Wednesday, October 20, 2021

You pay an arm and leg to use air transport in Africa

The fare breakdown of a flight from Gaborone to Tanzania via South Africa demonstrates the oddity of air transport in Africa. 

The air fare was charged at R4 290 and its related taxes at R5 473.46 of which added together gave a total of R9 763.46 for a round trip. From this breakdown it is clear that taxes exceed the specific amount charged for the trip. 

Last week at the fourth African-Indian Ocean (AFI) safety symposium which was hosted in Botswana this publication engaged Secretary General of the International Civil Aviation Authority (ICAO), Dr Fang Lui on the issue of government-imposed taxes and their impact to passenger traffic across the continent and resultant effects particularly regarding attempts to use the aviation sector to spur economic and social progress. 

“There is a tendency of seeing aviation as a source of tax income but another approach is to see aviation as a source of bringing people in as an enabler of economic development, stimulating tourism. 

“If you’re stimulating you need to be competitive, the levies and charges should be lower in order to attract passengers to come in. When you make tourism business cake bigger it means government can get tax from other sectors because aviation is bringing in business opportunities. You can increase consumption in restaurants, hotels and attract businesses,” she said. 

Lui added that it was for government to determine how it viewed the aviation sector saying that neither one of the approaches was good or bad. 

“For ICAO, we’d like to see aviation being promoted as a strategic enabler for economic and social progress,” she said.  

The approach Botswana is taking according to Transport Minister Kitso Mokaila, who had come to officially open the symposium, is that of remodeling herself around the attraction of passengers and tourism related businesses where revenue can come from. The advantage with this model, he said, is that in cases where the air line registered losses it would not cause alarm as revenue would have been generated in other activities fueled by passenger traffic.   

This reality of high taxes validates the existing theory which says that African governments taxed fuel heavily on the assumption that air transport was for rich people as was alluded to by the Secretary General of the African Airlines Association (AFRAA) Dr Elijah Chingosho at the 26th Extraordinary AFCAC meeting that was held in Botswana last year November. Although passenger traffic has diversified overtime accommodating varied income levels, it is evident that this peculiarity of air transport across the continent still persists. 

According to Chingosho, passenger charge in Africa typically ranges between $40 (P400) and $120 (P1 200) whereas the world-wide average ranges between $20 (P200) and $40 (P400). The downside is limited passenger traffic which by extension results in losses to African airlines. 

A recent effort taken by the government of Botswana in stimulating the aviation sector, particularly overturning the financial misfortune of the national airline carrier, is the issuance of an expression of interest (EOI) to the market. 

“In this regard, in February 2017, an Expression of Interest (EOI) was issued with a view to determining sustainable market driven and supported possibilities ÔÇô including, but not limited to strategic operational arrangements such as joint venture(s), new equity partner(s), franchising, concession arrangements, or any other arrangement(s) that may be economically realisable,” expressed Kabelo Anthony Ebineng, Permanent Secretary in the Transport Ministry. 

The lacklustre performance of Air Botswana was attributed to the issue of economies of scale by Mokaila, adding that remodeling the airline will involve the exercise of looking at fairly profitable routes against the number of visitors coming into the country. 

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