The aviation industry’s call for reduced fuel prices

Globally, many countries attach great importance to the number and frequency of airlines that land in their respective airports. This is because the more airlines that come in, the more revenue the state will generate from airport taxes and related income-generating sources.

It is also worth mentioning that once an airline uses an airport, the state has an unbridled opportunity to showcase its economic and tourism potentials to the passengers on board, who may either be transiting or entering for the first time.

Once the aircraft land, they are also bound to refuel and that means more money from the sale of aviation fuel to the state or the agency in charge of that aviation fuel sale.

Aviation fuel, according to experts across the world, is one key cost component of the airlines, which must be seriously considered to ensure that it does not eat too deep into an airline’s finances.

In Ghana, players in the industry have complained bitterly about the cost of aviation fuel and how it is negatively impacting their operations as far as airfares are concerned.

The latest to raise the concern is the Africa World Airline (AWA), which has strongly advocated a reduction in the taxes on aviation fuel to help bring the price down to appreciable levels. (See story on page 2)
According to the indigenous airline, Ghana’s aviation fuel is the highest in the sub-region and that makes the country unattractive for players in the industry.

The Chief Executive Officer (CEO) of AWA, Mr Michael Cheng Luo, told GRAPHIC BUSINESS in Accra that the cost of aviation fuel was high because of the taxes imposed on it and noted that instead of increasing taxes, the government should rather see how best the taxes could be reduced.

For instance, the specialised fuel is sold for about US$2.30 cents per litre in Nigeria and about US$3.14 cents per litre in Ghana. In Benin and Cameroon, it also goes for US$2.30 and US$1.94 cents per litre respectively.

This means that Ghana’s aviation fuel is too expensive and this gives credence to the allegations made by airlines such as United Airlines and Belgium Airlines, which left the shores of Ghana because of what they described as exorbitant cost of aviation fuel.

Since these concerns continue to fly, the GRAPHIC BUSINESS believes that it is necessary for the government to take a second look at the taxes put on aviation fuel.

Much as we share the government’s quest for increased revenue through taxes to meet its rising expenditure, we are of the view that it is better to sell the fuel at prices that are similar to what pertains in the sub-region rather than the high prices.

We are told that the airlines prefer to use the neighbouring countries whenever they want to refuel and that sends a bad signal.

The paper believes that we, as a country, are losing out in the competition, particularly when we have declared the country as the gateway to the sub-region.

The slogan, we believe, means that we need to do things that will make it attractive for more airlines to use our airports and buy our fuel rather than allow them to go elsewhere.

It is our expectation that a couple of months from now, as the finance minister prepares to read the 2016 budget, the government will take into consideration the calls of the aviation industry on the state to reduce the taxes imposed on aviation, which is not only making the country unattractive, but making us lose some revenue to the neighbouring countries.