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Essay: Deregulation

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  • Subject area(s): Geography essays
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  • Published: 22 September 2015*
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  • Words: 975 (approx)
  • Number of pages: 4 (approx)

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Deregulation is a situation in which the government regulation of a certain industry is minimized so as to create and foster a more efficient marketplace. In 1989, the South African government deregulated the transport sector in South Africa. The deregulation has had both negative and positive impacts. This assignment seeks to point out clearly how the deregulation of transport in South Africa has influenced the tourism sector.

Dissenting stance(s)
The deregulation of transportation in South Africa in 1987 led to some negative impacts. Below are some of the identified negative impacts of deregulation. Heavy vehicle road transport, which has grown excessively at the expense of rail is under increasing criticism from other road users, local authorities, provincial and the central government, the current state of rail in S.A is considerably worry (Jorgensen, 2004:671).

As a result of privatization globalization has increased. Recent research indicates that since deregulation of air transport in South Africa. SAA(South African airways) after air transport in South Africa sold its share to private company many counterparts started to be interested as well this include the likes of Continental airlines, British air and Singapore airlines . By virtue of deregulation obviously as it has just been noted that it aroused interest hence the sudden interest of other airlines in South African Airways so this led to many people frocking into our country. So globalization resulted in diversification of the economy of South Africa through the introduction of new international airline products and services.
Also deregulation caused the smaller airlines to start suffering since they couldn’t compete with the big and already well-established airlines.

South African Airways (SAA) since the international air services act was implemented has been looked after so that it could be the only operating airline in South Africa. That obviously created what is called a monopolistic market which refers to a situation whereby only company or organization is operating. That as a result led to customers not having an alternative but to use it. A monopolistic market causes the operating company to inflate prices anytime, provide poor or rather lower class services and products. Moreover, airlines who wished to compete had to meet some certain standards in order for its existence to be justified also that it might possibly get a chance to operate.

Before deregulation four (4) airlines were in existence and these include:
South African Airways (SAA) from 1934 (main routes and airports)
Comair from 1945 (secondary routes)
Link Airways (later known as SA Airlink) from 1978 (secondary routes)
Bop Air (later known as Sun Air) from 1979 (Smith 1998:241)
Congestion caused by Hub and Spoke system
Due to deregulation, the major airports resorted to creating the hub and spoke system. This system however to a certain degree resulted in causing congestion in airports. Because now low cost airlines transported passengers from smaller cities or towns to big and major airports this caused overcrowding of airplanes. Also, this congestion caused a non-conducive user-friendly environment in the sense that the airplanes occupied too much space thus leading to a limited space for passengers to roam freely and use the airports facilities to their advantage. Further, due to congestion, many disabled people weren’t able to move freely with their wheelchairs, the blind got mixed with the wrong crowd, the deaf people weren’t able to hear anything. So yes, congestion caused by the hub and spoke system caused the aforementioned complications.

Positive stance

Stimulating of the market
By virtue of deregulation in South Africa this led to entry of low cost carriers thus stimulating the market causing an increase in air traffic movements, higher passenger numbers, higher load factors and the opening of a secondary airport in Gauteng Lanseria airport. So as a result of the above-mentioned factors tourism is going to increase in the sense that more tourists will then be visiting South Africa both international and domestic tourists.

Change in market structure
Also due to the entry of low cost carriers this led to the change in structure of the market and increased options for passengers to choose from. obviously if tourists have a variety of options to choose from they are more inclined to partake in tourism , so that will automatically lead to tourist arrivals to increase and depending on the country’s attractions which are likely to cause the tourists receipts to increase gradually so in a way increasing the country’s economy .
A characteristic of the low-cost airlines is that they concentrate mostly on the high-density domestic ‘Golden Triangle’. Kulula.com also operates to Port Elizabeth and Mango to Bloemfontein. South African Airways has traditionally dominated the ‘Golden Triangle’, although recently it has lost some of its market share, largely due to the aggressive competition from the low-cost carriers and the potential to operate its aircraft more effectively in other markets. In 2010, it announced that it was withdrawing from the Durban’Cape Town route in favour of a code-share agreement with Mango (Orlek 2010), thereby relegating itself to only two of the legs of the ‘Golden Triangle’, that is, Johannesburg’Cape Town and Johannesburg’Durban.’

Fuel tourism growth
P. Forsyth (in Duval 2007: 6), liberalization of some airport transport sectors has helped to fuel tourism growth: ‘Tourism demand is quite price elastic, and aviation liberalization has brought down fares, thus increasing tourism overall, and often, altering patterns of tourism.’ It is evident that since transport was deregulated in South Africa tourism has without any doubt grown significantly. This is characterised by 428 596 tourists who visited South Africa in 2013, which is a 10.5 percent increase over 2012 an astonishing growth in 2012, when tourist arrivals to South Africa grew by 10.2 percent, which in this case is more than two and half times the global average, also in 2013 tourist arrivals grew by a further 4.7 percent. The above mentioned statistics clearly indicate that deregulated transport continues to play a pivotal in increasing tourist numbers to South Africa.

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