[ 2016-04-28 ]

High taxes threaten aviation industry
The International Air Transport Association (IATA)
has bemoaned the high taxes imposed on the
domestic aviation sector in Ghana

, saying the phenomenon militates against the
growth of the industry.

According to the Vice President of IATA for
Africa, Mr Raphael Kuuchi “taxes on jet fuel
increase the cost burden of airlines who are
already operating in a challenging environment and
hinders the domestic growth of an industry that
brings extensive socio-economic benefits.”

He said Ghana must not treat its aviation industry
as an easy target for taxation if it is serious
about becoming an aviation hub in the sub region,
adding that the negative impact on the economy of
taxing air transport outweighs the revenue
raised.

Mr Kuuchi has therefore urged the Ghanaian
government to recognize aviation as a
socio-economic enabler and provide the appropriate
infrastructure.

In an interview with this paper, Mr Kuuchi noted
that the elimination of taxes on jet fuel would
put Ghana in line with the common practice in
Europe and countries around the world where
aviation growth is strong.

“It will not only boost aviation in the country
but create a new opportunity for Ghana to become a
hub for aviation and fuel trade,” he stressed.

The IATA Vice President encouraged government to
reduce taxes and charges on infrastructure in
order to attract more capital inflow into the
industry.

Ghana’s domestic aviation sector has been
reeling under high operational costs, worsened by
the high costs of jet fuel which has compelled
some service providers to fuel their aircraft in
neighbouring Nigeria.

The difficult terrain has seen the exit of three
airlines, Antrak Air, Fly540 and CityLink leaving
only two, Starbow and Africa World Airlines (AWA).


The three have recently indicated their return to
the industry but experts are wondering whether
they can survive the odds.

The imposition of the 17.5 per cent Value Added
Tax (VAT) by government in 2014 sent airfares
through the roof.

Fares on all routes jumped up by 40 per cent after
the VAT took effect, resulting in a 30 per cent
reduction in passenger patronage of flights.

Even though the government through the Ghana
Airport Company (GACL) is investing in the
expansion of airport infrastructure across the
country, industry players say the pace is too
slow.

Chief Executive Officer (CEO) of Starbow, Mr James
Eric Antwi lamented the alarming losses the
airline has had to contend with in the wake of bad
weather.

“ The weather became so bad that in December
2015 we operated only 25 per cent of our flights,
in January this year we did 65 per cent and fell
drastically again within the first week of
February, “ he explained.

Mr Antwi blamed the Airline’s predicament on the
absence of requisite infrastructure at the
regional airports to assist visibility and
navigation.

“These are challenges that have to do with
infrastructure; we need to have proper
navigational equipment on the ground to direct the
aircraft to the airfield;” he said.

For an airline that flies five times a day into
Kumasi, the impact of cessation of flights on
operations and on passengers is tremendous.

“For both Starbow and AWA, we have had serious
cash flow problems; Starbow aircraft is a leased
one and whether we fly or not we have to pay for
the lease and it’s quite costly; we have to pay
salaries of staff,” Mr Antwi observed.

For many businessmen and women who travel by air
especially to Kumasi, Sunyani and Takoradi the
impact of the cessation of flights was quite
heavy.

“We have mining and oil companies whose staff
leave Accra every morning to Takoradi and return
in the evening and so when we had to cancel our
flights they all suffered with some of them
turning to the roads,” the Starbow CEO
recalled.

He hoped that government will through the Ghana
Civil Aviation Authority (GCAA) provide the
Instrument Landing System (ILS) in Kumasi, Tamale
and Takoradi to aid operations.

IATA called on government to come up with the
appropriate regulation to secure the industry for
growth, pointing out that Ghana and other African
nations have an opportunity to enact smarter
regulations to enable better aviation
connectivity.

It said implementation of the Yamoussoukro
Decision will open up air routes within the
continent and provide opportunities for more than
5 million additional passengers a year.

“Investors will only invest in an industry if
they can see the potential for positive
returns,” IATA added.

Source - The Finder

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