Reduce fuel taxes to save African airlines, lobby tells states

AFRICA – Fuel contributes an average of 70 to 80 per cent of operational costs for African airlines. This is against a global average of 40 to 50 per cent, which explains why African carriers charge higher passenger fares than other airlines.

The African Airlines Association (AFRAA) blames this disparity on the high taxes levied on fuel by African government scrambling to generate domestic revenues in the face of a strengthening dollar.

The lobby group’s secretary general, Elijah Chingosho, said some African stations charge as much as $5 (Sh510) per gallon of jet fuel compared to average international charges of $1.45 (Sh148) per gallon.

“Passenger charges by African airports have also contributed to making air transport in Africa look like a preserve of the rich as they range between $40 (Sh4,080) per passenger to as much as $100 (Sh10,200) per passenger in some countries against an average $25 (Sh2,550) charged by airports internationally.

These charges reflect on tickets, rendering flights unaffordable,” he added.

Dr Chingosho urged African governments to lower these charges if their airlines are to remain relevant in a highly competitive industry, where subsidies from some rich countries render the playing field uneven.

“African governments must be awake to the fact that subsidised Gulf, European and, lately, Chinese airlines are taking advantage of the high costs by flying more into the African continent and dominating the market through cheaper fares,” he said.

Government Subsidies

He added that Gulf carriers like Emirates, Qatar and Etihad airlines had in the last 10 years received about $45 billion (Sh4.6 trillion) in Government subsidies, making them a threat even to rich Western airlines.

He said it is regretful that air traffic from Africa to other parts of the world was dominated by foreign carriers by as much as 80 per cent, leaving African carriers with a paltry 20 per cent.

“The gap has unfortunately increased from a narrower margin in the past. It is sad that African airlines carry only 3 per cent of world air traffic, yet some African governments go out of their way to create an uneven playing field by preferring to open their airspaces more to foreign carriers than to African ones,” Chingosho said.

The secretary general, speaking at AFRAA headquarters in Nairobi, said an urgent review of taxes on fuel and other air transport charges was imperative and should go in tandem with easing of visa acquisition processes for African airlines to remain in business.

He also asked African states with no airlines of their own to designate established airlines from other countries in the continent to serve them, rather than licence foreign carriers.

February 15, 2016; http://www.standardmedia.co.ke/business/article/2000191668/reduce-fuel-taxes-to-save-african-airlines-lobby-tells-states

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