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14.08.2012 Business & Finance

Air fares are exorbitant

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Air transport operators have renewed their call for a review of the tax regime in the aviation industry in order to make air transport cheaper.

Operators and passengers have complained about the high cost of air travel in the country relative to other countries within the sub-region and in Europe.

"With the [high] taxes [being charged] we cannot reduce our fares, but we provide a reliable and efficient flight schedule and operations. It costs about US$550 from Accra to Abidjan for a flight time of one hour; the fare is increased by about US$150 as taxes and fees. Comparatively for a 3-hour flight in the US or Canada it costs less," Dr. Brock Friesen, Co- Chief Executive Officer of Starbow, told the B&FT

Recently, the issue of high airfares has been a thorny one between operators and the regulator -- the Ghana Civil Aviation Authority.

While operators contend that high government taxes and fees form a large chunk of the price of airfares passengers pay, government on the other hand has warned of drastic measure to force international airlines to reduce their fares.

The taxes and fees for a round trip between Accra and London are approximately US$500-US$965.50 per adult. For a ticket that costs US$350, passengers pay about US$500 in taxes bringing the total price to US$850.

"Authorities should review the level of taxes being charged. The level of taxes does not encourage people to travel. If the taxes are reviewed, it will bring down the cost of airfares considerably," Mr. James Wooldridge, the Country Commercial Manager of British Airways, said in an earlier interview.

He urged authorities to upgrade facilities at the only international airport in the country, Kotoka International Airport, to a level that is commensurate with the taxes and fees charged.

Business-class passengers of various airlines do not enjoy much differentiated service in the entire departure process of a travelling passenger, given the relatively high taxes and fees embedded in the price of their tickets.

"For paying something extra as a business-class passenger or first-class passenger, you need to have some level of differentiated service to be able to appreciate that you have paid extra for a value-added service," Gloria Yirenkyi, Country Manager of South African Airways, told the B&FT in an interview.

Though the Ghana Airports Company Limited has created a dedicated lane for immigration processing of first-class or business-class passengers, operators have to invest in value-added services for their elite clients through the provision of comfortable lounges and other services in the departure processes.

The country's aviation industry, with an average growth of 10 percent, is one of the fastest growing and the most competitive in the West African sub-region.

The aviation industry also grew by 15% last year. International and domesti

c carriers are therefore tapping into the regional market.

Projections by the Ghana Airport Company show that air passenger traffic is expected to hit six million by 2015. This represents an expected increase of more than 200 percent over the total passenger throughput of 1.8million recorded in 2011.

The number of carriers has grown from 15 in 2000 to an estimated 40 carriers this year, with more international airlines currently undergoing the necessary certification processes to acquire licences to enable them fly into the country.

Gambian Bird and Royal Jordanian Airlines are undergoing the necessary designation processes, while Pison Airline is undergoing the necessary processes to acquire the needed certificate in order to operate regional and international flights to Accra.

A Global Market Forecast 2011- 2030 conducted by Airbus, the world's leading aircraft manufacturer, projects that Accra and Lagos will be aviation “mega-cities” come 2030, with the two destinations handling more than 10,000 daily long-haul passengers.

The quest for dominance in these countries is also fuelled by strong economic growth of the two countries and the resulting increase in the standard of living.

In 2011 Ghana's economy grew at 14.4 percent boosted by discovery and production of oil in commercial quantities and a rebounded construction sector. The Gross Domestic Product for 2012 is expected to reach 7.5 percent.

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