratulate this entity,” Chairperson Ms Dikeledi Magadzi said.

She said this was a good story that needed to be told, and is a vindication that not all state entities are crumbling.

ACSA presented its annual report to the Committee earlier in October, where it revealed that CEO, Mr Bongani Maseko, had been appointed Vice-President of the Airports Council International – an organisation responsible for world aviation. It was also revealed that ACSA had made returns amounting to more than R1.6 billion.

The Deputy Minister of Transport Ms Sindy Chikunga told the Committee that 3 South African hotels based at the Airports had been recognised as among the top 10 in the world; while 6 of South Africa’s airports were ranked among the top 10 in Africa, and 3 rated in the top 30 worldwide.

shutterstock_125196224Ms Magadzi said she was not surprised by the results, especially following the unannounced visits the Committee had undertaken to OR Tambo and Cape Town International Airports earlier in the year. “The only aspect of work that ACSA still needs to improve on is the gantry gates at airport, especially during peak hours. But also the issue of standardising the service at the airports that are not operated by ACSA,” she said.

ACSA’s success is recognised among its peers and in September, news came through that the organisation was finalising a deal to advise the operator of Ghana’s main airport on the construction of a new international terminal, possibly with funding from the Development Bank of Southern Africa.

The proposed deal to advise Ghana Airports Company on a new terminal at Accra’s Kotoka International Airport would be ACSA’s first major project in Africa. The company plans to increase revenue from non-aeronautical services to 53 per cent by 2020, Business Day reported.

The consultancy talks follow a memorandum of understanding signed last year between ACSA and its Ghanaian counterpart.

ACSA derives around 37 per cent of its revenue from non-aeronautical operations and the rest from tariffs charged to airlines.

Whilst international business is important, ACSA continues to manage progress internally and in May of 2015 the company announced exciting plans for one of South Africa’s major airports.

Cape Town International Airport is set for an overhaul with the upgrading of its domestic and international terminals planned for the airport, along with the realignment of its runway, forming the bulk of Airports Company South Africa’s R7.7 billion expansion plans, SouthAfrica.info reported.

ACSA spokesperson Collin Naidoo, speaking at the Indaba 2015 in Durban, said the developments were part of ACSA’s new operating model aimed at improving South Africa’s airports. The expansion is set to be completed over the next 3 years.

When asked about the proposed expansions at Lanseria, South Africa’s only privately owned international airport which plans to build a new airport terminal, Naidoo said ACSA did not see it as a threat but rather a sign of good growth for the country.

“This is both a challenge and an opportunity, seeing all the upgrades and growth at Lanseria is promising, it says good things about the area,” said Naidoo.

shutterstock_106436423Operating effectively is part of the ACSA focus and the organisation has bold plans for the future.

In August of this year, Business Day reported that the company was seeking to partner with construction companies in South Africa and in Africa in a bid to increase its footprint in Africa and diversify its mainly aeronautical revenue sources.

ACSA was good at designing airports but was not a construction company, said CEO Bongani Maseko, speaking at the company’s results announcement in Johannesburg.

Mr Maseko said ACSA had to follow the global trend of airports diversifying revenue sources.

“So we would team up with local construction companies in South Africa and in countries on the Continent. Some countries would say bring your own construction companies to partner with ours. ACSA would bring aviation expertise,” said Mr Maseko.

In 2012 ACSA won a bid for a 20-year concession for the expansion, maintenance and operation of Brazil’s busiest airport, Guarulhos in São Paulo.

This came six years after ACSA won a bid for a 30-year concession for the modernisation of India’s Mumbai airport.

The aim of its new regional expansion plans was for the company to have 53 per cent of its revenue coming from non-aeronautical operations by 2020.

Revenue diversification will further strengthen the hand of one of South Africa’s success stories of recent years.