Ticket prices are expected to further fall after an up-coming meeting between the Aviation Minister, Ms. Cecilia Dapaah, and domestic airline operators to explain how airlines can also benefit from the removal of duty on imported parts—a major cost component for operators that has a bearing on the cost of airfares.
Mr. Eric Antwi, CEO, Starbow, told the B&FT in an earlier interview that: “The removal of the VAT will lead to a fall in airfares. When something is also done about the duty on spare parts, ticket prices will drop further.”
The drop-in airfares follows the announcement by the Finance Minister, Ken Ofori-Atta, of the abolishing of the 17.5 percent VAT on domestic airfares in the 2017 budget passed by Parliament.
Parliament, Last Friday, passed the Value-Added Tax (Amendment) Bill, 2017 following the recommendation of the Finance Committee.
Government is expected to take a GH¢21.11million hit in relation to the abolishing of the VAT on domestic air transport.
But the Committee noted that: “…The removal of VAT on domestic air transport is expected to lead to an expansion in the domestic airline industry leading to greater generation of employment in the sector and also encourage more people, especially, the middle and lower classes to patronize domestic air transport services.”
The consumption tax’s imposition in July 2015 led to a steady decline in domestic passenger throughput; as more passengers opted to travel by road to major capitals in the country.
Domestic passenger throughput declined from 55,000 in December 2014 to 44,000 in December 2015. Latest figures from the Ghana Airports Company Limited (GACL) also show a further slump in domestic passenger throughput to 37,775.
The drop in passenger throughput has also meant less revenue for the airports operator--GACL—and the industry regulator, Ghana Civil Aviation Authority
Kumasi Airport Development
In a related development, the Aviation Minister, Ms. Dapaah, has paid a working visit to the Kumasi Airport to familiarize herself with on-going works at the busiest domestic airport in the country, Kizito CUDJOE reports.
She noted that it will require some ‘few inputs’ to fully automate the facility in line with international standards.
The Minister disclosed that there will soon be a permanent waiting room for passengers and other visitors to the Airport, as well as one for domestic passengers at the Kotoka International Airport, in Accra.
She observed that all the installations carried out in 2015 the Kumasi Airport, including the Instrument Landing Systems (ILS), were functioning at their optimum capacity.
She said it remains a key priority of government to open up the country to investors, tourists, and businesses. “We are hoping to shorten the time it takes to travel; with the development of a strong, affordable and competitive local domestic aviation sector,” she said.
The subject of encroachment of lands belonging to the Kumasi Airport, she explained that managers of the facility have put measures in place to get illegal occupants off GACL land.
She, however, failed to indicate whether the possible extension of the runway would affect some settlements close to the Airport.
The Aviation Minister also visited the Sunyani Airport to determine whether there will be the need to rehabilitate the runway among others.
The Minister was accompanied on the tour by the Managing Director of Ghana Airports, Mr. John Attafuah; Ashanti Regional Minister, Simon Osei Mensah; and the Deputy Regional Minister, Elizabeth Agyemang; and the new KMA boss, Osei Assibey Antwi.