The Ghana Civil Aviation Authority (GCAA) is seeking to charge US$10 per passenger and US$20 per tonne of cargo as ‘safety charge’ on every international air-ticket and cargo in the country starting August 1, 2016.
The Authority, following the passage of the Ghana Civil Aviation (Amendment) Act 2016, is hoping to implement the new charge to boost its revenue and strengthen its role as an autonomous regulator of the industry.
“Hitherto, the Authority was providing this service free of charge, but as we are an autonomous entity, Parliament has given us the power to charge the safety charges which will be added on all air tickets and freight charges with effect from next month,” Mrs. Joyce Thompson, Director of Legal Service, Corporate Communications and International Relations of the Authority, said at a stakeholders’ meeting held in Accra.
The proposed charge, however, has far-reaching implications for the cost of doing business in the aviation sector in the country. The airlines have therefore, requested a meeting with the GCAA on the matter.
Director-General of the Authority, Simon Allotey, told stakeholders that: “We are going to have a special meeting with the airlines to look at the modalities for the implementation of the safety charge. You are our key stakeholders and we have decided to work collaboratively with you for the growth of the industry.”
Gloria Yirenkyi, a representative of airlines at the event said: “We have received the notification but there is a critical need for the airline body to meet the GCAA to discuss the implementation of the proposed safety charge. So at that forum, which the GCAA has committed to, we will have a bigger voice there and discuss.”
Answering a question about the appropriateness of the August 1, 2016 implementation date, she said: “I believe it is too close to the August 1 start date but there is that understanding on their [GCAA] part when the question was put to them. I believe we will have a better outcome after the interaction with the GCAA on the implementation date.
Ideally, according to the International Civil Aviation Organisation (ICAO), the recommendation for the implementation of such as fee or a new fee should be at least four months for all systems to be aligned because the International Air Transport Association (IATA) also has a role to play in there. They need to have a code created for this fee which will be on the ticket. Globally, everybody will then know that this code stands for this fee and it is for this territory or country.”
The cost of doing business within the sector has been rising due to various factors that include high fuel cost, depreciation of the local currency, imposition of Value Added Tax on domestic air travel, and difficulties with clearing of imported parts, among others.
Aviation fuel is one of the most expensive commodities in running an airline. It constitutes between 30 percent of an airline’s cost. Indeed, domestic airlines have had to bear the brunt of Ghana’s expensive aviation fuel regime.
For a country that wants to be the West African aviation hub of choice, the commodity’s price in Ghana is highest in the sub-region.
At US$3.14 per gallon, the specialised fuel is more expensive in Ghana than in neighbouring West African countries like Benin, Ivory Coast, Nigeria, Gambia, Senegal and Cameroon among others.
This has forced some international operators to lift fuel from other sites in the region.
The problem is further compounded by the cedi’s poor showing in the past two years, which has meant that operators have had to spend more cedis on purchasing the dollar-benchmarked commodity.
Given the current economic challenges, corporate clients of airlines have pruned their budget for management travels, while individual passenger load factor has reduced, except in the seasonal high-demand summer and Christmas periods.
Reacting to the cost of doing business in the sector, Ms. Yirenkyi, who is also the Country Manager for South African airways said: “I won’t be the one saying this for the first time. There have been concerns that the cost of doing business in the country’s aviation sector is high.
There are certain cost elements we see opportunity for bringing down but I also believe that it takes a process of engagement with the necessary stakeholders to get an outcome that will be beneficial for the airlines and the public. We should all come together and have a discourse as stakeholders who want to see the aviation sector grow and become affordable to the public.”