Airlines lose GH¢6m to Harmattan shutdown

Domestic airline will lose an estimated GH¢6million per week if the Harmattan, which is associated with poor visibility, continues to cause flight suspensions and delays.

The onset of the Harmatan -- north/eastern dry winds originating from the Saharan-Arabian desert last week -- has forced the two main domestic airlines in the country, Starbow and Africa World Airlines (AWA), to suspend flights to Kumasi, Tamale and Sunyani…leaving passengers stranded at the various airports.

Africa World Airlines (AWA), which operates 50-seat ERJ 145LR jets to Tamale, Kumasi and Takoradi, is estimated to lose about GH¢2.5million in gross revenue per week if visibility continues to be poor.

Starbow, which operates two 94-seat BAe 146-300 jets and a Bombardier Dash 8 Q400 aircraft that can seat up to 78 passengers, is estimated to lose about GH¢4million per week if the dusty season continues.

The industry regulator, the Ghana Civil Aviation Authority (GCAA), says the weather may improve for flight operations after December 15, 2015.

There are currently two airlines -- Starbow and Africa World Airlines -- offering domestic flights from Accra to Kumasi, Tamale, and Takoradi. The operators have had to increase their flight frequencies since July to these three destination following the suspension of Antrak’s operations for three months.

Antrak Air, a wholly-owned indigenous domestic operator, suspended its operations following challenges with its wet-lease arrangement with Swift Air, a Spanish airliner, for use of the latter’s two ATR 72-500 turbo-prop aircraft.

Foreign exchange losses are believed to have increased the cost of operations for the airline, forcing it to ditch the wet-lease agreement.

Since January 2014 the cedi has lost about 40 percent of its value to the US dollar, despite a range of measures introduced by the central bank

Last year the cedi lost about 31 percent of its value after a string of poor performances, largely in the first half of the year. The slide prompted the central bank to introduce forex restrictions, which market players accused of being counterproductive.

Domestic airlines, notwithstanding the local currency’s slide, had to absorb the exchange losses that were estimated to be about US$2million per operator.

About 80 percent of the operations of airlines are dollar-based. Imported spare-parts, cost of aviation fuel and insurance are all priced in dollars. The imposition of 17.5 percent Value Added Tax (VAT) in July also led to a drastic decline in passenger numbers.

There have been calls for the Finance |Ministry to review implementation of this tax, but the 2016 budget and economic policy of government presented to Parliament was conspicuously silent on it.

Dr. Camynta Baezie, Executive Chairman of the State Enterprises Commission, has called for immediate suspension of the 17.5 percent VAT on domestic air travel that has reduced passenger throughput by more than 20 percent.

“The State Enterprises Commission would like to bring to the attention of the President, sector ministry and, more importantly, the Ministry of Finance that the high cost of domestic flights is something that has been said over and over again.

“We need to reduce the airfares, and to do that we think government needs to take out the 17.5 percent VAT and remove the taxes on aviation fuel. Taxes are meant to benefit the people, and removal will lead to increased domestic passenger travel, creating jobs and hence employment for the benefit of the very people that we are imposing the taxes on,” Dr. Baezie said at a recent Annual General Meeting (AGM) of the Ghana Airports Company Limited in Accra.