Parliament is expected to pass the amended civil aviation law by end of the year, Chairman of the parliamentary select committee on Roads and Transport, Theophilus Tetteh Chaie, has said.
A key change expected is ratification of the Cape Town Convention — a treaty designed to facilitate asset-based financing and leasing of aviation equipment, expand financing opportunities, and reduce costs; thereby providing substantial economic benefits.
It does so by reducing a creditor’s risk and by enhancing legal predictability in these transactions, including in case of a debtor’s insolvency or other default. The Cape Town Convention entered into force in 2006.
“We started the process at our last sitting in Parliament, but unfortunately there were some technical challenges and as a result we couldn’t pass that particular Convention. But I can assure you that by the end of this year we will be able to do that for the airlines,” he said.
He was speaking at the presentation of an IATA Operational Safety Audit (IOSA) certificate to indigenous domestic operator and regionally accredited airline Starbow by the Ghana Civil Aviation Authority in Accra.
Ghana is yet to ratify the Cape Town Convention — a situation that the airline says is inimical to the growth of domestic aviation.
Passengers are expected to benefit from approval of the Cape Town Convention, with improved service and increased capacity on all four domestic routes — Kumasi, Takoradi, Tamale, and Sunyani.
Starbow’s Chief Executive Officer, Mr. James Eric Antwi, believes that it is time to ratify the convention so as to allow operators acquire efficient wide-bodied aircraft at a cheaper cost to reduce their cost of operation and meet needs of the travelling public.
There are currently two airlines — Starbow and Africa World Airlines — offering domestic flights from Accra to Kumasi, Tamale, and Takoradi.
The operators have had to increase their flight frequencies to these three destination following the suspension of Antrak’s operations for three months.
Antrak Air, a wholly-owned indigenous domestic operator, has suspended its operations for the next three months due to operational challenges.
The imposition of a 17.5 percent Value Added Tax (VAT) on domestic air travel has led to a drastic reduction in passenger numbers from Accra to the four main domestic destinations—Kumasi, Sunyani, Tamale and Takoradi.
With relatively expensive aviation fuel prices in the sub-region, high cost of spare-parts, aircraft lease and insurance premiums all denominated in dollars, operators say the recent imposition of VAT threatens their very existence, as passenger numbers keep dwindling due to high fares.
Sector Minister Dzifa Attivor has petitioned Cabinet to consider a possible suspension of the VAT on domestic air travel.
Tetteh Chaie said: “I believe that it is something we need to do to help our domestic aviation sector grow. As a nation, what we need to do is reduce taxes so that they can survive in this market.
“I believe what we need to do is to provide the needed tax incentives that will enable domestic airlines to thrive in this market.”