Airport tax shortfall pushes sector to the brink

Kotoka International Airport Sodl Kotoka International Airport

Mon, 27 Jul 2020 Source: goldstreetbusiness.com

The shortfall in actual airport taxes realised for the first half of the year has eroded government revenue, pushing the Ghana Airports Company and other agencies that draw funding from airport tax receipts to the brink.

For the 2020 financial year, government expected to receive GH¢556.2m in airport tax revenue, of which GH¢287.9m was projected to be received by half-year.

However, the COVID-19 pandemic, which forced government to close all land, sea and air borders, leading to an 80 percent fall in passenger throughput in the second quarter of the year, has affected the half-year performance.

The mid-year budget review presented to Parliament last week revealed that half-year airport tax revenue realised was GH¢117.8m, indicating a shortfall of about 59 percent.

With the exception of domestic air service at Terminal 2 and pre-approved repatriation flights operated out of Terminal 3, there is no other activity within the main international terminal of the Kotoka International Airport (KIA).

Most airline offices within Terminal 3 have been closed for months, with no idea of a reopening date, while most restaurants, forex bureaux and gift shops within the facility have recorded no sales for months.

Given the impact of the pandemic on the industry, government, in the mid-year review, cut its annual projected airport tax receipts by 43.5 percent. Hence, GH¢314m is now expected to be raked in instead of the initially projected GH¢556.2m for 2020.

Implications of revenue shortfall

The implication of the falling revenue is dire for the industry. Firstly, the Ghana Airports Company will struggle to service the debt it secured for the construction of Terminal 3 at the KIA.

As at last week, official sources said the company’s debt burden stood at about GH¢1.6bn (US$300m). Aside its debts, the airports operator also has to meet its fixed and recurrent costs at a time of reduced revenue.

Another entity affected by the revenue shortfall is the Ghana Civil Aviation Authority (GCAA), which receives 7.5 percent of the airport tax, also known as the Airport Passenger Service Charge (APSC). The authority, realising the impact of COVID-19 on the industry, has requested a bailout from government.

The revenue situation will also affect funding for the newly-established Accident Investigation and Prevention Bureau, which has been legally assigned 1.5 percent of the APSC.

Source: goldstreetbusiness.com
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