Business News of 2014-07-12

Air travel to add US$47m to GDP – IATA Report

The aviation industry can add an additional US$47million to the country’s Gross Domestic Product (GDP) and create 9,500 additional jobs if government fully commits liberalisation of the industry, a study by the International Air Transport Association (IATA) has found.

The aviation sector contributes about 6 percent to Gross Domestic Product (GDP) globally. There is no official figure of the sector’s contribution the country’s GDP. In 2013, the country’s real GDP was estimated at GH?32,332million.

In 2012, about GH¢57million was realised in airport taxes that went to support the national budget. About GH¢37million and GH¢47million in airport taxes was also paid to the Ghana Revenue Authority (GRA) in 2010 and 2011 respectively

The report said Ghana must fully implement the 1999 Yamoussoukro Decision that sought to deregulate air services and to open regional air markets to transnational competition, implement global standards in safety, security and regulations; and reduce high charges, taxes and fees as well as remove visa requirements for ease of movement across the continent.

The report by IATA, which represents 240 airlines comprising 84% of global air traffic, found that “implementation of this agreement, however, has been slow, and the benefits have not been realised”.

In West Africa, for instance, though almost all the countries are signatories to the Yamoussoukro decision there is a cumbersome designation process airlines from one country must go through before flying into another member-country.

Some countries in the sub-region are adopting a subtle protectionism approach as they seek to promote their local or indigenous airlines, by delaying the issuance of permits for carriers wanting to fly into their respective countries.

In Africa, aviation supports 6.9 million jobs and contributes more than US$80billion in GDP. However, the study found out that it can provide an extra 155,000 jobs and US$1.3billion in annual GDP if 12 key markets in Africa are fully liberalised.

The 12 key countries cited in the report are: Algeria, Angola, Egypt, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Senegal, South Africa, Tunisia and Uganda.

Tony Tyler, IATA’s Director General and CEO noted that: “This report demonstrates beyond doubt the tremendous potential for African aviation if the shackles are taken off. The additional services generated by liberalisation between just 12 key markets will provide an extra 155,000 jobs and US$1.3billion in annual GDP.

“A potential five million passengers a year are being denied the chance to travel between these markets because of unnecessary restrictions on establishing air routes. Furthermore, employment and economic growth are just the tip of the iceberg in terms of the benefits of connectivity.”

Ms. Iyabo Sosina, Secretary-General of the African Civil Aviation Commission said: “Africa represents a huge potential market for aviation. It is therefore unfortunate that African states are opening their aviation markets to third countries but not to each other, which does not promote the spirit of the Yamoussoukro Decision. This isn’t just holding back African aviation, but also African economies.”

The aviation sector has seen significant improvement over the past five years. There are now 42 scheduled carriers servicing the Kotoka International Airport (KIA). Passenger throughput stood at 2.9million in 2013.

A recent expansion in the scope of Value Added Tax to include domestic air travel has met stiff opposition from the three main domestic airline operators -- Antrak, Starbow, Africa World Airline -- who contend that it will derail gains made in encouraging people to chose air travel as an option.