ECOWAS to introduce common policy on aviation taxes, charges and fees
ECOWAS is in consultation with governments of member states to develop a sub-regional policy on taxes, in a bid to bring down the high aviation taxes that stakeholders say is hampering the growth of the sector in West Africa.
The consultations follow a study commissioned by the Economic Community of West African States (ECOWAS) and undertaken by the International Air Transport Association (IATA) on charges, taxes and fees in aviation in the sub-region, and will lead to the adoption of a common policy on aviation charges and fees.
Mr Simon Allotey, Director-General of the GCAA, said consultations were still ongoing, with a meeting held in Accra about a month ago to review the report of the study.
“Comments have gone back to the ECOWAS Commission and this will be finalized very soon,” he said.
Mr. Allotey explained that charges and fees at airports were necessary in order to help finance the provision of infrastructure and this tended to be high where the aviation in a particular country was smaller than those where it was large.
He explained that this was because the cost of the infrastructure, when spread across larger numbers of passengers would be lower than when spread among a smaller number.
“The disadvantage is that if your taxes are higher, it goes on the passenger ticket and it becomes unattractive for people to fly to your country and if they are too low, you will not attract the financing for projects. It is a vicious cycle, and we need to create a balance,” he stated.
Mr. Raphael Kuuchi, IATA Vice President for Africa, in an interview at the Routes Africa 2018 conference, said the ECOWAS commissioned study compared charges, taxes and fees in the West African sub-region to other regions of Africa, and other regions of the world.
It found, among other things, that the ECOWAS region had the highest taxes and charges of all the regions in Africa.
“Something needs to be done about it and it is our hope that once the report is finally availed, governments around West Africa will try to bring down the taxes particularly, to make the industry more competitive,” he said.
He said IATA was concerned because high taxes added to the high cost of the airfare, which repelled passengers, especially tourists from coming to your country, especially if they could get lower fares at another destination.
“We don’t want west Africa to continue to lose out on air connectivity just because of high costs, so we will want to see governments in Africa begin to reduce their taxes to comparable global levels so that the industry can benefit and more passengers can travel; then we can have more tourism around the continent.”
Mr. Kuuchi commended the government of Ghana for the decision to allow the airport and civil aviation authorities to keep all the taxes that previously went to central government to be reinvested in aviation, for use in development and maintenance of infrastructure, in line with ICAO policy.
“That is something very commendable. So even though the taxes are high in Ghana, at least, they are being reinvested in aviation. In many other parts of Africa, and also in Europe, Asia and Americas, it is not the case,” he noted.
He said the increase in air traffic when Ghana removed VAT on domestic flights was testament to the fact that Africa truly managed taxes and brought down fares, travel will increase.
“It’s always IATA’s recommendation that if you bring down the fares and make travel more competitive, you’re going to attract more traffic into your market; so why do we constrain traffic growth?”
Mr. John Attafuah, Managing Director of the Ghana Airports Company Limited, the hosts of this year’s Routes Africa conference, explained that the company for instance, borrowed for the construction of the new Terminal three (3) on its balance sheet, and will have to finance by its charges and fees, which he said was very competitive.
He, however, assured that the GACL was also working to increase its non-aeronautical revenue as it did with the Airport City project.
“We hope that Airport City II, which is on the drawing board, when it comes up, will also help us to improve the proportion of non-aeronautical revenue to GACL,” he said.