Business News of Sunday, 13 August 2017
Players in the local airline industry are asking the government to limit foreign airlines’ ability to lift passengers from Ghana to other countries in the West African sub-region while on transit.
They said the current arrangement, known as fifth freedom in aviation circles, was unfair to local airlines since by the time a foreign airline arrived in Ghana, it had recovered its cost and made profit hence could afford to charge very low rates
Speaking to journalists on the fringes of a meeting between the Ministry of Aviation and officials of the local and international airlines, the Chief Executive Officer of Starbow, Mr James E. Antwi said the turf of the local airlines must be protected.
“When the country starts operating its airline, they should limit the big airlines from picking passengers from the country destined for other countries in the sub-region as the local airlines have the capacity to do it.
In June this year, the Ministry of Aviation indicated its readiness to allow competition into Ghana’s domestic air travel space in the short to medium-term.
It was the view of the ministry that the move would contribute to Ghana’s competitiveness and make the country an attractive aviation hub within the sub-region.
But Mr Antwi took issues with that policy, saying the opening of the local terrain to a number of Nigerian airlines when the authorities in Nigeria were not reciprocating the gesture was not favorable to Ghana’s interest.
“It is very easy for other airlines to come to Ghana but it is difficult to enter other countries. They just signed the agreement but do not stick to it but put impediments on the way. Ghana is a small country and Nigeria is big.If we allow all the Nigerian airlines to come to Ghana, the Ghanaian operators cannot compete with them,” he said.
He also expressed concerns about the country’s aviation and navigation infrastructure as the current state of affairs at the various airfields affected the industry.
“We need proper navigational systems that would make it possible for us to land even during harmattan. This affects our business so much that customers lose confidence in the airlines during that season and do not come back.
In July 2015, the Ghana Revenue Authority ordered all domestic airlines to charge 17.5 per cent on airfares.
According to statistics, domestic passenger throughput declined from 55,000 in December 2014 to 44,000 in December 2015, with March 2017 figures from the Ghana Airports Company Limited (GACL) also showing a further slump in domestic passenger throughput to 37,775.
With the government scrapping the tax in March this year in line with the Akufo-Addo administration’s campaign promise, Mr Antwi said, the numbers were improving.
“The VAT had a serious impact on our business. It increased the cost of operations and we were not getting the numbers but we had fixed cost which was affecting cash flow,” he said.
According to GACL figures, in Ghana, Europe remained the most popular destination for travelers although intra- West African traveling is gaining momentum following the liberalization of the airways of some of the major economies in the sub-region.
The figures indicate that the European route topped the chart with 37.6 per cent of the outbound traffic as of the first quarter of this year with West Africa recording a 20.3 per cent international outbound traffic. The rest of the market is shared by East Africa, 14.5 per cent; Middle East 9.9 per cent; North America, 6.5 per cent and Southern Africa, 5.5 per cent.”
Speaking at the ceremony earlier, with those numbers in mind, the Minister of Aviation, Ms. Cecilia Dapaah, said data and patterns of travel presented an opportunity for local airlines to grow and expand their operations beyond Ghana.