The Ghana Civil Aviation Authority (GCAA) has pushed to October 1, implementation of the proposed US$10 per passenger and US$20 per tonne of cargo ‘safety tax,’ on every international air-ticket and cargo in the country, Business World has learned.
The deferment of the charges- initially set to take effect on August 1- follows a series of meetings that ensued between the GCAA and its stakeholders in Accra last week, where the International Air Transport Association (IATA) asked for time to properly codify the charges and feed it into its system.
The GCAA, following passage of the Ghana Civil Aviation (Amendment) Act 2016, is hoping to use the new charges, which could increase international air ticket prices, to boost its revenue and strengthen its role as an autonomous regulator of the industry.
The imminent implementation of the charges seen by airline operators as a tax, comes at a time the GCAA is now seeking to clearly delineate its regulatory and navigational service provider role based on the recommendations of the International Civil Aviation Organisation.
The delineation, however, is expected to leave the regulator short on revenue for its operations given that it relies heavily on the services provided by its air traffic control arm for revenue.
Its precarious financial position is also occasioned by the decision of the Togolese Civil Aviation Authority to now manage their own airspace.
The internationally designated Accra Flight Information Region (FIR) refers to the combined upper airspace (240 feet and above) and large portions of the Atlantic Ocean of Ghana, Togo, and Benin.
The Ghana Civil Aviation Authority (GCAA) has managed the Accra FIR on behalf of the three countries for decades.
However, revenue accruing from same went into the coffers of GCAA; with no share of the proceeds paid to either Togo or Benin.
However, Togo and Benin in 2014 sought to manage their own airspace. The pulling out of Togo has left the GCAA about 30 percent short on revenue.
The looming decoupling of the GCAA’s functions as a regulator from the air traffic control services will leave a much larger hole in the finances of the non-subventedstate agency.
Mrs. Joyce Thompson, Director of Legal Service, Corporate Communications and International Relations of the Authority, at a recent stakeholders’ meeting held in Accra said:
“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.”
Despite the justification put forward for the proposed ‘safety tax’,it has far-reaching implications for the cost of doing business in the aviation sector in the 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.