Business News of 2014-08-08

Huge expansion in Ghana’s aviation industry

Air travel in Ghana has been on a strong upward trajectory with the last two years showing a steep rise in both domestic and international passenger traffic.

International aircraft movements to and from the Kotoka International Airport (KIA) have improved tremendously between 2012 and 2013, as a result of the operation of new entrants into the industry and increased flight frequency of existing airlines.

Domestic aircraft movements, on the other hand, experienced a sharp increase as a result of growing demand, reliable services and competitive air fares offered passengers by operators compared to road transporters.

Pursuing the aim of making Ghana the gateway to Africa and an aviation hub in the West African sub-region, management of the Ghana Airports Company Limited (GACL) has unveiled an ambitious programme to bring KIA at par with some of the best in the world in terms of infrastructure, security and services.

In order to stay competitive, governments in Senegal, Togo and Nigeria have committed significant financial resources to upgrade their airport infrastructure.

The GACL at its second Annual General Meeting (AGM) in Accra last week announced its decision to source for and invest over US$600million in the next three years “to enhance and expand our airport infrastructure and services.”

This has been occasioned by the recent promulgation of the Airport Tax (Amendment ) 2013 Act 858 which enables the GACL to retain 100% tariff.

The development, according to the Board of the company, will improve GACL’s ability to leverage on its potential income to raise funding to improve international and domestic air travel facilities, human resources, build new airports and thereby raise the image of Ghana as a favourable investment destination.

The company has, therefore, instructed its bankers to go to the capital market and raise a syndicated facility payable within eight to ten years.

Strategies are underway to increase capacity and improve the operating efficiencies of the country’s airports at KIA, Kumasi, Tamale and Sunyani by upgrading and expanding infrastructure and service facilities, and also develop new regional aerodromes.

In line with the new trend in airport business management which emphasises non-aeronautical businesses, GACL intends to grow the non-aeronautical revenues of the company and increase its percentage contribution to total revenue from the current level of 10% to 30% within the next five years.

“Through joint ventures with private sector players and Public Private Partnerships, we will pursue opportunities in commercial real estate such as offices, hotels, malls, retail shopping malls, entertainment centres, car parks and other airport related development on the landside of our airports,” Mr Asare disclosed.

The aviation sector plays an important role in the global economy by providing connectivity through the only rapid worldwide transport network.

In doing so, the direct and wider impact on jobs and GDP globally is enormous—contributing over 22 million jobs and US$1.4 trillion in GDP. Moreover, the sector makes contributions to other industries by facilitating their growth and supporting their operations.

With a significant proportion of international tourists depending on air transport, the aviation industry supports 34.5 million jobs within tourism globally, contributing around US$762 billion a year to world GDP.

It supports tourism and international business by providing the world’s only rapid worldwide transportation network. Airlines transported 2.8 billion passengers and 47.6 million metric tonnes of air cargo in 2011, connecting the world’s cities with 36,000 routes.

By providing these services, the aviation industry plays an important role in enabling economic growth and providing various economic and social benefits.

The connections made between cities and markets produce an important infrastructure asset that facilitates activities that enhance a nation’s productivity.

More specifically, air transport enables foreign direct investment (FDI), business cluster development, specialization, and other spillover effects.

Source: The Finder
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