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Salient. Official Newspaper of the Victoria University Students' Association. Vol 44 No. 9. May 4 1981
What's Cause the Losses?
What's Cause the Losses?
| (i) | students are travelling less as a result of the harsh economic conditions. This reflects both on sales of ISIC's purchases for the domestic air concessions and on ticket sales for overseas travel; |
| (ii) | skyrocketing interest rates have substantially increased the cost of STB's overdraft. In addition the plummeting value of the New Zealand dollar has dragged out the time for repayment of the Australian debt, which is set in Australian dollars. |
In addition to these factors, inflation has eroded the value of STB's income. While travel commissions increase in line with continual and frequent increases in air fares, the price of the ISIC has not been increased since 1977 (the entire $2.00 per card special levy struck in 1978 went to the Australians, STB's general operations received no benefit from this increase). Thus in real terms the value of the ISIC has dropped to about 60% of its 1977 value. At the same time, sales have also dropped by a similar amount.
It would appear therefore that a significant increase in the price of the card would solve the problem of its declining real value, although possibly at the cost of some further sales.
The profitability of STB could be expected to improve, providing such an increase did not substantially affect sales of the cards, with the additional proviso that the travel operation were able to at least maintain a breakeven position.
Peter Beach