Government says it has begun talks with domestic airline operator Starbow to resume operations – following an accident in November 2017 which led to the airline operator halting operations.
“The ministry continues to engage operators such as Starbow to ensure the resumption of operations,” said the Minister for Aviation, Cecelia Abena Dapaah.
It is the expectation of government that with new entrants and an increased choice of operators for the travelling public, domestic air fares will come down.
“We wish to assure this House that as a policy, local entrepreneurs and airlines are being encouraged to set up stronger private airlines to boost the vision of making Ghana the regional aviation hub for air travel,” Madam Dapaah told Parliament when she appeared before the floor of the House to answer question on whether removal of the 17.5% VAT on domestic airline tickets had led to a reduction of domestic airfares in Ghana.
She also confirmed that prospective investors such as Baby Jet Airlines, among others, have advanced plans to commence domestic airline operations soon.
Furthermore, she says, the ministry will continue to support Africa World Airlines (AWA) and other in-coming domestic airlines to grow.
The expected competition, the minister explains, will ensure efficiency in air transport and further lead to competitive pricing.
Starbow, in November 2017, halted operations following a crash involving one of its aircraft at the Kotoka International Airport that resulted in five minor injuries.
The accident occurred after the aircraft – an ATR72-500 with registration 9G-SBF – skidded off the runway during its take-off run at the Kotoka International Airport.
Background on 17.5% VAT
Parliamentary approval for removing the 17.5% VAT on domestic airfares was granted in April 2017. Following the abolishment, the ministry engaged domestic airline operators to ensure that the intervention reflected in a reduction of domestic airfares.
For instance, domestic airfares from May to November 2017, in the case of Starbow reduced from GH?375 to GHC315 for Accra-Tamale and GHC315 to GHC265 for Accra-Kumasi/Accra-Takoradi.
For Africa World Airlines(AWA) domestic airfares likewise reduced from within the range of GHC375 – GHC500 to GHC320 – GHC400 for Accra-Tamale and GHC315 – GHC400 to GHC270 – GHC340 for Accra-Kumasi/Accra-Takoradi.
The removal of the 17.5% VAT not only led to a reduction in domestic airfares but also led to an increase in the number of passengers, the minister noted.
For instance, domestic passenger throughput for May to December 2017 was 323,754 as against 295,278 for the same period in 2016, representing a 9.64 percent increase.
According to the minister, her ministry has taken lessons from the reduction of 25% on aviation fuel (ATK) by a previous government, when the intervention did not reflect in a reduction of ticket prices and other related charges.
Additionally, she also stated that as a result of the Starbow accident on 25th November 2017 at the KIA, there is only one domestic operator AWA. The ministry has occasionally received reports of a purported increase in airfares by AWA – being the sole domestic operator.
In reaction to this, she indicated that they have engaged AWA and the ministry is satisfied from the engagements that airfares have been competitive compared to the period that included 17.5%VAT.
“Although the current level of airfares is a function of demand and supply, we all know the impact of competition. It is our expectation that with new entrants and an increased choice of operators for the travelling public, domestic airfares will come down.”