OBG talks to Richard Branson, President, Virgin Atlantic

Interview: Richard Branson

Who are South Africa’s biggest competitors in terms of attracting European holidaymakers?

RICHARD BRANSON: South Africa is a unique destination and one of my favourite countries to visit. I have always loved the country and have been touched by its rich and vibrant culture of warm and welcoming people. It has a beautiful and diverse landscape, and there are few places than can compete with it. However, right now, the UK government’s policy to increase tax on aviation has affected tourism in South Africa and created competition from other winter-sun destinations closer to Europe. High air passenger duty (APD), paid on all flights departing the UK, means that a British family of four faces a £324 tax bill before they consider any other cost for travelling to South Africa.

How big of an impact are rising airline taxes and fuel charges having on the global travel industry?

BRANSON: These are still tough times for the airline industry, with ever rising fuel costs and airline taxes reducing margins, and we will see this trend continue for a few years to come. The UK is a great example of how these issues directly affect travel. From 2007-11, the number of people visiting the UK fell by 9.3%, while APD tax receipts increased by 43.5%. In 2010 some 3m Chinese tourists came to Europe, but just 127,000 of them visited the UK. According to the Tourism Alliance, APD has already cost the UK 25,000 jobs.

In 2008 a similar tax was introduced in the Netherlands, but was scrapped a year later after a study showed that the loss it caused to the economy was nearly four times greater than the revenue it aimed to raise. The true impact of APD must be understood, and Virgin Atlantic has called on the UK government to commission independent research into the effects of this tax.

What factors are insulating African air travel from the global economic downturn?

BRANSON: It is reassuring to see that Africa has continued to grow despite the global financial downturn, which is, in part, due to the fact the banking crisis has not engulfed the continent and also because of the strength of its natural resources. Many international carriers are trying to put on more routes to Africa, which has prompted the expansion of a number of local airlines as well. Likewise, Africa has seen an increasing presence of global hotel brands catering to the growing demand from business travellers across the region. South Africa is increasingly attracting international businesses in telecoms, banking and pharmaceuticals, as well as in more traditional oil, gas and minerals projects. With this comes higher business demand and that means more businesses will focus their energy on growing companies within Africa.

How would you rate South Africa’s overall attractiveness as a tourism investment destination?

BRANSON: South Africa recognises the contribution and value of tourism to the economy, and has set some goals for growth between now and 2020. The key to achieving them is ensuring that government policy is joined up across departments. Tourism targets are great, but if the Department of Transport is effectively pricing airlines out of airports, how will tourists get to and around South Africa? I am confident the government will work its way through this and establish a better foundation for tourism. The country did an amazing job hosting the FIFA World Cup in 2010, and it will undoubtedly benefit for years to come from the showcase it provided. In addition, as the gateway to sub-Saharan Africa, the country is well positioned to benefit from an increasingly positive outlook for the region.

Given the recent challenges of many traditional markets, businesses are looking for new investment opportunities, and Africa is definitely on the radar screen. As businesses invest and overseas companies set up local operations, tourism follows. If South Africa embraces this interest and helps businesses to be successful in the local market then everyone will win, with more local jobs, more disposable income and more tourism.